<PAGE>
DEAN WITTER PREMIER INCOME TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------
During the past 12 months, the fixed-income markets presented tremendous
challenges to managers of and investors in mortgage-backed securities (MBS) and
the volatility of these markets created a difficult and disappointing 12 months
for Dean Witter Premier Income Trust. The U.S. Treasury market, which continued
to rally throughout the year, brought U.S. home mortgage rates to 20-year lows.
These low rates have sparked extremely high levels of refinancings of
outstanding residential mortgages. With no end to these refinancings in sight,
certain MBS prices have actually fallen at the same time that the prices of U.S.
Treasury securities have hit new highs.
While much of the publicity surrounding increased mortgage refinancings has
focused on fixed-rate mortgages, prepayments of adjustable-rate mortgages (ARMs)
have also increased, establishing a ceiling over the prices of these securities,
and causing certain ARM securities to also underperform the general market.
PORTFOLIO STRATEGY AND PERFORMANCE
The Fund seeks low net asset value (NAV) volatility -- similar to that of the
3-year U.S. Treasury note -- by maintaining a portfolio of short average life
MBS and ARMs. The portfolio managers employ
a "targeted duration" approach such that
the Fund's target for NAV sensitivity is
roughly between that of the 2-and 3-year
U.S. Treasury notes. As a result,
changes in the prices and yields of
short-term U.S. Treasury securities
affect the value of the Fund's
securities. In addition, the Fund's NAV
is also affected by the prepayment rates
of the mortgage securities it holds. As
such, the Fund's MBS investment is
dependent upon the degree to which
homeowners refinance their mortgages.
The actual performance of these
securities depends upon whether
prepayment rates are higher or lower
than were anticipated at the time of
purchase of these securities.
Significant changes in prepayment rates,
such as those the market has experienced
over the last year and a half, cause MBS
to underperform the general fixed-income
markets -- this was the environment
under which the Fund operated over much
of the recent fiscal year.
The Fund is actively managed to modify
the portfolio's allocation to certain
types of investments and to change its
weighting among these sectors in
different interest rate and prepayment
rate environments. The Fund's strategy
has most recently been to restructure
the portfolio in favor of securities
with less sensitivity to prepayment
rates and to reduce the portfolio's
overall exposure to mortgage
prepayments. Reflecting this strategy,
over the past 12 months the Fund
substantially reduced its allocation to
derivative MBS such as interest-only and
principal-only stripped securities and
increased its allocation to
short-average life mortgages (those that
were issued at least 10-15 years ago and
are less likely to prepay because the
remaining loan balances are much smaller
than newly originated mortgages), as
well as slightly increasing the
allocation to ARM securities.
<PAGE>
The restructuring process is completed and is demonstrated in the portfolio
composition below:
<TABLE>
<CAPTION>
6/30/93 10/31/93
------------- -------------
<S> <C> <C>
Adjustable-Rate Mortgages 34.0% 35.0%
Short Avg. Life Fixed-Rate Mortgages 35.0% 42.0%
CMOs 15.0% 17.0%
Asset-Backed Securities/AAA Corporate Bonds 4.0% 5.9%
Interest-Only Securities (IOs)/PAC IOs 6.0% 0.1%
Principal-Only Securities 6.0% 0.0%
</TABLE>
The Fund's net asset value began the fiscal year at $9.69 per share and declined
to $9.18 per share as of October 31, 1993. Including the monthly dividends paid
during the year, and the December 31, 1992 capital gains distribution, the
Fund's total return was 2.87 percent for the year. In addition, during the
fiscal year the Fund's net assets declined to approximately $90 million from
approximately $155 million on November 1, 1992. The Fund's SEC yield and
distribution rate on October 31, 1993 were 6.54 percent and 6.10 percent,
respectively. The accompanying chart illustrates the growth of a $10,000
investment in the Fund from July 1, 1991 through the fiscal year ended October
31, 1993 versus the performance of a similar investment in the unmanaged Lehman
Brothers Mutual Fund Short (1-3) U.S. Government Index.
As described above, the portfolio restructuring process is designed to enhance
the consistency of the Fund's performance through a dramatic reduction in
prepayment exposure. Reducing prepayment exposure, however, involves liquidating
securities that typically have higher yields and reinvesting the proceeds in
other, more stable, lower-yielding instruments. The restructuring, therefore,
will cause a reduction in the Fund's monthly dividend level. Based on
conservative projections of the Fund's income-earning ability, the Fund's
dividend is being reduced to more accurately reflect the income produced by the
restructured portfolio. As of November 27, 1993, the Fund's distribution was
reduced to $0.0325 per share. This change will be reflected in the December
month-end regular dividend distribution. Based on a net asset value on that date
of $9.10 per share, this represents a distribution rate of 4.29 percent. This
compares favorably to one-and two-year U.S. Treasury securities, which were
yielding approximately 3.50 percent and 4.00 percent, respectively, on November
27, 1993.
THE FIXED-INCOME MARKETS
As noted earlier, during the fiscal year the fixed-income markets were quite
erratic, with a combination of interest rate volatility and unprecedented levels
of mortgage refinancing rates. Much of the market's instability has been the
result of conflicting economic data and the expectations regarding the economic
recovery. Short-term U.S. Treasury securities experienced a great deal of
volatility, which affects ARMs coupons and prices.
In addition, the rally in the U.S. Treasury market during most of the fiscal
year -- particularly in the 10-year note -- brought U.S. home mortgage interest
rates to their lowest levels in 20 years. At these rates, more than 80 percent
of the home mortgages in the U.S. became refinanceable from an economic
perspective, with borrowers' interest savings costs far exceeding the costs
associated with refinancing. The marketplace, therefore, has continued to
exhibit concern over rapid MBS prepayments, which have kept mortgage prices from
rallying along with the U.S. Treasury market. As a result, MBS have
underperformed their U.S. Treasury counterparts.
OUTLOOK
We believe the outlook for the Fund is positive. The securities in which the
Fund invests, which are largely affected by changes in short-term U.S. Treasury
securities and prepayments often tied to intermediate-term U.S. Treasury
securities, may be less volatile in the future. At the same time, the rate of
mortgage prepayments is expected to moderate. As these factors begin to resolve
themselves, volatility in the fixed-income markets should ease, benefiting the
MBS market as a whole and the Fund in particular. The portfolio restructuring
that has already been done is expected to result in a more stable NAV.
We appreciate your support of Dean Witter Premier Income Trust and look forward
to continuing to serve your investment needs and objectives.
Very truly yours,
Charles A. Fiumefreddo
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATES VALUE
- ----------------------------------------------------------------- ------------ ----------------- ------------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY MORTGAGE PASS-THROUGH CERTIFICATES (67.5%)
FEDERAL HOME LOAN MORTGAGE CORP. PC GOLD
$ 1,975........................................................ 8.50 % 7/01/06 $ 2,086,842
1,633........................................................ 9.00 1/01/24 1,733,355
5,227........................................................ 9.00 5/01/06 5,575,980
------------
9,396,177
------------
FEDERAL HOME LOAN MORTGAGE CORP. PC
6,396 ++..................................................... 7.375 3/01/06 6,636,211
2,282........................................................ 7.75 8/01/08 2,376,406
2,758........................................................ 9.00 4/01/03 2,896,573
------------
11,909,190
------------
FEDERAL NATIONAL MORTGAGE ASSOC.
1,796........................................................ 8.00 11/01/98 1,868,911
3,368++...................................................... 8.00 6/01/14 3,537,457
2,620........................................................ 11.00 8/01/06 2,818,367
------------
8,224,735
------------
GOVERNMENT NATIONAL MORTGAGE ASSOC.
7,752........................................................ 5.00 + 9/20/23 7,955,167
6,335........................................................ 5.50 + 10/20/22 6,513,335
7,724........................................................ 6.00 + 9/20/22 7,957,687
------------
22,426,189
------------
GOVERNMENT NATIONAL MORTGAGE ASSOC.
4,429........................................................ 7.25 11/15/04-4/15/06 4,683,539
4,000........................................................ 8.00 * 4,267,520
------------
8,951,059
------------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE
PASS-THROUGH CERTIFICATES
(IDENTIFIED COST $58,410,771) 60,907,350
------------
COLLATERALIZED MORTGAGE OBLIGATIONS (28.6%)
FEDERAL HOME LOAN MORTGAGE CORP. 1584 FB
4,996.......................................................... 2.875+ 9/15/23 5,270,513
FEDERAL NATIONAL MORTGAGE ASSOC. 1993-19E ++
5,000.......................................................... 5.00 3/25/17 4,912,500
FEDERAL NATIONAL MORTGAGE ASSOC. 1993-25C ++
5,000.......................................................... 5.00 1/25/17 4,909,589
FEDERAL HOME LOAN MORTGAGE CORP. 1288 A
3,448.......................................................... 5.10 11/15/02 3,456,227
FIRST BOSTON MORTGAGE SECURITIES CORP. 1993-M1
1,996.......................................................... 6.013+ 9/25/06 2,025,222
FEDERAL HOME LOAN MORTGAGE CORP. 1333-F
5,104.......................................................... 6.50 7/15/22 5,178,387
RESIDENTIAL FUNDING CORP. 1992-S2 CLASS A17 (TAC I/O)
2........................................................... 16856.861 + 1/25/22 64,544
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(IDENTIFIED COST $30,539,677) 25,816,982
------------
</TABLE>
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1993 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATES VALUE
- ------------------------------------------------------------------------ ------------ ---------- ------------
<S> <C> <C> <C>
CORPORATE BOND (3.4%)
International Bank for Reconstruction and Development
(Identified Cost $2,970,334)
$ 3,650................................................................ 0.00+% 8/07/97 $ 3,037,530
------------
ASSET-BACKED SECURITY (3.3%)
Peoples Bank Credit Card Master Trust 1993-1
(Identified Cost $2,997,656)
3,000............................................................... 4.80 12/15/98 3,008,438
------------
102.8 % 92,770,300
TOTAL INVESTMENTS (IDENTIFIED COST $94,918,438)(A)....................................
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS........................................ (2.8 ) (2,510,096)
---------- ------------
NET ASSETS............................................................................ 100.0 % $ 90,260,204
---------- ------------
---------- ------------
<FN>
- ---------------
</TABLE>
<TABLE>
<S> <C>
I/O -- INTEREST ONLY SECURITY
PC --PARTICIPATION CERTIFICATE
TAC --TARGETED AMORTIZATION CLASS
* SECURITIES PURCHASED ON A FORWARD COMMITMENT BASIS WITH AN APPROXIMATE PRINCIPAL AMOUNT AND NO DEFINITE MATURITY DATE;
THE ACTUAL PRINCIPAL AMOUNT AND MATURITY DATE WILL BE DETERMINED UPON SETTLEMENT.
+ FLOATING RATE SECURITIES. RATE SHOWN IS THE RATE IN EFFECT AT OCTOBER 31, 1993.
++ SOME OR ALL OF THESE SECURITIES ARE PLEDGED IN CONNECTION WITH THE REVERSE REPURCHASE AGREEMENTS.
(A) THE AGGREGATE COST OF INVESTMENTS FOR FEDERAL INCOME TAX PURPOSES IS $94,918,438; THE AGGREGATE GROSS UNREALIZED
APPRECIATION IS $1,457,141 AND THE AGGREGATE GROSS UNREALIZED DEPRECIATION IS $3,605,279, RESULTING IN NET DEPRECIATION
OF $2,148,138.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND
LIABILITIES
OCTOBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $94,918,438) (Note 1)......... $ 92,770,300
Cash............................................. 17,023
Receivable for:
Investments sold............................... 41,359,018
Interest....................................... 730,025
Principal paydowns............................. 487,226
Shares of beneficial interest sold............. 11,468
Deferred organizational expenses (Note 1)........ 79,886
Prepaid expenses and other receivables........... 215,090
-------------
TOTAL ASSETS............................... 135,670,036
-------------
LIABILITIES:
Reverse repurchase and dollar roll agreements
(Note 6)....................................... 16,063,333
Payable for:
Investments purchased.......................... 28,708,501
Shares of beneficial interest repurchased...... 384,558
Dividends to shareholders...................... 32,139
Investment management fee (Note 2)............... 41,749
Plan of distribution fee (Note 3)................ 16,699
Accrued expenses and other payables (Note 4)..... 162,853
-------------
TOTAL LIABILITIES.......................... 45,409,832
-------------
NET ASSETS:
Paid in capital.................................. 96,334,183
Accumulated net realized loss on investments..... (5,234,397)
Net unrealized depreciation on investments....... (2,148,138)
Accumulated undistributed net investment income.. 1,308,556
-------------
NET ASSETS................................. $ 90,260,204
-------------
-------------
NET ASSET VALUE PER SHARE, (9,832,273 shares
outstanding; unlimited shares authorized of
$.01 par value)................................ $9.18
-------------
-------------
MAXIMUM OFFERING PRICE PER SHARE (net asset value
plus 3.09% of net asset value)*................ $9.46
-------------
-------------
<FN>
- ------------------------------------
* On sales of $100,000 or more, the offering price is reduced.
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1993
________________________________________________________________
<TABLE>
<S> <C>
INVESTMENT INCOME:
INTEREST INCOME................................... $ 11,752,328
------------
EXPENSES
Investment management fee (Note 2).............. 657,860
Plan of distribution fee (Note 3)............... 251,868
Professional fees............................... 103,445
Transfer agent fees and expenses (Note 4)....... 61,373
Shareholder reports and notices................. 51,934
Registration fees............................... 37,688
Custody fees.................................... 30,431
Organizational expenses (Note 1)................ 29,967
Trustees' fees and expenses..................... 20,295
Other........................................... 9,569
------------
TOTAL OPERATING EXPENSES.................. 1,254,430
Interest expense from reverse repurchase agree-
ments (Note 6)................................. 862,962
------------
TOTAL EXPENSES............................ 2,117,392
------------
NET INVESTMENT INCOME................... 9,634,936
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 1):
Net realized loss on investments................ (5,234,554)
Net change in unrealized depreciation on invest-
ments.......................................... 397,575
------------
NET LOSS ON INVESTMENTS................... (4,836,979)
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS........................ $ 4,797,957
------------
------------
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1993 OCTOBER 31, 1992
------------------- ----------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income.................................................. $ 9,634,936 $ 10,189,640
Net realized (loss) gain on investments................................ (5,234,554) 3,139,374
Net change in unrealized depreciation/appreciation on investments...... 397,575 (6,463,853)
------------------- ---------------
Net increase in net assets resulting from operations................. 4,797,957 6,865,161
------------------- ---------------
Dividends and distributions to shareholders from:
Net investment income.................................................. (8,326,380) (10,246,315)
Net realized gain on investments....................................... (2,813,443) (705,315)
------------------- ---------------
(11,139,823) (10,951,630)
------------------- ---------------
Net (decrease) increase from transactions in shares of beneficial
interest (Note 5)....................................................... (58,257,655) 26,726,857
------------------- ---------------
Total (decrease) increase.......................................... (64,599,521) 22,640,388
NET ASSETS:
Beginning of period....................................................... 154,859,725 132,219,337
------------------- ---------------
END OF PERIOD (including undistributed net investment income of
$1,308,556 and $0, respectively)........................................ $ 90,260,204 $ 154,859,725
------------------- ---------------
------------------- ---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED OCTOBER 31, 1993
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INCREASE (DECREASE) IN CASH:
Cash Flows from Operating Activities:
Net investment income......................................................................... $ 9,634,936
Adjustments to reconcile net investment income to net cash provided by operating activities:
Decrease in receivables and other assets related to operations.............................. 688,776
Increase in payables related to operations.................................................. 90,324
Net amortization of discount/premium........................................................ 940,139
-------------
Net cash from operating activities........................................................ 11,354,175
-------------
Cash Flows provided by Investing Activities:
Purchases of investments...................................................................... (657,783,041)
Principal prepayments/sales of investments.................................................... 736,865,293
Net sales/maturities of short-term investments................................................ 9,053,192
-------------
Net cash provided by investing activities................................................. 88,135,444
-------------
Cash Flows used for Financing Activities:
Shares of beneficial interest sold............................................................ 31,204,346
Shares of beneficial interest repurchased..................................................... (93,806,277)
Net proceeds from issuance of reverse repurchase and dollar roll agreements................... (32,920,203)
-------------
(95,522,134)
Dividends and distributions to shareholders (net of reinvestments of $7,199,190) (3,968,373)
-------------
Net cash used for financing activities.................................................... (99,490,507)
-------------
Net decrease in cash............................................................................ (888)
Cash at beginning of year....................................................................... 17,911
-------------
CASH AT END OF YEAR............................................................................. $ 17,023
-------------
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- Dean Witter Premier Income Trust
(the "Fund") is registered under the Investment Company Act of 1940, as amended
(the "Act"), as a diversified, open-end management investment company. It was
organized on March 27, 1991 as a Massachusetts business trust and on May 15,
1991 issued 10,420 shares of beneficial interest for $100,032 to Dean Witter
Reynolds Inc., an affiliate of the Investment Manager, to effect the Fund's
initial capitalization. The Fund commenced operations on July 1, 1991.
The following is a summary of the significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity portfolio security listed or
traded on the New York or American Stock Exchange is valued at its latest
sale price on that exchange (if there were no sales that day, the security
is valued at the closing bid price); (2) all portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest bid price prior to the time of valuation; (3) when market quotations
are not readily available, portfolio securities are valued at their fair
value as determined in good faith under procedures established by and under
the general supervision of the Fund's Trustees (valuation of debt securities
for which market quotations are not readily available may also be based upon
current market prices of securities which are comparable in coupon, rating
and maturity or an appropriate matrix utilizing similar factors). Certain of
the Fund's portfolio securities for which reliable market quotations are
generally not readily available may be valued by an outside pricing service
approved by the Fund's Trustees. The pricing service utilizes a computerized
grid matrix and/or research and evaluations by its staff in determining what
it believes is the fair value of the portfolio securities valued by such
pricing service; and (4) short-term securities having a maturity date of
more than 60 days are valued on a "mark-to-market" basis, that is, at prices
based on market quotations for securities of similar type, yield, quality
and maturity, until 60 days prior to maturity and thereafter at amortized
value based on the value on the 61st day to maturity. Short-term securities
having a maturity date of 60 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). In computing net
investment income, the Fund amortizes premiums and accrues discounts on
fixed income securities in the portfolio. Realized gains and losses on
security transactions are determined on the identified cost method. Interest
income is accrued daily.
C. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records
dividends and distributions to its shareholders on the record date.
E. ORGANIZATIONAL EXPENSES -- The Fund has reimbursed the Investment
Manager, hereafter defined, for $150,000 of organizational expenses. The
reimbursed expenses have been deferred and are being amortized by the Fund
on the straight-line method over a period of five years from the
commencement of operations.
F. REPURCHASE AGREEMENTS -- The Fund's custodian takes possession on behalf
of the Fund of the collateral pledged for investments in repurchase
agreements. It is the policy of the Fund to value the underlying collateral
daily on a mark-to-market basis to determine that the value, including
accrued interest, is at least equal to the repurchase price plus accrued
interest. In the event of default of the obligation to repurchase, the Fund
has the right to liquidate the collateral and apply the proceeds in
satisfaction of the obligation.
2. INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS -- Pursuant to an
Investment Management Agreement with Dean Witter InterCapital Inc. (the
"Investment Manager"), formerly the
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
InterCapital Division of Dean Witter Reynolds Inc., the Fund pays its Investment
Manager a management fee accrued daily and payable monthly by applying the
annual rate of .50% to the net assets of the Fund determined as of the close of
each business day.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes office space and 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.
Under a Sub-Advisory Agreement between BlackRock Financial Management L.P.,
(the "Sub-Advisor") and the Investment Manager, the Sub-Advisor provides the
Fund with investment advice and portfolio management relating to the Fund's
investment in securities, subject to the overall supervision of the Investment
Manager. As compensation for its services provided pursuant to the Sub-Advisory
Agreement, the Investment Manager pays the Sub-Advisor monthly compensation
equal to 40% of its monthly compensation.
3. PLAN AND AGREEMENT OF DISTRIBUTION -- Shares of beneficial interest of the
Fund are distributed by Dean Witter Distributors Inc. (the "Distributor"), an
affiliate of the Investment Manager. Previously the shares were distributed by
Dean Witter Reynolds Inc. ("DWR"), also an affiliate of the Investment Manager,
exclusively through its own sales organization. The Fund has entered into a Plan
and Agreement of Distribution (the "Plan"), pursuant to Rule 12b-1 under the
Act, with the Distributor whereby the Distributor finances certain activities in
connection with the distribution of shares of the Fund.
Under the Plan, the Distributor bears the expense of all promotional and
distribution related activities on behalf of the Fund, except for expenses that
the Trustees determine to reimburse as described below. The following activities
and services may be provided by the Distributor under the Plan: (1) compensation
to sales representatives of DWR and other broker-dealers; (2) sales incentives
and bonuses to sales representatives and to marketing personnel in connection
with promoting sales of the Fund's shares; (3) expenses incurred in connection
with promoting sales of the Fund's shares; (4) preparing and distributing sales
literature; and (5) providing advertising and promotional activities, including
direct mail solicitation and television, radio, newspaper, magazine and other
media advertisements.
The Fund is authorized to reimburse the Distributor for specific expenses
the Distributor incurs or plans to incur in promoting the distribution of the
Fund's shares. The amount of each monthly reimbursement payment may in no event
exceed an amount equal to payment at the annual rate of .20% of the Fund's
average daily net assets during the month. For the year ended October 31, 1993,
the distribution fee accrued was at the annual rate of .20%.
Dean Witter Reynolds Inc., the Fund's principal underwriter, has informed
the Fund that it received approximately $224,000 in commissions from the sale of
the Fund's shares of beneficial interest. Such commissions are not an expense of
the Fund; they are deducted from the proceeds of sales of shares of beneficial
interest.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- The cost of
purchases and the proceeds from sales/prepayments of securities for the year
ended October 31, 1993, excluding short-term investments, were as follows:
<TABLE>
<CAPTION>
SALES/
PURCHASES PREPAYMENTS
---------------- ----------------
<S> <C> <C>
U.S. Government Agencies and Obligations............... $ 588,089,710 $ 664,184,674
Non Government CMOs.................................... 34,470,783 32,465,377
Asset-Backed Securities................................ 33,787,500 57,043,880
</TABLE>
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Dean Witter Trust Company ("DWTC"), an affiliate of the Investment Manager
and Distributor, is the Fund's transfer agent. The Fund incurred transfer agent
fees and expenses of $61,373 with DWTC for the year ended October 31, 1993, of
which $10,257 was payable at October 31, 1993.
5. SHARES OF BENEFICIAL INTEREST -- Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
OCTOBER 31, 1993 OCTOBER 31, 1992
----------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Sold................................. 2,978,014 $ 28,675,877 8,729,752 $ 86,591,731
Reinvestment of dividends and
distributions....................... 753,734 7,199,190 654,527 6,472,788
------------ --------------- ------------ ---------------
3,731,748 35,875,067 9,384,279 93,064,519
Repurchased.......................... (9,880,854) (94,132,722) (6,691,002) (66,337,662)
------------ --------------- ------------ ---------------
Net (decrease) increase.............. (6,149,106) $ (58,257,655) 2,693,277 $ 26,726,857
------------ --------------- ------------ ---------------
------------ --------------- ------------ ---------------
</TABLE>
6. REVERSE REPURCHASE AND DOLLAR ROLL AGREEMENTS -- The Fund may use reverse
repurchase and dollar roll agreements as part of its investment strategy.
Reverse repurchase agreements involve sales by the Fund of portfolio securities
concurrently with an agreement by the Fund to repurchase the same securities at
a later date at a fixed price. Generally, the effect of such a transaction is
that the Fund can recover all or most of the cash invested in the portfolio
securities involved during the term of the reverse repurchase agreement, while
it will be able to keep the interest income associated with those portfolio
securities. Such transactions are advantageous only if the interest cost to the
Fund of the reverse repurchase transaction is less than the cost of obtaining
the cash otherwise. Reverse repurchase agreements are collateralized by Fund
securities with a market value in excess of the Fund's obligation under the
contract. At October 31, 1993 the reverse repurchase agreements outstanding were
$10,855,000 with rates of 3.20% and 3.33% and maturity dates of November 1, 1993
and November 4, 1993, respectively. Securities valued at $11,211,550 were
pledged as collateral.
The Fund may enter into dollar rolls in which the Fund sells mortgage-backed
securities and simultaneously contracts to repurchase substantially similar
securities on a specified future date. Dollar rolls are accounted for as a
financing arrangement; the difference between the sale and the repurchase price
is recorded as deferred income and amortized to interest income.
7. FEDERAL INCOME TAX STATUS -- At October 31, 1993 the Fund had net capital
loss carryovers of approximately $5,235,000 which will be available through
October 31, 2001 to offset net realized gains, to the extent provided by
regulations.
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Trustees of Dean Witter Premier Income Trust
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations, of cash
flows and of changes in net assets and the financial highlights present fairly,
in all material respects, the financial position of Dean Witter Premier Income
Trust (the "Fund") at October 31, 1993, the results of its operations and its
cash flows 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 two years in the period then ended and for the period July 1, 1991
(commencement of operations) through October 31, 1991, 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 owned at October 31, 1993 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE
New York, New York
December 27, 1993
1993 FEDERAL TAX NOTICE
For the year ended October 31, 1993, the Fund paid to shareholders $0.02281 per
share from long-term capital gains.
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data and ratios for a share of beneficial interest outstanding
throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FOR THE YEAR JULY 1, 1991*
ENDED ENDED THROUGH
OCTOBER 31, 1993 OCTOBER 31, 1992 OCTOBER 31, 1991
------------------ ------------------ ----------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period............ $9.69 $9.95 $9.60
-------- ---------- ----------------
Net investment income......................... 0.73 0.71 0.26
Net realized and unrealized gain (loss) on
investments.................................. (0.45) (0.21) 0.37
-------- ---------- ----------------
Total from investment operations................ 0.28 0.50 0.63
-------- ---------- ----------------
Less dividends and distributions:
Dividends from net investment income.......... (0.61) (0.71) (0.26)
Distribution from net realized gain on
investments.................................. (0.18) (0.05) (0.02)
-------- ---------- ----------------
Total dividends and distributions............... (0.79) (0.76) (0.28)
-------- ---------- ----------------
Net asset value, end of period.................. $9.18 $9.69 $9.95
-------- ---------- ----------------
-------- ---------- ----------------
TOTAL INVESTMENT RETURN+.......................... 2.87% 5.18% 6.41%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)........ $ 90,260 $ 154,860 $ 132,219
Ratio of expenses to average net assets:
Operating expenses............................ 0.95% 0.99% 0.85%(2)
Interest expense.............................. 0.65% 0.61% 0.84%(2)
Total expenses.............................. 1.60% 1.60% 1.69%(2)(3)
Ratio of net investment income to average net
assets........................................... 7.32% 7.05% 7.50%(2)(3)
Portfolio turnover rate........................... 412% 254% 91%
<FN>
- ------------------------
+ DOES NOT REFLECT THE DEDUCTION OF SALES LOAD.
* DATE OF COMMENCEMENT OF OPERATIONS.
(1) NOT ANNUALIZED.
(2) ANNUALIZED.
(3) IF THE FUND HAD BORNE ALL EXPENSES THAT WERE ASSUMED BY THE INVESTMENT
MANAGER, THE ABOVE ANNUALIZED EXPENSE RATIO WOULD HAVE BEEN 1.85% ($.065
PER SHARE) AND THE ABOVE ANNUALIZED NET INVESTMENT INCOME RATIO WOULD HAVE
BEEN 7.34% ($.253 PER SHARE).
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TRUSTEES
Jack F. Bennett
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck DEAN WITTER
Dr. Manuel H. Johnson PREMIER INCOME
Paul Kolton TRUST
Michael E. Nugent
Albert T. Sommers
Edward R. Telling
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
LEGAL COUNSEL [PHOTO]
Sheldon Curtis
Two World Trade Center
New York, New York 10048
INDEPENDENT ACCOUNTANTS
Price Waterhouse
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
SUB-ADVISOR
BlackRock Financial Management L.P.
This report is submitted for the general
information of shareholders of the Fund.
For more detailed information about the
Fund, its officers and trustees, fees,
expenses and other pertinent information,
please see the prospectus of the Fund.
This report is not authorized for distribution
to prospective investors in the Fund unless
preceded or accompanied by an effective
prospectus.
ANNUAL REPORT
OCTOBER 31, 1993
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
<TABLE>
<CAPTION>
GROWTH OF $10,000
($ IN THOUSANDS)
LEHMAN BROTHERS
GENERAL US GOVT.
DATE TOTAL 1-3 YEAR INDEX
<S> <C> <C>
---------------------------------------------------------
July 31, 1991 $ 9,700 $10,000
---------------------------------------------------------
October 31, 1991 $10,228 $10,354
---------------------------------------------------------
October 31, 1992 $10,758 $11,197
---------------------------------------------------------
October 31, 1993 $11,067 (3) $11,845
---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR LIFE OF FUND
<S> <C> <C>
----------------------------------------------
Non-Standard 2.87 (1) 6.22 (1)
----------------------------------------------
Standard (-FESC) -0.21 (2) 4.85 (2)
----------------------------------------------
<FN>
Past performance is not predictive of future returns.
---------------------------------
_______Fund _______LEHMAN (4)
---------------------------------
- -------------------------------
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes the deduction of the maximum applicable front-end
sales charge (3%). See the Fund's current prospectus for complete details
on fees and sales charges.
(3) Closing value including the deduction of a 3% front-end sales charge,
assuming a complete redemption on October 31, 1993.
(4) The Lehman Brothers Mutual Fund Short (1-3) U.S. Government Index tracks
the performance of all U.S. Government agency and U.S. Treasury securities
with maturities of one to three years, excluding fees or expenses.
</TABLE>
