<PAGE>
DEAN WITTER HIGH INCOME SECURITIES TWO WORLD TRADE CENTER, NEW YORK, NEW YORK
10048
LETTER TO THE SHAREHOLDERS MARCH 31, 1996
DEAR SHAREHOLDER:
After rebounding sharply during 1995, the fixed-income markets retreated during
the first quarter of 1996 as the economy began to show signs of a recovery. The
high-yield market, which performed nicely during the 1995 rally, held up
relatively well during the first quarter of 1996, even as interest rates moved
up. While recent signs of an economic recovery have led to a sharp increase in
interest rates, this recovery bodes well for the future prospects of many
corporate issuers in the high-yield marketplace and helps erase some of the
recession fears that had plagued the high-yield market in late 1995. Overall,
the high-yield market is off to a relatively good start in early 1996.
Against this backdrop, Dean Witter High Income Securities produced a total
return of 12.85 percent for the twelve-month period ended March 31, 1996
(excluding any applicable contingent deferred sales charge). As of March 31,
1996, the Fund had net assets in excess of $505 million. Over the past twelve
months, the Fund continued to distribute regular income dividends at a rate of
$0.08 per share per month. For the full twelve-month period, distributions
totaled approximately $1.05 per share, including an extra income dividend of
$0.051 per share, a short-term capital gain distribution of $0.034 per share and
a long-term capital gain distribution of $0.002 per share paid on December 29,
1995. The accompanying chart illustrates the growth of a $10,000 investment in
the Fund since inception (June 2, 1994) through the fiscal year ended March 31,
1996, compared to a similar investment in the issues that comprise the Lehman
Brothers Corporate/ High Yield Index.
INVESTMENT STRATEGY
The Fund's investment strategy throughout 1995 and early 1996 has been to
capitalize on the opportunities created by the 1994 market correction by
positioning the portfolio for a continued rebound in the high-yield market.
Despite the fact that corporate credit quality remained strong, the 1994 market
correction pushed yields on many
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
LETTER TO THE SHAREHOLDERS MARCH 31, 1996, CONTINUED
B-rated issues 300-400 basis points higher (to the 13-14 percent range) and
caused bond prices in some cases to decline by as much as 15-20 percent. In
light of this correction, the Fund increased its emphasis on discounted issues
during the second half of 1994, which helped to provide more capital
appreciation potential for the Fund during the past twelve months. While the
Fund's portfolio is still positioned for further upside in the high-yield
market, it continues to maintain a sizable position in various defensive
securities, in order to provide the flexibility needed to take advantage of any
interim opportunities that may arise.
MARKET OUTLOOK
[GRAPHIC]
Given our outlook for continued, albeit
moderate economic growth, we find that
many of today's B-rated issues -- still
yielding more than 500 basis points (5
percent) 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, possible
Federal Reserve Board actions and
ongoing budget negotiations in
Washington. However, despite any
potential short-term weakness, we
consider today's high-yield market to
be an attractive long-term opportunity
for investors.
[GRAPHIC]
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 MARCH 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (92.3%)
AEROSPACE (1.6%)
$ 8,900 Sabreliner Corp. (Series B)................. 12.50 % 04/15/03 $ 8,321,500
---------------
AUTOMOTIVE (3.2%)
5,000 APS, Inc. - 144A*........................... 11.875 01/15/06 5,125,000
14,500 Envirotest Systems, Inc..................... 9.625 04/01/03 11,165,000
---------------
16,290,000
---------------
BROADCAST MEDIA (3.7%)
4,000 Adams Outdoor Advertising - 144A*........... 10.75 03/15/06 4,090,000
8,000 Paxson Communications....................... 11.625 10/01/02 8,560,000
6,249 Spanish Broadcasting System, Inc............ 7.50 06/15/02 6,249,000
---------------
18,899,000
---------------
CABLE & TELECOMMUNICATIONS (9.9%)
10,429 Adelphia Communications Corp. (Series B).... 9.50+ 02/15/04 9,281,509
14,000 AT&T Capital Corp........................... 15.00 05/05/97 15,316,411
6,750 Charter Communication South East L.P. -
144A*....................................... 11.25 03/15/06 6,783,750
4,693 Falcon Holdings Group L.P................... 11.00+ 09/15/03 4,481,337
28,500 In-Flight Phone Corp. (Series B)............ 14.00++ 05/15/02 8,835,000
6,000 Peoples Telephone Co., Inc.................. 12.25 07/15/02 5,520,000
---------------
50,218,007
---------------
COMPUTER EQUIPMENT (4.0%)
8,000 IBM Credit Corp............................. 15.00 06/13/96 8,141,280
7,000 Unisys Corp................................. 15.00 07/01/97 7,472,500
4,150 Unisys Corp. (Conv.)........................ 8.25 03/15/06 4,575,375
---------------
20,189,155
---------------
CONSUMER PRODUCTS (1.1%)
5,500 J.B. Williams Holdings, Inc................. 12.00 03/01/04 5,445,000
---------------
CONTAINERS (3.3%)
15,800 Ivex Holdings Corp. (Series B).............. 13.25++ 03/15/05 9,796,000
7,100 Mail-Well Corp.............................. 10.50 02/15/04 6,904,750
---------------
16,700,750
---------------
ELECTRICAL & ALARM SYSTEMS (1.7%)
11,000 Mosler, Inc................................. 11.00 04/15/03 8,470,000
---------------
ENTERTAINMENT/GAMING & LODGING (11.0%)
7,000 AMF Group Inc. - 144A*...................... 10.875 03/15/06 6,973,750
9,000 Fitzgeralds Gaming Corp. (Units)++.......... 13.00 12/31/02 8,460,000
8,000 Lady Luck Gaming Finance Corp. (Series B)... 10.50 03/01/01 7,200,000
7,400 Motels of America, Inc. (Series B).......... 12.00 04/15/04 7,289,000
9,900 Plitt Theaters, Inc......................... 10.875 06/15/04 10,048,500
27,250 Spectravision, Inc. (a)..................... 11.65 12/01/02 2,837,942
12,000 Trump Taj Mahal (Series A).................. 11.35+ 11/15/99 12,600,000
---------------
55,409,192
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
FOODS & BEVERAGES (11.3%)
$ 25,461 Envirodyne Industries, Inc.................. 10.25 % 12/01/01 $ 19,923,232
8,000 PepsiCo Inc................................. 15.00 06/14/96 8,144,880
3,900 SC International Services, Inc.............. 13.00 10/01/05 4,212,000
14,000 Seven Up/RC Bottling Co. Southern
California, Inc. (b)........................ 11.50 08/01/99 8,199,825
34,715 Specialty Foods Acquisition Corp. (Series
B).......................................... 13.00++ 08/15/05 16,663,200
---------------
57,143,137
---------------
MANUFACTURING (9.2%)
11,450 Alpine Group, Inc........................... 12.25 07/15/03 11,221,000
7,900 Berry Plastics Corp......................... 12.25 04/15/04 8,729,500
7,500 Cabot Safety Corp........................... 12.50 07/15/05 8,306,250
11,500 International Wire Group.................... 11.75 06/01/05 11,241,250
7,230 Uniroyal Technology Corp.................... 11.75 06/01/03 6,850,425
---------------
46,348,425
---------------
MANUFACTURING - DIVERSIFIED (8.7%)
11,650 Foamex L.P.................................. 11.875 10/01/04 11,125,750
13,900 Interlake Corp.............................. 12.125 03/01/02 12,961,750
6,000 J.B. Poindexter & Co., Inc.................. 12.50 05/15/04 5,040,000
7,000 Jordan Industries, Inc...................... 10.375 08/01/03 6,527,500
12,150 Jordan Industries, Inc...................... 11.75++ 08/01/05 8,140,500
---------------
43,795,500
---------------
OIL & GAS (1.8%)
9,900 Empire Gas Corp............................. 7.00 07/15/04 8,934,750
---------------
PUBLISHING (4.0%)
15,300 Affiliated Newspapers Investments, Inc...... 13.25++ 07/01/06 10,327,500
11,100 United States Banknote Corp................. 10.375 06/01/02 8,824,500
1,500 United States Banknote Corp. (Series B)..... 11.625 08/01/02 937,500
---------------
20,089,500
---------------
RESTAURANTS (8.2%)
12,000 American Restaurant Group Holdings, Inc..... 14.00++ 12/15/05 5,100,000
17,000 American Restaurant Group Holdings, Inc. -
144A*....................................... 14.00++ 12/15/05 7,225,000
8,437 Carrols Corp................................ 11.50 08/15/03 8,711,203
28,000 Flagstar Corp............................... 11.25 11/01/04 20,650,000
---------------
41,686,203
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
RETAIL (3.5%)
$ 4,983 Cort Furniture Rental Corp.................. 12.00 % 09/01/00 $ 5,331,810
1,000 County Seat Stores Co....................... 12.00 10/01/02 750,000
11,639 Thrifty Payless Holdings, Inc............... 11.625+ 04/15/06 11,406,588
---------------
17,488,398
---------------
RETAIL - FOOD CHAINS (3.7%)
7,000 Jitney-Jungle Stores........................ 12.00 03/01/06 6,965,000
12,000 Ralphs Grocery Co........................... 10.45 06/15/04 11,550,000
---------------
18,515,000
---------------
TEXTILES (0.3%)
2,000 CMI Industries, Inc......................... 9.50 10/01/03 1,590,000
---------------
TEXTILES - APPAREL MANUFACTURERS (2.1%)
10,334 JPS Textile Group, Inc...................... 10.85 06/01/99 7,543,820
3,950 U.S. Leather, Inc........................... 10.25 07/31/03 3,298,250
---------------
10,842,070
---------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $473,631,297)....................................... 466,375,587
---------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (C) (3.3%)
FOODS & BEVERAGES (0.1%)
300,975 Specialty Foods Acquisition Corp. (Restricted) - 144A*.................. 601,950
---------------
MANUFACTURING - DIVERSIFIED (2.5%)
385,800 Interlake Corp.......................................................... 723,375
630,689 Thermadyne Holdings Corp. (d)........................................... 11,825,419
---------------
12,548,794
---------------
OIL & GAS (0.2%)
100,000 TransTexas Gas Corp..................................................... 1,000,000
---------------
PUBLISHING (0.1%)
12,500 Affiliated Newspapers Investments, Inc. (Class B)....................... 375,000
---------------
RESTAURANTS (0.0%)
12,000 American Restaurant Group Holdings, Inc. - 144A*........................ 180,000
---------------
RETAIL (0.4%)
438,891 Thrifty Payless Holdings, Inc. (Class C)................................ 2,139,593
---------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $15,983,399)........................................... 16,845,337
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------------------------------
<C> <S> <C>
PREFERRED STOCK (0.4%)
ENTERTAINMENT/GAMING & LODGING
80,000 Fitzgeralds Gaming Corp. (Units)++ $3.75
(Identified Cost $2,000,000)............................................ $ 2,020,000
---------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
WARRANTS (C) (0.1%)
CABLE & TELECOMMUNICATIONS (0.0%)
22,850 In-Flight Phone Corp. - 144A*............................ 08/31/02 228,500
---------------
MANUFACTURING (0.0%)
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%)
139,800 Cort Business Services Corp.............................. 09/07/98 559,200
---------------
RETAIL - FOOD CHAINS (0.0%)
4,359 Grand Union Co. (Series 1) (d)........................... 06/16/00 --
8,718 Grand Union Co. (Series 2) (d)........................... 06/16/00 --
---------------
--
---------------
TOTAL WARRANTS
(IDENTIFIED COST $1,527,310).......................................... 922,900
---------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENT (1.1%)
REPURCHASE AGREEMENT
$ 5,356 The Bank of New York (dated 03/29/96;
proceeds $5,358,191; collateralized by
$5,111,049 U.S. Treasury Bond 7.25% due
05/15/16 valued at $5,463,306) (Identified
Cost $5,356,182)............................ 4.50% 04/01/96 5,356,182
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
PORTFOLIO OF INVESTMENTS MARCH 31, 1996, CONTINUED
<TABLE>
<CAPTION>
VALUE
- ---------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $498,498,188) (E)........... 97.2% $491,520,006
OTHER ASSETS IN EXCESS OF LIABILITIES........ 2.8 13,970,570
----- ------------
NET ASSETS................................... 100.0% $505,490,576
----- ------------
----- ------------
<FN>
- ---------------------
* Resale is restricted to qualified institutional investors.
++ Consists of one or more class of securities traded together as a unit;
generally bonds/stocks with attached warrants.
+ Payment-in-kind security.
++ Currently a zero coupon bond and will pay interest at the rate shown at a
future specified rate.
(a) Non-income producing security, issuer in bankruptcy.
(b) Non-income producing security, bond in default.
(c) Non-income producing securities.
(d) Acquired through exchange offer.
(e) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation was $12,706,783 and the
aggregate gross unrealized depreciation was $19,684,965, resulting in net
unrealized depreciation of $6,978,182.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $498,498,188)............................ $491,520,006
Receivable for:
Interest................................................ 12,308,009
Shares of beneficial interest sold...................... 4,616,837
Deferred organizational expenses............................ 102,539
Prepaid expenses............................................ 41,285
------------
TOTAL ASSETS........................................... 508,588,676
------------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased............... 1,580,623
Dividends to shareholders............................... 778,636
Plan of distribution fee................................ 331,120
Investment management fee............................... 206,950
Accrued expenses............................................ 200,771
------------
TOTAL LIABILITIES...................................... 3,098,100
------------
NET ASSETS:
Paid-in-capital............................................. 503,999,925
Net unrealized depreciation................................. (6,978,182)
Accumulated undistributed net investment income............. 3,050,651
Accumulated undistributed net realized gain................. 5,418,182
------------
NET ASSETS............................................. $505,490,576
------------
------------
NET ASSET VALUE PER SHARE,
50,912,864 SHARES OUTSTANDING (UNLIMITED
SHARES AUTHORIZED OF $.01 PAR VALUE)......................
$9.93
------------
------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1996
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $41,954,762
-----------
EXPENSES
Plan of distribution fee.................................... 2,640,686
Investment management fee................................... 1,650,429
Transfer agent fees and expenses............................ 212,010
Registration fees........................................... 155,696
Shareholder reports and notices............................. 85,917
Custodian fees.............................................. 72,120
Professional fees........................................... 49,500
Organizational expenses..................................... 32,252
Trustees' fees and expenses................................. 19,184
Other....................................................... 6,284
-----------
TOTAL EXPENSES......................................... 4,924,078
-----------
NET INVESTMENT INCOME.................................. 37,030,684
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain........................................... 8,183,189
Net change in unrealized depreciation....................... (6,754,811)
-----------
NET GAIN............................................... 1,428,378
-----------
NET INCREASE................................................ $38,459,062
-----------
-----------
</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
FOR THE YEAR JUNE 2, 1994*
ENDED THROUGH
MARCH 31, 1996 MARCH 31, 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 37,030,684 $ 8,122,614
Net realized gain (loss).................................... 8,183,189 (1,341,004)
Net change in unrealized depreciation....................... (6,754,811) (223,371)
-------------- --------------
NET INCREASE........................................... 38,459,062 6,558,239
-------------- --------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income....................................... (34,585,105) (7,517,542)
Net realized gain........................................... (1,424,003) --
-------------- --------------
TOTAL.................................................. (36,009,108) (7,517,542)
-------------- --------------
Net increase from transactions in shares of beneficial
interest.................................................. 334,159,446 169,740,479
-------------- --------------
TOTAL INCREASE......................................... 336,609,400 168,781,176
NET ASSETS:
Beginning of period......................................... 168,881,176 100,000
-------------- --------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$3,050,651 AND $605,072, RESPECTIVELY).................. $ 505,490,576 $ 168,881,176
-------------- --------------
-------------- --------------
---------------------
* Commencement of operations.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996
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's primary investment objective
is to earn a high level of current income and, as a secondary objective, capital
appreciation, but only when consistent with its primary objective. The Fund
seeks to achieve its objective by investing primarily in lower-rated fixed
income securities.
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 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 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 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
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996, CONTINUED
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.
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 approximately $154,000 which have been
reimbursed for the full amount thereof. Such expenses have been deferred and are
being amortized on the straight-line method over a period not to exceed five
years from the commencement of operations.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Fund pays a management fee,
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.
Effective May 1, 1996, the annual rate will be reduced to 0.425% of net assets
in excess of $500 million.
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996, CONTINUED
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.
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 broker-dealers who
engage in or support distribution of the Fund's shares or who service
shareholder accounts, including overhead and telephone expenses, printing and
distribution of prospectuses and reports used in connection with the offering of
the Fund's shares to other than current shareholders and preparation, printing
and distribution of sales literature and advertising materials. In addition, the
Distributor may be compensated under the Plan for its opportunity costs in
advancing such amounts, which compensation would be in the form of a carrying
charge on any unreimbursed expenses incurred by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred but
not yet recovered may be recovered through future distribution fees from the
Fund and contingent deferred sales charges from the Fund's shareholders.
The Distributor has informed the Fund that for the year ended March 31, 1996, it
received approximately $655,000 in contingent deferred sales charges from
certain redemptions of the Fund's shares.
<PAGE>
DEAN WITTER HIGH INCOME SECURITIES
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996, 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 year ended March 31, 1996 aggregated
$554,731,074 and $200,685,030, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager and the
Distributor, is the Fund's transfer agent. At March 31, 1996, the Fund had
transfer agent fees and expenses payable of approximately $21,000.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
JUNE 2, 1994*
FOR THE YEAR ENDED THROUGH
MARCH 31, 1996 MARCH 31, 1995
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 41,085,242 $408,356,512 19,293,553 $189,368,053
Reinvestment of dividends and distributions...................... 1,336,198 13,186,801 297,694 2,889,883
----------- ------------ ----------- ------------
42,421,440 421,543,313 19,591,247 192,257,936
Repurchased...................................................... (8,797,583) (87,383,867) (2,312,240) (22,517,457)
----------- ------------ ----------- ------------
Net increase..................................................... 33,623,857 $334,159,446 17,279,007 $169,740,479
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
<TABLE>
<S> <C>
<FN>
- ---------------------
* Commencement of operations.
</TABLE>
6. FEDERAL INCOME TAX STATUS
During the year ended March 31, 1996, the Fund utilized its net capital loss
carryover of approximately $736,000.
<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 PERIOD
FOR THE YEAR JUNE 2, 1994*
ENDED THROUGH
MARCH 31, 1996 MARCH 31, 1995
- ------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................ $ 9.77 $ 10.00
----- ------
Net investment income.............. 1.03 0.75
Net realized and unrealized gain
(loss)............................ 0.18 (0.26)
----- ------
Total from investment operations... 1.21 0.49
----- ------
Less dividends and distributions
from:
Net investment income........... (1.01) (0.72)
Net realized gain............... (0.04) --
----- ------
Total dividends and
distributions..................... (1.05) (0.72)
----- ------
Net asset value, end of period..... $ 9.93 $ 9.77
----- ------
----- ------
TOTAL INVESTMENT RETURN+........... 12.85% 5.19%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... 1.49% 1.55%(2)(3)
Net investment income.............. 11.22% 10.85%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $505,491 $168,881
Portfolio turnover rate............ 69% 53%(1)
<FN>
- ---------------------
* 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 year.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all the expenses that were reimbursed or waived by
the Investment Manager, the above annualized expense and net investment
income 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, 1996, the results of its operations for the year then
ended, and the changes in its net assets and the financial highlights for the
year then ended and 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 audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at March 31, 1996 by correspondence with the
custodian, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
MAY 10, 1996
- --------------------------------------------------------------------------------
1996 FEDERAL TAX NOTICE (UNAUDITED)
During the year ended March 31, 1996, the Fund paid to its
shareholders $0.002 per share from long-term capital gains.
<PAGE>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo DEAN WITTER
Edwin J. Garn HIGH INCOME
John R. Haire SECURITIES
Dr. Manuel H. Johnson
Paul Kolton [GRAPHIC]
Michael E. Nugent
Philip J. Purcell ANNUAL REPORT
John L. Schroeder MARCH 31, 1996
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
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and directors,
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
DATE TOTAL LEHMAN
- ------------------------------------------------------------
June 2, 1994 $10000 $10000
- ------------------------------------------------------------
March 31, 1995 $10519 $10702
- ------------------------------------------------------------
March 31, 1996 $11573 (3) $12073
- ------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
ONE YEAR LIFE OF FUND
---------------------------------
12.85 (1) 9.83 (1)
---------------------------------
8.85 (1) 8.32 (2)
---------------------------------
---------------------------------
_______ Fund _______ Lehman (4)
---------------------------------
Past performance is not predictive of future returns.
________________________________________
(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) (one
year-4%, since inception-3%). See the Fund's current prospectus for
complete details on fees and sales charges.
(3) Closing value after the deduction of a 3% CDSC, assuming a complete
redemption on March 31, 1996.
(4) The Lehman Brothers Mutual Fund Corporate/ High Yield Index is an index
measuring all investment and noninvestment grade corporate debt securities.
The Index is unmanaged and should not be considered an investment.
