<PAGE> 1
DEAN WITTER GOVERNMENT INCOME TRUST Two World Trade Center,
New York, New York 10048
LETTER TO THE SHAREHOLDERS September 30, 1997
DEAR SHAREHOLDER:
In December 1996 Federal Reserve Board Chairman Alan Greenspan hinted that a
preemptive move against rising pressure on prices might be necessary to ensure
that inflation remained under control. Almost immediately in the wake of his
comments, U.S. bond yields rose as investors grew concerned that an increase in
interest rates was imminent. The economy started 1997 with employment expanding,
personal income climbing and consumer confidence rising. Concerns regarding a
possible interest rate increase, however, still permeated the bond markets.
As anticipated, the Federal Reserve Board voted on March 25, 1997, to raise the
federal-funds rate by 25 basis points (0.25 percentage points). Although this
move initially sent stocks and bonds lower, many economists applauded the
action. This decision was viewed as a strike against inflation designed to
prolong the current economic expansion. It first appeared that the Federal
Reserve Board was poised for a series of further rate increases. But a slight
cooling of economic data, subdued inflation during the second and third quarters
and a balanced budget agreement prevented a succession of tightening moves. As a
result, interest rates declined.
During the second and third quarter, the Federal Reserve Board members continued
to express concern over the probable rise of inflationary pressures due to the
continuing strength of the economy and strong employment, but left rates
unchanged after each meeting.
Interest rates on intermediate-term U.S. Treasuries were highly volatile over
the course of the past twelve months, with five-year U.S. Treasury yields
ranging between 5.83 percent and 6.86 percent. On September 30, 1997, the
five-year U.S. Treasury note was yielding 5.99 percent, compared to 6.46 percent
twelve months earlier.
PERFORMANCE AND PORTFOLIO
On September 30, 1997, Dean Witter Government Income Trust's net asset value
(NAV) per share was $9.32, up from $9.08 on September 30,
<PAGE> 2
DEAN WITTER GOVERNMENT INCOME TRUST
LETTER TO THE SHAREHOLDERS September 30, 1997, continued
1996. Based on this increase, and including reinvestment of income dividends
totaling $0.60 per share, the Trust's total return for the fiscal year ended
September 30, 1997, was 10.25 percent. Over the same period, the Trust's market
price per share on the New York Stock Exchange (NYSE) increased from $8.25 per
share to $8.438. The Trust's total return based on its market price on the NYSE
was 9.86 percent. The Trust continued to declare income dividends at a rate of
$0.05 per share per month.
During the past twelve months the Trust's average maturity was maintained at
approximately 6.7 years. While this strategy has proven successful in 1997,
adjustments to the Trust's average maturity in the months ahead will be made as
conditions warrant and as attractive investment opportunities become available.
As of September 30, 1997, the Trust had net assets of approximately $430
million. Seventy-eight percent of the Trust's net assets were invested in
mortgage-backed securities issued by the Government National Mortgage
Association (GNMA), the Federal National Mortgage Association (FNMA) and the
Federal Home Loan Mortgage Corp. (FHLMC), four percent was invested in U.S.
Treasury securities and 16 percent was invested in U.S. government agency
obligations. The remaining two percent was held in cash equivalents.
LOOKING AHEAD
For the balance of 1997 and early into 1998, we expect U.S. economic growth to
remain healthy. The Federal Reserve Board is likely to look for a confirmation
of inordinately strong economic trends coupled with rising inflationary
pressures before considering another increase in the federal-funds rate.
We would again like to remind shareholders that the Trustees have approved a
procedure whereby the Trust may, when appropriate, 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. In accordance
with this procedure, 2,349,100 shares of the Trust were purchased on the New
York Stock Exchange over the fiscal year ended September 30, 1997.
We appreciate your support of Dean Witter Government Income Trust and look
forward to continuing to serve your investment objectives.
Very truly yours,
/S/ CHARLES A. FIUMEFREDDO
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE> 3
DEAN WITTER GOVERNMENT INCOME TRUST
RESULTS OF SPECIAL MEETING (unaudited)
* * *
On May 20, 1997, a special meeting of the Trust's shareholders was held for the
purpose of voting on two separate matters, the results of which were as follows:
(1) ELECTION OF TRUSTEES:
<TABLE>
<S> <C>
Wayne E. Hedien
For................................................................ 35,232,864
Withheld........................................................... 1,202,797
</TABLE>
The following Trustees were not standing for reelection at this meeting:
Michael Bozic, Charles A. Fiumefreddo, Edwin J. Garn, John R. Haire,
Dr. Manuel H. Johnson, Michael E. Nugent, Philip J. Purcell and John L.
Schroeder
(2) APPROVAL OF A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN THE TRUST AND DEAN
WITTER INTERCAPITAL INC. IN CONNECTION WITH THE PROPOSED MERGER OF MORGAN
STANLEY GROUP INC. WITH DEAN WITTER, DISCOVER & CO:
<TABLE>
<S> <C>
For................................................................ 33,855,874
Against............................................................ 927,476
Abstain............................................................ 1,652,311
</TABLE>
<PAGE> 4
DEAN WITTER GOVERNMENT INCOME TRUST
PORTFOLIO OF INVESTMENTS September 30, 1997
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION
AMOUNT IN AND COUPON
THOUSANDS MATURITY DATE RATE VALUE
- ------------------------------------------------------------------------------------------
<C> <S> <C> <C>
MORTGAGE-BACKED SECURITIES (77.4%)
Federal Home Loan Mortgage Corp. (8.9%)
$ 5,943 12/01/18 - 02/01/19.............................. 9.50% $ 6,340,689
17,494 07/01/09 - 08/01/20.............................. 10.00 18,948,631
11,812 08/01/14 - 05/01/19.............................. 10.50 12,971,242
------------
38,260,562
------------
Federal National Mortgage Assoc. (48.8%)
20,396 11/01/08 - 01/01/09.............................. 6.00 19,885,760
50,459 05/01/07 - 12/01/23.............................. 6.50 49,422,095
47,837 10/01/13 - 04/01/26.............................. 7.00 47,642,896
41,471 01/01/22 - 01/01/27.............................. 7.50 42,157,533
29,994 12/01/21 - 10/01/25.............................. 8.00 30,950,506
14,904 08/01/17 - 05/01/25.............................. 8.50 15,555,907
1,385 09/01/13 - 07/01/23.............................. 9.00 1,470,959
2,500 06/01/18 - 01/01/21.............................. 9.50 2,679,309
------------
209,764,965
------------
Government National Mortgage Assoc. (19.7%)
13,876 02/15/24 - 08/15/25.............................. 7.00 13,871,791
11,034 12/15/22 - 06/15/26.............................. 7.50 11,219,928
13,083 11/15/15 - 12/15/21.............................. 8.00 13,524,950
32,262 05/15/16 - 11/15/24.............................. 8.50 33,754,554
10,330 04/15/17 - 02/15/25.............................. 9.00 11,004,942
1,092 08/15/18 - 08/15/20.............................. 9.50 1,182,485
------------
84,558,650
------------
TOTAL MORTGAGE-BACKED SECURITIES
(Identified Cost $324,542,826)............................. 332,584,177
------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS (20.3%)
2,000 Federal Farm Credit Corp.
09/23/04........................................ 6.30 2,000,280
1,000 Federal Farm Credit Corp.
09/24/07........................................ 6.52 1,008,360
14,000 Federal Home Loan Banks
02/25/04 - 07/02/12............................. 0.00 8,328,990
2,000 Federal Home Loan Banks
08/15/07........................................ 6.295 1,984,480
2,500 Federal National Mortgage Assoc.
02/01/04 - 08/01/04............................. 0.00 1,650,647
92,000 Resolution Funding Corp. Coupon Strip
10/15/01 - 01/15/07............................. 0.00 55,504,395
8,000 U.S. Treasury Note
09/30/98........................................ 4.75 7,931,840
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
DEAN WITTER GOVERNMENT INCOME TRUST
PORTFOLIO OF INVESTMENTS September 30, 1997, continued
<TABLE>
<CAPTION>
PRINCIPAL DESCRIPTION
AMOUNT IN AND COUPON
THOUSANDS MATURITY DATE RATE VALUE
- ------------------------------------------------------------------------------------------
<C> <S> <C> <C>
$ 3,000 U.S. Treasury Note
02/15/07........................................ 6.25% $ 3,016,170
2,000 U.S. Treasury Note
08/15/05........................................ 6.50 2,042,340
5,000 U.S. Treasury Strip
02/15/03........................................ 0.00 3,628,750
------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Identified Cost $85,891,628).............................. 87,096,252
------------
SHORT-TERM INVESTMENT (a) (1.7%)
U.S. GOVERNMENT AGENCY
7,400 Federal Home Loan Mortgage Corp.
10/01/97 (Amortized Cost $7,400,000)............ 6.05 7,400,000
------------
TOTAL INVESTMENTS
(Identified Cost $417,834,454) (b)............... 99.4% 427,080,429
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES... 0.6 2,683,783
----- ------------
NET ASSETS....................................... 100.0% $429,764,212
===== ============
</TABLE>
- ---------------------
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $13,770,043 and the
aggregate gross unrealized depreciation is $4,524,068, resulting in net
unrealized appreciation of $9,245,975.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
DEAN WITTER GOVERNMENT INCOME TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
September 30, 1997
ASSETS:
Investments in securities, at value
(identified cost $417,834,454)....................................... $427,080,429
Cash.................................................................. 117,326
Receivable for:
Interest.......................................................... 2,461,431
Principal paydowns................................................ 715,631
Prepaid expenses and other assets..................................... 28,954
------------
TOTAL ASSETS...................................................... 430,403,771
------------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased......................... 290,873
Investment management fee......................................... 225,798
Accrued expenses and other payables................................... 122,888
------------
TOTAL LIABILITIES................................................. 639,559
------------
NET ASSETS........................................................ $429,764,212
============
COMPOSITION OF NET ASSETS:
Paid-in-capital....................................................... $445,362,729
Net unrealized appreciation........................................... 9,245,975
Accumulated undistributed net investment income....................... 389,057
Accumulated net realized loss......................................... (25,233,549)
------------
NET ASSETS........................................................ $429,764,212
============
NET ASSET VALUE PER SHARE,
46,089,300 shares outstanding
(unlimited shares authorized of $.01 par value)...................... $9.32
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
DEAN WITTER GOVERNMENT INCOME TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the year ended September 30, 1997
NET INVESTMENT INCOME:
INTEREST INCOME........................................................ $31,538,193
-----------
EXPENSES
Investment management fee.............................................. 2,589,522
Transfer agent fees and expenses....................................... 291,968
Custodian fees......................................................... 78,875
Professional fees...................................................... 68,935
Shareholder reports and notices........................................ 62,650
Registration fees...................................................... 34,534
Trustees' fees and expenses............................................ 12,851
Other.................................................................. 7,949
-----------
TOTAL EXPENSES..................................................... 3,147,284
-----------
NET INVESTMENT INCOME.............................................. 28,390,909
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain...................................................... 55,238
Net change in unrealized depreciation.................................. 9,296,771
-----------
NET GAIN........................................................... 9,352,009
-----------
NET INCREASE........................................................... $37,742,918
===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
DEAN WITTER GOVERNMENT INCOME TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR FOR THE YEAR
ENDED ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income............................ $ 28,390,909 $ 30,216,080
Net realized gain................................ 55,238 380,329
Net change in unrealized
appreciation/depreciation....................... 9,296,771 (7,305,945)
------------ ------------
NET INCREASE................................. 37,742,918 23,290,464
Dividends from net investment income............. (28,178,965) (30,343,494)
Net decrease from transactions in shares of
beneficial interest............................. (19,695,793) (28,522,051)
------------ ------------
NET DECREASE................................. (10,131,840) (35,575,081)
NET ASSETS:
Beginning of period.............................. 439,896,052 475,471,133
------------ ------------
END OF PERIOD
(Including undistributed net investment
income of
$389,057 and $177,113, respectively)......... $429,764,212 $439,896,052
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9
DEAN WITTER GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 1997
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter Government Income Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as a diversified, closed-end
management investment company. The Trust's primary investment objective is to
provide as high a level of current income as is consistent with prudent
investment and as a secondary objective, capital appreciation. The Trust
commenced operations on February 29, 1988.
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) 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; (2) when market
quotations are not readily available, including circumstances under which it is
determined by Dean Witter InterCapital Inc. (the "Investment Manager") that sale
or bid prices are not reflective of a security's market value, portfolio
securities are valued at their fair value as determined in good faith under
procedures established by and under the general supervision of the Trustees
(valuation of debt securities for which market quotations are not readily
available may be based upon current market prices of securities which are
comparable in coupon, rating and maturity or an appropriate matrix utilizing
similar factors); (3) certain portfolio securities may be valued by an outside
pricing service approved by the Trustees. The pricing service may utilize 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 securities valued by
such pricing service; and (4) short-term debt securities having a maturity date
of more than sixty days at time of purchase are valued on a mark-to-market basis
until sixty days prior to maturity and thereafter at amortized cost based on
their value on the 61st day. Short-term debt securities having a maturity date
of sixty days or less at the time of purchase are valued at amortized cost.
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.
<PAGE> 10
DEAN WITTER GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 1997, continued
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 ex-dividend date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations which may
differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Trust pays the Investment
Manager a management fee, accrued weekly and payable monthly, by applying the
annual rate of 0.60% to the Trust's weekly net assets.
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/prepayments of portfolio
securities, excluding short-term investments, for the year ended September 30,
1997 aggregated $82,028,527 and $110,236,266, respectively.
<PAGE> 11
DEAN WITTER GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 1997, continued
Dean Witter Trust FSB, an affiliate of the Investment Manager, is the Trust's
transfer agent. At September 30, 1997, the Trust had transfer agent fees and
expenses payable of approximately $5,600.
The Trust has 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 year ended September 30, 1997
included in Trustees' fees and expenses in the Statement of Operations amounted
to $2,467. At September 30, 1997, the Trust had an accrued pension liability of
$48,326 which is included in accrued expenses in the Statement of Assets and
Liabilities.
4. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
CAPITAL
PAID IN
PAR VALUE EXCESS OF
SHARES OF SHARES PAR VALUE
---------- --------- ------------
<S> <C> <C> <C>
Balance, September 30, 1995..................................................... 51,828,700 $518,287 $503,485,416
Treasury shares purchased and retired (weighted average discount 7.52%)*........ (3,390,300) (33,903) (28,488,148)
---------- -------- ------------
Balance, September 30, 1996..................................................... 48,438,400 484,384 474,997,268
Treasury shares purchased and retired (weighted average discount 8.91%)*........ (2,349,100) (23,491) (19,672,302)
Reclassification due to permanent book/tax differences.......................... -- -- (10,423,130)
---------- -------- ------------
Balance, September 30, 1997..................................................... 46,089,300 $460,893 $444,901,836
========== ======== ============
</TABLE>
- ---------------------
* The Trustees have voted to retire the shares purchased.
5. DIVIDENDS
On September 23, 1997, the Trust declared the following dividends from net
investment income:
<TABLE>
<CAPTION>
AMOUNT RECORD PAYABLE
PER SHARE DATE DATE
- --------- ----------------- ------------------
<S> <C> <C>
$0.05 October 3, 1997 October 17, 1997
$0.05 November 7, 1997 November 21, 1997
$0.05 December 5, 1997 December 19, 1997
</TABLE>
<PAGE> 12
DEAN WITTER GOVERNMENT INCOME TRUST
NOTES TO FINANCIAL STATEMENTS September 30, 1997, continued
6. FEDERAL INCOME TAX STATUS
During the year ended September 30, 1997, the Trust utilized approximately
$73,000 of its net capital loss carryover. At September 30, 1997, the Trust had
a net capital loss carryover of approximately $25,208,000, to offset future
capital gains to the extent provided by regulations, available through September
30 of the following years:
<TABLE>
<CAPTION>
AMOUNTS IN THOUSANDS
- ------------------------------------------------
1998 1999 2002 2003 2004
- ------ ---- ------ ------ ------
<S> <C> <C> <C> <C>
$5,061 $191 $8,299 $9,638 $2,019
====== ==== ====== ====== ======
</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 of
approximately $26,000 during fiscal 1997.
As of September 30, 1997, the Trust had permanent book/tax differences
attributable to an expired capital loss carryover. To reflect reclassifications
arising from these differences, paid-in-capital was charged and accumulated net
realized loss was credited $10,423,130.
<PAGE> 13
DEAN WITTER GOVERNMENT INCOME TRUST
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30*
------------------------------------------------------------
1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period............................. $ 9.08 $ 9.17 $ 8.69 $ 9.54 $ 9.72
-------- -------- -------- -------- --------
Net investment income............................................ 0.61 0.60 0.58 0.62 0.81
Net realized and unrealized gain (loss).......................... 0.19 (0.14) 0.43 (0.77) (0.29)
-------- -------- -------- -------- --------
Total from investment operations................................. 0.80 0.46 1.01 (0.15) 0.52
-------- -------- -------- -------- --------
Less dividends from net investment income........................ (0.60) (0.60) (0.60) (0.73) (0.70)
-------- -------- -------- -------- --------
Anti-dilutive effect of acquiring treasury shares................ 0.04 0.05 0.07 0.03 --
-------- -------- -------- -------- --------
Net asset value, end of period................................... $ 9.32 $ 9.08 $ 9.17 $ 8.69 $ 9.54
======== ======== ======== ======== ========
Market value, end of period...................................... $ 8.438 $ 8.25 $ 8.25 $ 7.875 $ 9.125
======== ======== ======== ======== ========
TOTAL INVESTMENT RETURN+......................................... 9.86% 7.31% 12.97% (5.97)% 6.51%
RATIOS TO AVERAGE NET ASSETS:
Expenses......................................................... 0.73% 0.73% 0.71% 0.70% 0.70%
Net investment income............................................ 6.60% 6.56% 6.50% 6.73% 8.54%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.......................... $429,764 $439,896 $475,471 $486,634 $551,659
Portfolio turnover rate.......................................... 19% 21% 25% 59% 132%
</TABLE>
- ---------------------
* The per share amounts were computed using an average number of shares
outstanding during the period.
+ Total investment return is based upon the current market value on the last day
of each period reported. Dividends are assumed to be reinvested at the prices
obtained under the Trust's dividend reinvestment plan. Total investment return
does not reflect brokerage commissions.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 14
DEAN WITTER GOVERNMENT INCOME TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF DEAN WITTER GOVERNMENT INCOME TRUST
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 Government Income Trust
(the "Trust") at September 30, 1997, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended and the financial highlights for each of the five years in the
period then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust'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
September 30, 1997 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
November 10, 1997
<PAGE> 15
(This Page Intentionally Left Blank)
<PAGE> 16
TRUSTEES
- ---------------------------------------------
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
- ---------------------------------------------
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
Rajesh K. Gupta
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
- ---------------------------------------------
Dean Witter Trust FSB
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
DEAN WITTER
GOVERNMENT
INCOME TRUST
Annual Report
September 30, 1997
