<PAGE>
HIGH INCOME ADVANTAGE TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------
The six-month period ended March 31, 1995 has produced somewhat mixed
performance results for High Income Advantage Trust. The first three months of
the reporting period (October through December 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 in 1994. High-yield investors, concerned
about rising interest rates and possible further tightening actions by the
Federal Reserve Board, remained nervous throughout 1994, leading to 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.
During the second half of the reporting period, 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 in
the marketplace remains solid, reflecting the strong economy, improved corporate
earnings picture and the spruced up balance sheets of many high-yield issuers.
Against this backdrop, High Income Advantage Trust's total return for the
six-month period ended March 31, 1995 was 6.41 percent, based on its closing
market price on the New York Stock Exchange (NYSE) of $5.625 per share. Based on
its net asset value (NAV) of $5.17 per share on March 31, 1995, the Trust's
total return for the six month period was 3.41 percent. As of March 31, 1995,
the Trust's net assets exceeded $155 million. Over the past six months, the
Trust continued to distribute regular income dividends at a rate of $.05 per
share per month. For the full six-month period, income dividends totaled
approximately $.342 per share, including an extra income dividend of $.042 per
share paid on December 23, 1994.
INVESTMENT STRATEGY
As reported in its annual report to shareholders, dated September 30, 1994,
the Trust began 1994 positioned quite defensively. However, the Trust became a
buyer during the second quarter, as a correction in the market pushed bond
prices back to more attractive levels. Despite the fact that corporate credit
quality in most cases remained strong, B-rated issues could then be purchased at
13 percent yield levels versus the 10 percent levels that existed earlier in the
year and at significant discounts to par (face) value.
The Trust continued this buying activity during the second half of 1994,
increasing its emphasis on discounted issues, which possess more upside
opportunity for the Trust when the high-yield market rebounds. While the Trust
overall is positioned for a recovery in the high-yield market, it still retains
a sizeable holding in various defensive securities, in order to provide the
portfolio flexibility needed to take advantage of any opportunities that may
arise.
During the first quarter of 1995, the Trust took profits in several holdings
that traded up (over par value) in the recent market rally. Among those holdings
sold were Federated Department Stores, Icon
<PAGE>
Health and Thrifty Payless Drugstores. The Trust reinvested the proceeds back
into other issues which we feel still represent good value in today's market.
MARKET OUTLOOK
Given our outlook for slower, but continued growth in the economy, we find
today's B-rated issues (now yielding more than 600 basis points, six percent,
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 today's high-yield market
to be an attractive long-term opportunity for investors. Current 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 would like to remind you that the Trustees have approved a procedure
whereby the Trust, when appropriate, may repurchase shares in the open market or
in privately negotiated transactions at a price not above market value or net
asset value, whichever is lower at the time of purchase.
We thank you for you continued support of High Income Advantage Trust and
look forward to continuing to serve your investment needs.
Very truly yours,
[SIGNATURE]
Charles A. Fiumefreddo
CHAIRMAN OF THE BOARD
<PAGE>
HIGH INCOME ADVANTAGE TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ----------- --------- ---------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (84.4%)
AEROSPACE (2.9%)
$ 5,000 Sabreliner Corp. (Series B)...................................... 12.50 % 04/15/03 $ 4,475,000
---------------
AIRLINES (4.1%)
8,000 GPA Delaware, Inc................................................ 8.75 12/15/98 6,300,000
---------------
AUTOMOTIVE (2.2%)
5,000 Envirotest Systems, Inc.......................................... 9.625 04/01/03 3,450,000
---------------
COMPUTER EQUIPMENT (4.2%)
6,000 Unisys Corp...................................................... 13.50 07/01/97 6,540,000
---------------
CONSUMER PRODUCTS (1.6%)
2,000 J.B. Williams Holdings, Inc...................................... 12.00* 03/01/04 1,930,000
500 Thermoscan, Inc. (Units)++ - 144A**.............................. 13.438* 08/15/01 507,500
---------------
2,437,500
---------------
CONTAINERS (1.9%)
6,000 Ivex Holdings Corp. (Series B)................................... 13.25++ 03/15/05 2,940,000
---------------
ELECTRICAL & ALARM SYSTEMS (2.0%)
4,000 Mosler, Inc...................................................... 11.00 04/15/03 3,080,000
---------------
ENTERTAINMENT (0.0%)
10,883 Days Inns of America, Inc. (c)................................... 12.375 06/01/97 --
---------------
ENTERTAINMENT/GAMING & LODGING (10.9%)
1,000 Fitzgeralds Gaming Corp. - 144A**................................ 13.75* 03/15/96 530,000
4,000 Motels of America, Inc. (Series B)............................... 12.00 04/15/04 4,090,000
12,711 Spectravision, Inc............................................... 11.65+ 12/01/02 1,970,205
4,000 Trump Castle Funding, Inc........................................ 11.75 11/15/03 2,440,000
8,322 Trump Plaza Holding Assoc........................................ 12.50+ 06/15/03 7,905,733
---------------
16,935,938
---------------
FOODS & BEVERAGES (7.5%)
6,500 Envirodyne Industries, Inc....................................... 10.25 12/01/01 5,395,000
12,000 Specialty Foods Acquisition Corp. (Series B)..................... 13.00++ 08/15/05 6,120,000
---------------
11,515,000
---------------
MANUFACTURING (6.8%)
4,000 Berry Plastics Corp.............................................. 12.25 04/15/04 3,920,000
4,000 MS Essex Holdings Inc............................................ 16.00++ 05/15/04 3,980,000
1,000 Talley Manufacturing & Technology Inc............................ 10.75 10/15/03 937,500
2,000 Uniroyal Technology Corp......................................... 11.75 06/01/03 1,660,000
---------------
10,497,500
---------------
MANUFACTURING - DIVERSIFIED (6.2%)
4,000 Interlake Corp................................................... 12.125 03/01/02 3,910,000
2,000 J.B. Poindexter & Co., Inc....................................... 12.50 05/15/04 1,920,000
2,000 Jordan Industries, Inc........................................... 10.375 08/01/03 1,900,000
3,500 Jordan Industries, Inc........................................... 11.75++ 08/01/05 1,925,000
---------------
9,655,000
---------------
<PAGE>
</TABLE>
HIGH INCOME ADVANTAGE TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1995 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- ----------- --------- ---------------
<C> <S> <C> <C> <C>
OIL & GAS (5.3%)
$ 2,000 Deeptech International, Inc...................................... 12.00 % 12/15/00 $ 1,740,000
4,000 Empire Gas Corp.................................................. 7.00 07/15/04 2,800,000
6,000 Presidio Oil Co. (Series B)...................................... 13.30*** 07/15/02 3,644,700
---------------
8,184,700
---------------
PUBLISHING (7.2%)
7,000 Affiliated Newspapers Investments, Inc........................... 13.25++ 07/01/06 3,745,000
3,800 BFP Holdings, Inc. (Series B).................................... 13.50++ 04/15/04 2,394,000
2,000 Garden State Newspapers, Inc..................................... 12.00 07/01/04 1,980,000
4,000 United States Banknote Corp...................................... 10.375 06/01/02 3,040,000
---------------
11,159,000
---------------
RESTAURANTS (8.6%)
8,000 American Restaurant Group Holdings, Inc.......................... 14.00++ 12/15/05 3,840,000
4,000 Carrols Corp..................................................... 11.50 08/15/03 3,730,000
7,000 Flagstar Corp.................................................... 11.25 11/01/04 5,810,000
---------------
13,380,000
---------------
RETAIL (4.7%)
4,000 Cort Furniture Rental Corp....................................... 12.00 09/01/00 3,840,000
2,000 County Seat Stores Co............................................ 12.00 10/01/01 1,960,000
1,500 Thrifty Payless, Inc............................................. 12.25 04/15/04 1,507,500
---------------
7,307,500
---------------
RETAIL - FOOD CHAINS (4.8%)
3,000 Food 4 Less Holdings, Inc. (Series B)............................ 15.25++ 12/15/04 2,370,000
19,000 Grand Union Capital Corp. (Series A) (c)......................... 15.00++ 07/15/04 237,500
34,000 Grand Union Capital Corp. (Series A) (c)......................... 0.00 01/15/07 212,500
5,500 Purity Supreme, Inc. (Series B).................................. 11.75 08/01/99 4,675,000
---------------
7,495,000
---------------
TEXTILES (3.0%)
273 Farley, Inc. (Conv.)............................................. 0.00 01/01/12 28,354
5,534 JPS Textile Group, Inc........................................... 10.85 06/01/99 4,593,329
---------------
4,621,683
---------------
TRANSPORTATION (0.5%)
1,500 Transtar Holdings L.P. (Series B)................................ 13.375++ 12/15/03 840,000
---------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $157,832,508)..................................... 130,813,821
---------------
</TABLE>
<TABLE>
<CAPTION>
<C> <S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (4.9%)
5,000 U.S. Treasury Note............................................... 12.625 05/15/95 5,036,719
2,500 U.S. Treasury Note............................................... 11.50 11/15/95 2,578,516
---------------
TOTAL U.S. GOVERNMENT OBLIGATIONS (IDENTIFIED COST $7,777,343)........................... 7,615,235
---------------
</TABLE>
<PAGE>
HIGH INCOME ADVANTAGE TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1995 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ---------------
<C> <S> <C>
COMMON STOCKS (A) (6.8%)
BUILDING & CONSTRUCTION (2.0%)
133,483 USG Corp. (b)........................................................................... $ 3,070,109
---------------
COMPUTER EQUIPMENT (0.1%)
191,107 Memorex Telex Corp. (ADR) (Netherlands) (b)............................................. 137,368
---------------
ENTERTAINMENT/GAMING & LODGING (0.2%)
4,000 Motels of America, Inc. - 144A**........................................................ 360,000
---------------
FOODS & BEVERAGES (0.3%)
180,000 Specialty Foods Acquisition Corp. - 144A**.............................................. 495,000
---------------
HOTELS/MOTELS (0.0%)
113 Northern Holdings Industrial Corp.** (c)................................................ --
---------------
MANUFACTURING - DIVERSIFIED (3.2%)
346,812 Thermadyne Holdings Corp. (b)........................................................... 4,942,071
---------------
PUBLISHING (0.7%)
7,000 Affiliated Newspapers Investments, Inc. (Class B)....................................... 210,000
30,400 BFP Holdings, Inc. - 144A** (Class D)................................................... 836,000
---------------
1,046,000
---------------
RESTAURANTS (0.1%)
8,000 American Restaurant Group Holdings, Inc. - 144A**....................................... 144,000
---------------
RETAIL (0.2%)
76,000 Thrifty Payless Holdings, Inc. (Class C)................................................ 342,000
---------------
TOTAL COMMON STOCKS (IDENTIFIED COST $30,254,306)....................................... 10,536,548
---------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE
- ----------- ---------
<C> <S> <C> <C>
WARRANTS (A) (0.6%)
AEROSPACE (0.0%)
5,000 Sabreliner Corp. (b).......................................................... 04/15/03 50,631
---------------
CONTAINERS (0.1%)
4,000 Crown Packaging Holdings, Ltd. - 144A** (Canada).............................. 10/15/03 220,000
---------------
ENTERTAINMENT/GAMING & LODGING (0.1%)
3,263 Casino America, Inc........................................................... 11/15/96 2,039
1,000 Fitzgeralds Gaming Corp. - 144A**............................................. 03/15/99 10,000
200 Trump Plaza Holding Assoc..................................................... 06/18/96 180,000
---------------
192,039
---------------
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
---------------
<PAGE>
</TABLE>
HIGH INCOME ADVANTAGE TRUST
PORTFOLIO OF INVESTMENTS MARCH 31, 1995 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
- ----------- --------- ---------------
<C> <S> <C> <C>
RETAIL (0.3%)
4,000 County Seat Holdings Co....................................................... 10/15/98 $ 100,014
132,000 New Cort Holdings Corp........................................................ 09/01/98 280,500
---------------
380,514
---------------
RETAIL - FOOD CHAINS (0.0%)
13,861 Purity Supreme, Inc.**........................................................ 08/06/97 --
---------------
TOTAL WARRANTS (IDENTIFIED COST $574,355)................................................ 978,384
---------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE
- ----------- ----------- ---------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENT (1.4%)
REPURCHASE AGREEMENT
$ 2,193 The Bank of New York (dated 03/31/95; proceeds $2,194,216,
collateralized by $2,267,016 U.S. Treasury Bill 5.74% due
09/07/95 valued at $2,209,591) (Identified Cost $2,193,142)...... 5.875 % 04/03/95 2,193,142
---------------
TOTAL INVESTMENTS (IDENTIFIED COST $198,631,654) (D).......................... 98.1% 152,137,130
OTHER ASSETS IN EXCESS OF LIABILITIES......................................... 1.9 2,923,102
---------- -------------
NET ASSETS.................................................................... 100.0% $ 155,060,232
---------- -------------
---------- -------------
<FN>
- ----------
ADR AMERICAN DEPOSITORY RECEIPT.
* ADJUSTABLE RATE. RATE SHOWN IS THE RATE IN EFFECT AT MARCH 31, 1995.
** RESALE IS RESTRICTED TO QUALIFIED INSTITUTIONAL INVESTORS.
*** BASE INTEREST RATE 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) ACQUIRED THROUGH EXCHANGE OFFER.
(C) NON-INCOME PRODUCING, ISSUER IN BANKRUPTCY.
(D) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $198,856,200; THE
AGGREGATE GROSS UNREALIZED APPRECIATION IS $3,062,838 AND THE AGGREGATE
GROSS UNREALIZED DEPRECIATION IS $49,781,908, RESULTING IN NET UNREALIZED
DEPRECIATION OF $46,719,070.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
HIGH INCOME ADVANTAGE TRUST
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $198,631,654).......... $ 152,137,130
Interest receivable....................... 3,830,067
Prepaid expenses and other assets......... 25,920
-------------
TOTAL ASSETS...................... 155,993,117
-------------
LIABILITIES:
Payable for:
Investments purchased................... 701,069
Investment management fee............... 111,076
Accrued expenses and other payables....... 120,740
-------------
TOTAL LIABILITIES................. 932,885
-------------
NET ASSETS:
Paid-in-capital........................... 288,883,672
Net unrealized depreciation............... (46,494,524)
Accumulated undistributed net investment
income.................................. 2,599,741
Accumulated net realized loss............. (89,928,657)
-------------
NET ASSETS........................ $ 155,060,232
-------------
-------------
NET ASSET VALUE PER SHARE, 30,017,252
shares outstanding (unlimited shares
authorized of $.01 par value)...........
$5.17
-------------
-------------
</TABLE>
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME......................... $ 10,015,020
-------------
EXPENSES
Investment management fee............. 577,921
Transfer agent fees and expenses...... 75,138
Professional fees..................... 32,375
Registration fees..................... 20,112
Custodian fees........................ 17,917
Shareholder reports and notices....... 13,807
Trustees' fees and expenses........... 13,693
Other................................. 7,585
-------------
TOTAL EXPENSES.................... 758,548
-------------
NET INVESTMENT INCOME........... 9,256,472
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain..................... 10,231,207
Net change in unrealized
depreciation........................ (13,996,983)
-------------
NET LOSS.......................... (3,765,776)
-------------
NET INCREASE.................... $ 5,490,696
-------------
-------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED
MARCH 31, 1995 FOR THE YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1994
----------------------- -------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income.......................................... $ 9,256,472 $ 18,775,523
Net realized gain (loss)....................................... 10,231,207 (26,559,960)
Net change in unrealized depreciation.......................... (13,996,983) 8,035,914
----------------------- -------------------
Net increase............................................... 5,490,696 251,477
Dividends to shareholders from net investment income............. (10,265,900) (20,162,588)
----------------------- -------------------
Total decrease............................................. (4,775,204) (19,911,111)
NET ASSETS:
Beginning of period.............................................. 159,835,436 179,746,547
----------------------- -------------------
END OF PERIOD (including undistributed net investment income of
$2,599,741 and $3,609,169, respectively)........................ $ 155,060,232 $ 159,835,436
----------------------- -------------------
----------------------- -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
HIGH INCOME ADVANTAGE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES--High Income Advantage Trust (the
"Trust") is registered under the Investment Company Act of 1940, as amended, as
a diversified, closed-end management investment company. The Trust was organized
as a Massachusetts business trust on June 17, 1987 and commenced operations on
October 29, 1987.
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 Trust'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 Trust does not amortize premiums on securities.
Interest income is accrued daily except where collection is not expected.
C. FEDERAL INCOME TAX STATUS--It is the Trust'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 Trust 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
<PAGE>
HIGH INCOME ADVANTAGE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
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.
2. INVESTMENT MANAGEMENT AGREEMENT--Pursuant to an Investment Management
Agreement with Dean Witter InterCapital Inc. (the "Investment Manager"), the
Trust pays its Investment Manager a management fee, accrued weekly and payable
monthly, by applying the following annual rates to the Trust's average weekly
net assets: 0.75% to the portion of average weekly net assets not exceeding $250
million; 0.60% to the portion of average weekly net assets exceeding $250
million but not exceeding $500 million; 0.50% to the portion of average net
assets exceeding $500 million but not exceeding $750 million; 0.40% to the
portion of average net assets exceeding $750 million but not exceeding $1
billion; and 0.30% to the portion of daily net assets exceeding $1 billion.
Under the terms of the Agreement, in addition to managing the Trust's
investments, the Investment Manager maintains certain of the Trust'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 Trust 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 Trust.
3. 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 March 31, 1995 aggregated $25,930,132 and
$30,055,125, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Trust's transfer agent. At March 31, 1995, the Trust had transfer agent fees and
expenses payable of approximately $17,000.
The Trust established an unfunded noncontributory defined benefit pension
plan covering all independent Trustees of the Trust who will have served as
independent Trustees for at least five years at the time of retirement. Benefits
under this plan are based on years of service and compensation during the last
five years of service. Aggregate pension costs for the six months ended March
31, 1995 included in Trustees' fees and expenses in the Statement of Operations
amounted to $3,782. At March 31, 1995, the Trust had an accrued pension
liability of $47,974 which is included in accrued expenses in the Statement of
Assets and Liabilities.
4. SHARES OF BENEFICIAL INTEREST--
<TABLE>
<CAPTION>
CAPITAL
PAID IN
PAR VALUE OF EXCESS OF
SHARES SHARES PAR VALUE
----------- -------------- -----------
<S> <C> <C> <C>
Balance, September 30, 1993 and 1994
and March 31, 1995.............................................. 30,017,252 $ 300,172 $288,583,500
----------- -------------- -----------
----------- -------------- -----------
</TABLE>
5. DIVIDENDS--The Trust has declared the following dividends from net
investment income:
<TABLE>
<CAPTION>
DECLARATION AMOUNT PER
DATE SHARE RECORD DATE PAYABLE DATE
- ------------------ ----------- --------------- ----------------
<S> <C> <C> <C>
March 28, 1995 $0.05 April 7, 1995 April 21, 1995
April 25, 1995 $0.05 May 5, 1995 May 19, 1995
</TABLE>
<PAGE>
HIGH INCOME ADVANTAGE TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
6. FEDERAL INCOME TAX STATUS--At September 30, 1994, the Trust had approximate
net capital loss carryovers which may be used to offset future capital gains to
the extent provided by regulations which are available through September 30 in
the following years:
<TABLE>
<CAPTION>
AMOUNTS IN THOUSANDS
- ---------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002 TOTAL
- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
$1,114 $5,723 $27,616 $23,411 $95 $15,205 $73,164
- --------- --------- --------- --------- --- --------- ---------
- --------- --------- --------- --------- --- --------- ---------
</TABLE>
Capital losses incurred after October 31 ("post-October" losses) within the
taxable year are deemed to arise on the first business day of the Trust's next
taxable year. The Trust incurred and will elect to defer net capital losses
during such net capital losses of approximately $26,771,000 during fiscal 1994.
At September 30, 1994, the Trust had temporary book/tax differences
primarily attributable to post-October losses.
7. SELECTED QUARTERLY FINANCIAL DATA--
<TABLE>
<CAPTION>
QUARTERS ENDED
-------------------------------------------
3/31/95 12/31/94
-------------------- ---------------------
TOTAL* PER SHARE TOTAL* PER SHARE
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Total investment income............................................... $ 4,680 $ 0.15 $ 5,335 $ 0.18
Net investment income................................................. 4,302 0.14 4,954 0.17
Net realized and unrealized gain (loss)............................... 17,841 0.60 (21,607) (0.72)
</TABLE>
<TABLE>
<CAPTION>
QUARTERS ENDED
----------------------------------------------------------------------------------------
9/30/94 6/30/94 3/31/94 12/31/93
--------------------- --------------------- -------------------- --------------------
TOTAL* PER SHARE TOTAL* PER SHARE TOTAL* PER SHARE TOTAL* PER SHARE
---------- --------- ---------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income....... $ 5,277 $ 0.18 $ 5,137 $ 0.17 $ 5,117 $ 0.17 $ 4,998 $ 0.17
Net investment income......... 4,861 0.16 4,685 0.16 4,672 0.15 4,558 0.15
Net realized and unrealized
gain (loss).................. (12,366) (0.41) (12,517) (0.42) (1,030) (0.04) 7,389 0.25
<CAPTION>
QUARTERS ENDED
----------------------------------------------------------------------------------------
9/30/93 6/30/93 3/31/93 12/31/92
--------------------- --------------------- -------------------- --------------------
TOTAL* PER SHARE TOTAL* PER SHARE TOTAL* PER SHARE TOTAL* PER SHARE
---------- --------- ---------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total investment income....... $ 6,427 $ 0.21 $ 5,409 $ 0.18 $ 5,420 $ 0.18 $ 5,321 $ 0.18
Net investment income......... 6,002 0.20 5,012 0.17 5,005 0.17 4,894 0.16
Net realized and unrealized
gain (loss).................. 542 0.02 5,375 0.18 11,111 0.37 (8,015) (0.27)
<FN>
- ---------
* TOTALS EXPRESSED IN THOUSANDS.
</TABLE>
<PAGE>
HIGH INCOME ADVANTAGE TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED
MARCH 31, FOR THE YEAR ENDED SEPTEMBER 30,
1995 -----------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
---------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value,
beginning of
period.......... $ 5.32 $ 5.99 $ 5.81 $ 5.23 $ 4.96 $ 7.68
---------- --------- --------- --------- --------- ---------
Net investment
income.......... 0.31 0.62 0.70 0.84 0.69 1.07
Net realized and
unrealized gain
(loss)........... (0.12) (0.62) 0.30 0.33 0.27 (2.66)
---------- --------- --------- --------- --------- ---------
Total from
investment
operations...... 0.19 -- 1.00 1.17 0.96 (1.59)
Dividends from
net investment
income.......... (0.34) (0.67) (0.82) (0.59) (0.69) (1.13)
---------- --------- --------- --------- --------- ---------
Net asset value,
end of period... $ 5.17 $ 5.32 $ 5.99 $ 5.81 $ 5.23 $ 4.96
---------- --------- --------- --------- --------- ---------
---------- --------- --------- --------- --------- ---------
Market value, end
of period....... $ 5.625 $ 5.625 $ 6.125 $ 5.75 $ 4.625 $ 3.625
---------- --------- --------- --------- --------- ---------
---------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT
RETURN+......... 6.41%(1) 2.56% 22.41% 38.06% 50.89% (43.28)%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end
of period (in
thousands)...... $155,060 $159,835 $179,747 $174,713 $162,002 $158,454
Ratios to average
net assets:
Expenses....... 0.98%(2) 0.98% 0.97% 1.00% 1.07% 1.01%
Net investment
income........ 12.01%(2) 10.52% 12.14% 14.72% 14.80% 17.46%
Portfolio
turnover rate... 18%(1) 102% 140% 108% 149% 20%
<FN>
- ------------
+ TOTAL INVESTMENT RETURN IS BASED UPON THE CURRENT MARKET VALUE ON THE FIRST
AND LAST DAY OF EACH PERIOD REPORTED. DIVIDENDS AND DISTRIBUTIONS ARE ASSUMED
TO BE REINVESTED AT THE PRICES OBTAINED UNDER THE TRUST'S DIVIDEND
REINVESTMENT PLAN. TOTAL INVESTMENT RETURN DOES NOT REFLECT SALES CHARGES OR
BROKERAGE COMMISSIONS.
(1) NOT ANNUALIZED.
(2) ANNUALIZED.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
THE FINANCIAL STATEMENTS INCLUDED HEREIN HAVE BEEN TAKEN FROM THE RECORDS OF
THE TRUST WITHOUT EXAMINATION BY THE INDEPENDENT ACCOUNTANTS AND ACCORDINGLY
THEY DO NOT EXPRESS AN OPINION THERON.
<PAGE>
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn HIGH
John R. Haire INCOME
Dr. Manuel H. Johnson ADVANTAGE
Paul Kolton TRUST
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
SEMIANNUAL REPORT
MARCH 31, 1995
