<PAGE>
DEAN WITTER PREMIER INCOME TRUST
Two World Trade Center
New York, New York 10048
Dear Shareholder:
- - -----------------------------------------------------------------------------
While the six-month period ended April 30, 1994 was characterized by
conflicting data and varying expectations regarding the U.S. economic
recovery, the financial markets have clearly responded to signs of economic
growth. As the economy improved, the markets indicated that fears of
inflationary pressure were growing as both fixed-income and equity prices
declined. The Federal Reserve Board demonstrated its resolve to quell
inflation with a series of "preemptive" measures. Three times, between
February and April, the central bank raised the federal-funds rate--the
interest rate that banks charge each other for overnight loans--moving the
target for this key interest rate from 3.00 percent to 3.75 percent. While
these moves were intended to calm fears of rising long-term rates, bond
prices across all points of the yield curve declined, with the yield on the
three-year U.S. Treasury note eclipsing the 6.00 percent mark for the first
time since early 1991, and the yield on the 30-year U.S. Treasury bond going
over 7.50 percent.
While the past six months have been difficult for all investors, Dean
Witter Premier Income Trust performed relatively well during this challenging
period, in large part a result of last year's restructuring of the portfolio.
The active management of the portfolio related to this restructuring
virtually eliminated positions in derivative securities, such as
interest-only and principal-only strips, in an effort to deliver more
consistent performance.
THE MORTGAGE-BACKED SECURITIES MARKET
Adjustable-rate mortgages (ARMs) performed relatively well in the volatile
market of the last few months, as coupons began to adjust to higher
short-term interest rates. However, ARMs with restrictive caps, which limit a
coupon's increase when a security resets, have experienced some pressure. In
reaction to the rise in interest rates, mortgage prepayments have subsided to
more normal lower levels, causing mortgage investors to focus less on fears
of rapid prepayments than on fears of extension risk. The concern is that as
interest rates continue to rise, homeowners will "lock in" their current
mortgage rates, making prepayments unlikely. This would result in a
lengthening of the average life of mortgage-backed securities (MBS). Very
seasoned, short weighted average maturity mortgages (30-year MBS that
originated in the late 1970s), in which the Fund concentrates a substantial
portion of its investments, have performed relatively well in this
environment as they are unlikely to extend significantly.
PORTFOLIO STRATEGY
The Fund seeks to maintain low net asset value (NAV) volatility through a
portfolio comprised primarily of short average life MBS and ARMs. The
portfolio managers use a "targeted duration" approach which targets an NAV
sensitivity of roughly between that of the two and three-year U.S. Treasury
notes. Therefore, if the prices of these notes decline or rise,
<PAGE>
<PAGE>
shareholders should expect to see a similar move in the Fund's NAV. In
addition, since MBS are subject to unpredictable cash flows, their prices are
affected by the rate of prepayments or the degree to which homeowners
refinance their mortgages. The yield spreads of MBS compared to their U.S.
Treasury counterparts reflect this cash flow uncertainty. As a result, MBS
perform best in stable interest rate environments where cash flows are more
predictable. Unfortunately, the interest rate environment of the past six
months has been volatile, which accounts for the underperformance of MBS. The
Fund's conservative restructuring has paid off, how- ever, as recent
performance has been good relative to both other fixed-income securities and
other short-duration funds.
The Fund's emphasis on securities with stable cash flows and limited cap
risk has paid off in the volatile environment of the last six months. For
example, the Fund has increased its weighting in very seasoned, short average
life MBS, which tend to experience fewer prepayments in a declining rate
environment since they only have a short time until maturity and their
remaining loan balances are very small. These securities also perform better
than traditional MBS in rising interest rate environments because of their
short fixed maturities and reduced extension risk. In addition, one-year
credit card asset-backed securities (ABS) have been favored because of their
AAA credit quality, short term, stable cash flow and their 40 to 50 basis
point yield advantage over U.S. Treasury securities of comparable maturities.
During the first quarter of 1994, the Fund significantly reduced its
allocation to Government National Mortgage Association (GNMA) ARMs, reducing
the portfolio's cap risk while taking advantage of the significant
yield-spread tightening that had occurred since the end of 1993. The GNMA
ARMs have been replaced by higher-coupon Federal National Mortgage
Association/Federal Home Loan Mortgage Corporation (FNMA/FHLMC) convertible
ARMs and London Interbank Offered Rate (LIBOR) based floating rate
collateralized mortgage obligations (CMOs), which have less cap risk. Because
of its emphasis on mortgage pools with higher rate caps and shorter ARM reset
periods, the Fund is expected to continue to perform well in a rising
interest rate environment relative to its peers. ARMs, which have less price
volatility than many other fixed-income securities because their coupons
reset periodically to bring them in line with current interest rates (subject
to cap limitations), should also lend a degree of future NAV stability to the
Fund as the securities within the portfolio reset to reflect the rise in
interest rates. Finally, last year's restructuring of the Fund, which reduced
its exposure to derivative securities, has proved beneficial as these
instruments have been quite unstable in the rapidly changing interest rate
environment of the past six months. The portfolio composition outlined below
highlights the changes that have been made over the past year:
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
4/30/93 10/31/93 4/30/94
--------- ---------- ---------
<S> <C> <C> <C>
Adjustable Rate Mortgages ............. 13.0% 35.0% 25.5%
Short Avg. Life Fixed-Rate Mortgages . 20.0 42.0 48.0
CMOs .................................. 36.0 17.0 12.0
Asset-Backed Securities/AAA Corporate 11.0 5.9 6.8
Bonds ................................
Interest-Only Securities (IOs)/PAC IOs 1.0 0.1 0.0
Principal-Only Securities ............. 10.0 0.0 0.0
U.S. Treasury Securities .............. 9.0 0.0 7.7
--------- ---------- ---------
100.0% 100.0% 100.0%
</TABLE>
PERFORMANCE
The Fund's net asset value began the period under review at $9.18 per
share and ended on April 30, 1994 at $8.84. For the six-month period, the
Fund distributed income dividends totaling $0.32 per share, including an
extra income dividend of $0.12 per share paid on December 31, 1993. Including
dividends paid, the Fund's total return for the six-month period was -0.20
percent. Although this modest decline is disappointing, the Fund outperformed
the unmanaged Lehman Brothers Mutual Fund Short (1-3) U.S. Government Index,
which registered a total return of -0.47 percent for the same period. The
Fund's SEC yield and distribution rate as of April 30, 1994 were 4.73 percent
and 4.41 percent, respectively.
LOOKING AHEAD
BlackRock Financial Management, the Fund's sub-advisor, believes the
Federal Reserve Board is likely to continue to tighten monetary policy over
the next four to six months to demonstrate its commitment to controlling
inflation, but also believes that recently released inflation data do not
warrant as strong a market reaction as is currently the case. As a result,
BlackRock's forecast is for continued volatility throughout the summer as
investors attempt to "price in" expected Federal Reserve Board tightening on
the short end of the yield curve. After this period of volatility, however,
the expectation is for short-term interest rates, such as that of the
two-year U.S. Treasury note, to stabilize between 5.75 and 6.00 percent by
the end of the year. In the interim, the volatility in the additional demand
for less interest-rate-sensitive investments, such as ARMs and short average
life MBS, which would aid the Fund's performance for the remainder of the
fiscal year.
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>
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 1994 (unaudited)
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATES VALUE
- - ----------- -------- ------------------- -----------
<S> <C> <C> <C> <C>
U.S. GOVERNMENT OBLIGATION (2.2%)
$ 1,250 U.S. Treasury Bonds (IDENTIFIED COST
$1,239,208) .................................. 5.125 % 3/31/96 $ 1,236,523
-----------
MORTGAGE-BACKED PASS-THROUGH SECURITIES
(79.8%)
U.S. GOVERNMENT AGENCIES (60.0%)
1,658 Federal Home Loan Mortgage Corp. ARM ......... 5.503+ 12/ 1/18 1,689,539
1,888 Federal Home Loan Mortgage Corp. ARM ......... 5.682+ 8/ 1/22 1,926,363
1,346 Federal Home Loan Mortgage Corp. .............. 7.375 3/ 1/06 1,353,081
1,515 Federal Home Loan Mortgage Corp. PC Gold ..... 8.50 7/ 1/06 1,557,168
2,104 Federal Home Loan Mortgage Corp. .............. 9.00 4/ 1/03 2,169,400
4,958 Federal Home Loan Mortgage Corp. PC Gold++ ... 9.00 5/ 1/06 - 1/ 1/24 5,136,278
-----------
13,831,829
-----------
1,443 Federal National Mortgage Assoc. ARM ......... 5.448+ 12/ 1/22 1,462,827
1,946 Federal National Mortgage Assoc. ARM ......... 5.484+ 3/ 1/22 1,984,375
3,910 Federal National Mortgage Assoc. .............. 8.00 11/ 1/98 - 06/ 1/14 3,975,610
1,745 Federal National Mortgage Assoc. .............. 11.00 7/ 1/01 1,843,896
-----------
9,266,708
-----------
1,724 Government National Mortgage Assoc. II ARM ... 6.00+ 8/20/22 1,743,626
1,737 Government National Mortgage Assoc. II ARM ... 6.50+ 4/20/23 1,758,022
-----------
3,501,648
-----------
3,983 Government National Mortgage Assoc. ........... 7.25 11/15/04 - 4/15/06 3,972,368
3,625 Government National Mortgage Assoc. ........... 8.00 7/15/07 - 12/15/67 3,692,128
-----------
7,664,496
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $34,810,812) ................ 34,264,681
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS (19.8%)
U.S. GOVERNMENT AGENCIES (10.5%)
1,464 Federal Home Loan Mortgage Corp. 1584 FB ..... 4.14+ 9/15/23 1,529,665
1,300 Federal Home Loan Mortgage Corp. 1189 G ...... 7.75+ 1/15/22 1,458,437
3,000 Federal Home Loan Mortgage Corp. 1314 HB ..... 7.00 11/15/04 3,009,277
-----------
TOTAL U.S. GOVERNMENT AGENCIES
(Identified Cost $8,358,717) ................. 5,997,379
-----------
PRIVATE ISSUES (9.3%)
1,984 First Boston Mortgage Securities Corp 1993 --
M1 ........................................... 6.012+ 9/25/06 1,907,684
1,754 Collateralized Mortgage Securities Corp.
1991-G5 ...................................... 10.20+ 4/20/17 1,828,716
1,563 Collateralized Mortgage Securities Corp.
1988-14 C (PAC) .............................. 8.00 9/25/22 1,582,901
1 Resolution Funding Corp. 1992- S2 class A17
(TAC I/O) ....................................1054.57+ 1/25/22 720
-----------
TOTAL PRIVATE ISSUES
(Identified Cost $6,252,259) ................. 5,320,021
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(IDENTIFIED COST $14,610,976) ................ 11,317,400
-----------
TOTAL MORTGAGE-BACKED PASS-THROUGH SECURITIES
(IDENTIFIED COST $49,421,788) ................ 45,582,081
----------
</TABLE>
<PAGE>
<PAGE>
Dean Witter Premier Income Trust
Portfolio of Investments April 30, 1994 (unaudited) (continued)
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATES VALUE
- - ----------- -------- ------------------- -----------
<S> <C> <C> <C> <C>
ASSET-BACKED SECURITIES (6.2%)
$2,000 First Chicago Master Trust 1990 -- AA ........ 9.25 % 6/15/95 $ 2,075,620
1,400 Standard Credit Card Trust 1993-1 ............. 9.375 8/10/96 1,454,250
-----------
TOTAL ASSET-BACKED SECURITIES
(IDENTIFIED COST $3,587,937) ................. 3,529,870
-----------
SHORT-TERM INVESTMENTS (A) (19.0%)
U.S. GOVERNMENT OBLIGATION (5.0%)
3,000 Treasury Bills (Amortized Cost $2,878,376) ... 4.99 4/ 6/95 2,865,530
-----------
REPURCHASE AGREEMENT (14.0%)
8,039 Nikko Securities Co. International, Inc.
(dated 4/29/94, proceeds $8,041,445;
collateralized by $8,200,000 Federal National
Mortgage Association 1992-38J 6.75% due
6/25/14, valued at $8,200,000) (Identified
Cost $8,039,000) ............................. 3.65 5/ 2/94 8,039,000
-----------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $10,917,376) ................ 10,904,530
-----------
TOTAL INVESTMENTS (IDENTIFIED COST $65,166,309) (B) ... 107.2% 61,253,004
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS ........ (7.2) (4,136,192)
----- -----------
NET ASSETS ............................................. 100.0% $57,116,812
===== ===========
<FN>
- - ---------------
ARM -- Adjustable rate mortgage security.
I/O -- Interest only securities.
PAC -- Planned Amortization Class.
TAC -- Targeted Amortization Class.
PC -- Participation Certificate.
+ Floating rate securities. Rate shown is the rate in effect at April 30,
1994.
++ Some or all of these securities are pledged in connection with the
Reverse Repurchase Agreement.
(a) Treasury bills were purchased on a discount basis. The interest rate
shown has been adjusted to reflect a bond equivalent yield.
(b) The aggregate cost of investments for federal income tax purposes is
$65,166,309; the aggregate gross unrealized appreciation is $403,061
and the aggregate gross unrealized depreciation is $4,316,366,
resulting in net unrealized depreciation of $3,913,305.
</TABLE>
See Notes to Financial Statements
<PAGE>
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
FINANCIAL STATEMENTS
- - -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1994 (unaudited)
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $65,166,309) (Note 1) . $61,253,004
Cash ..................................... 54,467
Receivable for:
Principal paydowns ...................... 155,163
Interest ................................ 444,937
Shares of beneficial interest sold ..... 9,705
Deferred organizational expenses
(Note 1) ............................... 65,026
Prepaid expenses ........................ 40,755
-----------
Total Assets .......................... 62,023,057
-----------
LIABILITIES:
Reverse repurchase agreement (Note 6) .. 1,000,000
Payable for:
Investments purchased ................... 3,597,810
Shares of beneficial interest
repurchased ............................ 168,572
Dividends to shareholders ............... 13,405
Investment management fee (Note 2) ..... 24,176
Plan of Distribution fee (Note 3) ...... 9,670
Interest ................................ 1,153
Accrued expenses and other payables
(Note 4) ................................ 91,459
-----------
Total Liabilities ..................... 4,906,245
-----------
NET ASSETS:
Paid-in-capital ......................... 65,892,153
Accumulated net realized loss on
investments ............................ (5,064,859)
Net unrealized depreciation on
investments ............................ (3,913,305)
Accumulated undistributed net investment
income ................................. 202,823
-----------
Net Assets ............................ $57,116,812
===========
NET ASSET VALUE PER SHARE (6,459,950
shares outstanding; unlimited shares
authorized of $.01 par value) ...... $8.84
=====
MAXIMUM OFFERING PRICE PER SHARE (net
asset value plus 3.09% of net asset
value)* ............................. $9.11
=====
</TABLE>
STATEMENT OF OPERATIONS For the six months
ended April 30, 1994 (unaudited)
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
INTEREST INCOME ..................... $2,109,710
----------
EXPENSES
Investment management fee (Note 2) 178,209
Plan of distribution fee (Note 3) . 61,256
Professional fees ................. 45,744
Transfer agent fees and expenses .. 38,178
Shareholder reports and notices ... 25,136
Trustees' fees and expenses ....... 15,538
Organizational expenses (Note 1) .. 14,860
Registration fees ................. 13,130
Custodian fees .................... 11,476
Other ............................. 11,468
----------
Total Operating Expenses ......... 414,995
Interest expense .................. 139,761
----------
Total Expenses ................... 554,756
----------
Net Investment Income ........... 1,554,954
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (Note 1):
Net realized gain on investments ... 169,538
Net change in unrealized
<PAGE>
depreciation on investments ........ (1,765,167)
-----------
Net Loss on Investments ............ (1,595,629)
-----------
Net Decrease in Net Assets
Resulting from Operations ...... $ (40,675)
===========
<FN>
- - ---------------
* On sales of $100,000 or more, the offering price is reduced.
</TABLE>
See Notes to Financial Statements
<PAGE>
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
FINANCIAL STATEMENTS (continued)
- - -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
APRIL 30, 1994 ENDED OCTOBER
(UNAUDITED) 31, 1993
-------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ................................................ $ 1,554,954 $ 9,634,936
Net realized gain (loss) on investments .............................. 169,538 (5,234,554)
Net change in unrealized depreciation on investments ................. (1,765,167) 397,575
------------- -------------
Net increase (decrease) in net assets resulting from operations ..... (40,675) 4,797,957
------------- -------------
Dividends and distributions to shareholders from:
Net investment income ................................................ (2,660,687) (8,326,380)
Net realized gain on investments ..................................... -- (2,813,443)
------------ -------------
(2,660,687) (11,139,823)
------------ -------------
Net decrease from transactions in shares of beneficial interest (Note
5) ..................................................................... (30,442,030) (58,257,655)
------------ -------------
Total decrease
NET ASSETS: ........................................................... (33,143,392) (64,599,521)
Beginning of period ................................................... 90,260,204 154,859,725
------------ ------------
End of period (including undistributed net investment income of
$202,823 and $1,308,556, respectively) ................................ $ 57,116,812 $ 90,260,204
============ ============
</TABLE>
See Notes to Financial Statements
<PAGE>
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
FINANCIAL STATEMENTS (unaudited) (continued)
- - -----------------------------------------------------------------------------
STATEMENT OF CASH FLOWS For the six months ended April 30, 1994
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
INCREASE (DECREASE) IN CASH:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net investment income ...................................................................... $ 1,554,954
Adjustments to reconcile net investment income to net cash provided by operating
activities:
Decrease in receivables and other assets related to operations ............................ 474,283
Decrease in payables related to operations ................................................ (94,843)
Net amortization of discount/premium ...................................................... 139,479
-------------
Net cash from operating activities ....................................................... 2,073,873
-------------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Purchases of investments ................................................................... (168,389,613)
Principal prepayments/sales of investments ................................................. 225,561,104
Net purchases/sales of short-term investments .............................................. (10,909,172)
-------------
Net cash provided by investing activities ................................................ 46,262,319
-------------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Shares of beneficial interest sold ......................................................... 1,641,364
Shares of beneficial interest repurchased .................................................. (33,726,114)
Net proceeds from issuance of reverse repurchase agreements ................................ (15,063,333)
-------------
(47,148,083)
Dividends to shareholders (net of reinvested dividends of $1,528,756) ...................... (1,150,665)
-------------
Net cash used for financing activities ................................................... (48,298,748)
-------------
Net increase in cash ....................................................................... 37,444
Cash at beginning of period ................................................................ 17,023
-------------
Cash at end of period ...................................................................... $ 54,467
=============
Cash paid during the period for interest .................................................... $ 138,608
=============
</TABLE>
See Notes to Financial Statements
<PAGE>
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited)
- - -----------------------------------------------------------------------------
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 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 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 that 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
<PAGE>
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- - -----------------------------------------------------------------------------
investment income or distributions in excess of net realized capital gains.
To the extent they exceed net investment income and net realized capital
gains for tax purposes, they are reported as distributions of
paid-in-capital.
E. Organizational Expenses - The 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"), 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.
On June 16, 1994, the Sub-Advisor announced that it had entered into an
agreement to be acquired by PNC Bank, N.A. ("PNC"). The acquisition, which is
subject to regulatory approval, is expected to occur prior to the end of the
calendar year, at which time the Sub-Advisor would become a subsidiary of PNC
Investment Management Research, the holding company for PNC's asset
management businesses.
The proposed acquisition would constitute an assignment of the
Sub-Advisory Agreement between the Investment Manager and the Sub-Advisor.
Under federal securities laws, an assignment of the Sub-Advisory Agreement
would result in its immediate termination; therefore, the Fund's Trustees
will determine what actions to take prior to the assignment. Those actions
may include convening a shareholder meeting to approve a new investment
advisory agreement.
<PAGE>
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- - -----------------------------------------------------------------------------
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. 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 six months ended
April 30, 1994, the distribution fee accrued was at the annual rate of .19%.
The Distributor has informed the Fund that for the six months ended April
30, 1994, it received approximately $13,600 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 six
months ended April 30, 1994, excluding short-term investments, were as
follows:
<TABLE>
<CAPTION>
SALES/
PURCHASES PREPAYMENTS
-------------- --------------
<S> <C> <C>
U.S. Government Agencies and Obligations $136,253,968 $117,853,456
Private Issue Collateralized Mortgage 3,437,016 3,005,786
Obligations ............................
Asset-Backed Securities ................. 3,587,938 3,010,781
</TABLE>
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At April 30, 1994 the Fund had
transfer agent fees and expenses payable of approximately $10,400.
<PAGE>
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- - -----------------------------------------------------------------------------
5. SHARES OF BENEFICIAL INTEREST - Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED APRIL FOR THE YEAR ENDED OCTOBER
30, 1994 31, 1993
------------------------------ -----------------------------
SHARES AMOUNT SHARES AMOUNT
------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
Sold ......................... 165,921 $ 1,656,261 2,978,014 $ 28,675,877
Reinvestment of dividends and
distributions ............... 169,956 1,528,756 753,734 7,199,190
---------- ------------ ----------- ------------
335,877 3,185,017 3,731,748 35,875,067
Repurchased .................. (3,708,200) (33,627,047) (9,880,854) (94,132,722)
---------- ------------ ----------- ------------
Net decrease ................. (3,372,323) $(30,442,030) (6,149,106) $(58,257,655)
========== ============ =========== ============
</TABLE>
6. REVERSE REPURCHASE AND DOLLAR ROLL AGREEMENTS - 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 only advantageous 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 securities with a market value in excess of the Fund's
obligation under the contract. At April 30, 1994, the reverse repurchase
agreement outstanding was $1,000,000 with rates of 4.15% and maturity date of
May 18, 1994. Security valued at $1,030,000 was pledged as collateral.
The Fund enters into mortgage dollar rolls in which the Fund sells
mortgage securities for delivery in the current month, realizing a gain or
loss, and simultaneously contracts to repurchase somewhat similar (same type,
coupon and maturity) securities on a specified future date. During the roll
period, the Fund forgoes principal and interest paid on the securities. The
Fund is compensated by the interest earned on the cash proceeds of the
initial sale and by the lower repurchase price at the future date. The
difference between the sale proceeds and the lower repurchase price is taken
into income. The Fund maintains a segregated account, the dollar value of
which is equal to its obligations, in respect to dollar rolls.
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. For the six months ended April 30, 1994, the Fund had
approximately $170,000 in net realized gains.
<PAGE>
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
FINANCIAL HIGHLIGHTS
- - -----------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX MONTHS FOR THE YEAR FOR THE YEAR JULY 1, 1991*
ENDED APRIL 30, ENDED OCTOBER ENDED OCTOBER THROUGH OCTOBER
1994 (UNAUDITED) 31, 1993 31, 1992 31, 1991
------------------ ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period $ 9.18 $ 9.69 $ 9.95 $ 9.60
------------------ ---------------- ---------------- ----------------
Net investment income .............. 0.22 0.73 0.71 0.26
Net realized and unrealized gain
(loss) on investments ............. (0.24) (0.45) (0.21) 0.37
------------------ ---------------- ---------------- ----------------
Total from investment operations .... (0.02) 0.28 0.50 0.63
------------------ ---------------- ---------------- ----------------
Less dividends and distributions:
Dividends from net investment
income ............................ (0.32) (0.61) (0.71) (0.26)
Distribution from net realized gain
on investments .................... -0- (0.18) (0.05) (0.02)
------------------ ---------------- ---------------- ----------------
Total dividends and distributions .. (0.32) (0.79) (0.76) (0.28)
------------------ ---------------- ---------------- ----------------
Net asset value, end of period ..... $ 8.84 $ 9.18 $ 9.69 $ 9.95
================== ================ ================ ================
TOTAL INVESTMENT RETURN+ ............. (0.20)%(1) 2.87% 5.18% 6.41%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) .......................... $57,117 $90,260 $154,860 $132,219
Ratio of expenses to average net
assets:
Operating expenses ................. 1.16%(2) 0.95% 0.99% 0.85%(2)
Interest expense ................... 0.39%(2) 0.65% 0.61% 0.84%(2)
Total expenses .................... 1.55%(2) 1.60% 1.60% 1.69%(2)(3)
Ratio of net investment income to
average net assets .................. 4.36%(2) 7.32% 7.05% 7.50%(2)(3)
Portfolio turnover rate .............. 191% 412% 254% 91%
<FN>
- - ---------------
+ Does not reflect the deduction of sales load.
* Date of commencement of operations.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all expenses that were assumed by the Investment
Manager, the above annualized expense ratio would have been 1.85%
($.065 per share) and the above annualized net investment income ratio
would have been 7.34% ($.253 per share).
See Notes to Financial Statements
</TABLE>
<PAGE>
<PAGE>
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
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
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.
The financial statements included herein have been taken from the records of
the Fund without examination by the independent accountants and accordingly
they do not express an opinion thereon.
This report is submitted for the general information of shareholders of
the Fund. For more detailed information about the Fund, its officers and
trustees, fees, expenses and other pertinent information, please see
the prospectus of the Fund.
This report is not authorized for distribution to prospective investors
in the Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER
PREMIER
INCOME
TRUST
SEMIANNUAL REPORT
APRIL 30, 1994
