<PAGE>
DEAN WITTER PREMIER INCOME TRUST TWO WORLD TRADE CENTER, NEW YORK, NEW YORK
10048
LETTER TO THE SHAREHOLDERS
DEAR SHAREHOLDER:
Characterized by large swings in interest rates across the yield curve, the
semiannual reporting period ended April 30, 1995, provided a challenging
investment environment for the fixed-income markets, including the Dean Witter
Premier Income Trust.
In contrast to the year-long increase in interest rates in 1994, the fixed-
income markets have rallied sharply during the first four months of 1995. This
rally, which has caused interest rates to decline as prices have increased, has
been caused largely by modest inflationary data and the perception that the
Federal Reserve Board's proactive attempts to contain inflation and provide a
"soft landing" for the economy (modest economic growth with little or no
inflation) may have been successful.
The Federal Reserve's seventh monetary intervention on February 1, 1995 was a 50
basis point increase in the Federal funds rate, which brought the overnight
lending rate that banks charge each other to borrow cash to 6.00 percent. The
central bank's continued efforts to combat inflation appear to be effective, as
the belief that inflation will remain low has resulted in interest rates falling
dramatically, particularly in recent weeks. The yield of the 2-year U.S.
Treasury note (the U.S. Treasury security that most closely reflects the
interest rate sensitivity of the Trust) has fallen over 70 basis points since
October 31, 1994. On April 30, 1995, the yield of the 2-year U.S. Treasury note
was 6.59 percent.
PERFORMANCE AND PORTFOLIO STRATEGY
For the six-month period ended April 30, 1995, Dean Witter Premier Income Trust
posted a total return of 4.11 percent, compared to a return of 3.31 percent for
the Lehman Brothers Short (1-3 year) U.S. Government Index. During the reporting
period, the Fund paid distributions totaling $.40 per share, including an extra
income dividend of $.149 paid on December 30, 1994. The Fund's monthly dividend
has remained consistent, paying $0.0417 per share. As of April 30, 1995, the
Fund's distribution rate was 5.57 percent and its SEC yield was 5.51 percent.
The Fund attempts to maintain a net asset value volatility close to that of a
2-year Treasury security by actively managing a portfolio of high-quality,
short-duration fixed-income securities, including adjustable
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
LETTER TO THE SHAREHOLDERS, CONTINUED
and fixed-rate mortgage-backed securities, U.S. Treasury securities,
Collateralized Mortgage Obligations (CMOs) and fixed- and floating-rate
asset-backed securities (ABS). By maintaining a duration close to its benchmark,
changes in the Fund's net asset value would be expected to reflect changes in
the value of the 2-year U.S. Treasury note. (Duration measures a bond's
sensitivity to interest rate changes. The effect of interest rate fluctuations
on a bond fund can be estimated by multiplying its duration by the percentage
rates rise or fall.)
The Fund's portfolio is actively managed to provide for diversification across a
number of sectors and to allocate the Fund's assets to reflect the portfolio
manager's relative value analysis. The following chart provides a comparison of
the Fund's portfolio as of the end of the Fund's last fiscal year of operations
on October 31, 1994 and the end of this semiannual period (April 30, 1995).
<TABLE>
<CAPTION>
PERCENT OF FUND ASSETS
ON:
SECURITY TYPE 4/30/95 10/31/94
- ------------------------------------------------------------------------------------------------------------ --------- -----------
<S> <C> <C>
Adjustable Rate Mortgage Securities (ARMs).................................................................. 25.1 25.1
Fixed-Rate Asset Backed Securities (ABS).................................................................... 16.2 18.8
Floating Rate Asset Backed Securities (ABS)................................................................. 10.5 9.0
U.S. Treasury Securities.................................................................................... 11.1 16.7
Short Average Life Mortgage-Backed Securities............................................................... 18.3 17.2
Collateralized Mortgage Obligations (CMOs).................................................................. 14.1 4.8
Small Business Administration Securities (SBAs)............................................................. 4.8 0.0
Cash........................................................................................................ 0.0 8.4
</TABLE>
The most significant reallocation of assets in the portfolio is seen in the
increased allocation to short average life sequential pay CMOs from 4.8 percent
to 14.1 percent. These securities, also referred to as "plain vanilla" CMOs,
offer a relatively high degree of prepayment protection while yielding
approximately 100 basis points over U.S. Treasury securities with a comparable
duration. Additionally, the Fund allocated almost 5 percent of net assets to
Small Business Administration (SBA) floating-rate securities. The underlying
assets of these securities are loans made to small businesses which are
guaranteed by the full faith and credit of the U.S. government. These
securities, which are similar to ARMs in that they have coupons which
periodically adjust to a spread over a specified index, offer excellent
prepayment protection. The Fund's allocation to agency-backed (GNMA, FNMA,
FHLMC) ARMs remained at approximately 25 percent of net assets, as their
periodic coupon resets help to make them less sensitive to interest rate
fluctuations than some fixed-rate securities. GNMA ARMs performed particularly
well relative to other short duration products as increased demand met with a
sharp decrease in supply during the first quarter of 1995.
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
LETTER TO THE SHAREHOLDERS, CONTINUED
LOOKING AHEAD
Although the recent market rally has afforded fixed income investors an
opportunity to partially recoup losses suffered in 1994, BlackRock Financial
Management, the Fund's sub-advisor, remains cautiously optimistic concerning the
near-term future of the bond market. Investor sentiment clearly indicates that
the inflationary fears that consumed the market during most of 1994 have
dissipated. However, the steep decline in interest rates could stimulate a
resurgence in consumption and increase the potential for inflationary pressures.
Other factors which may influence the market are the momentum with which the
economy entered 1995 and the continued weakness of the dollar.
Should the Federal Reserve Board's vigilance toward inflation continue and the
economy continue to respond with low absolute levels of inflation, BlackRock
expects the performance of the fixed income markets to remain strong and looks
for a possible stabilization of interest rates towards year end. The Fund's
portfolio will continue to be actively managed to add value by both taking
advantage of price dislocations in the short duration market and through sector
rotation.
We appreciate your support of Dean Witter Premier Income Trust and look forward
to continuing to serve your long-term financial needs.
Very truly yours,
[SIG]
Charles A. Fiumefreddo
CHAIRMAN OF THE BOARD
ADDITIONAL INFORMATION (UNAUDITED)
On February 17, 1995, a special meeting of shareholders of the Fund was held for
the purpose of voting on approval or disapproval of a new Sub-Advisory Agreement
between Dean Witter InterCapital Inc. and BlackRock Financial Management, Inc.
The results of the vote on the proposal were as follows:
<TABLE>
<CAPTION>
VOTE NO. OF SHARES
- --------------------------------------------------------------------------------------------------------------- -----------------
<S> <C>
For............................................................................................................ 2,365,059
Against........................................................................................................ 47,781
Abstain........................................................................................................ 294,817
</TABLE>
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATES VALUE
- ---------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (11.6%)
$ 3,770 U.S. Treasury Note++............................... 6.00 % 06/30/96 $ 3,752,328
300 U.S. Treasury Note++............................... 6.875 02/28/97 301,453
--------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $4,021,237)................................................ 4,053,781
--------------
MORTGAGE-BACKED SECURITIES (48.6%)
U.S. GOVERNMENT AGENCIES
995 Federal Home Loan Mortgage Corp. ARM............... 6.129+ 02/01/18 989,304
1,094 Federal Home Loan Mortgage Corp. PC Gold........... 8.50 07/01/06 1,119,897
3,123 Federal Home Loan Mortgage Corp. PC Gold........... 9.00 05/01/06 3,241,032
--------------
5,350,233
--------------
779 Federal National Mortgage Assoc.++................. 8.00 11/01/98 785,053
998 Federal National Mortgage Assoc. ARM............... 5.596+ 02/01/25 996,615
1,199 Federal National Mortgage Assoc. ARM............... 7.446+ 12/01/22 1,225,653
1,241 Federal National Mortgage Assoc. ARM............... 7.856+ 12/01/20 1,253,977
--------------
4,261,298
--------------
1,000 Government National Mortgage Assoc. ARM............ 6.50 * 1,001,875
1,651 Government National Mortgage Assoc................. 7.25 11/05/04 - 1,635,979
04/15/06
2,895 Government National Mortgage Assoc. II............. 7.50 03/20/25 2,961,079
--------------
5,598,933
--------------
848 Small Business Administration ARM.................. 6.75 + 08/15/16 854,362
885 Small Business Administration ARM.................. 6.875+ 09/25/16 895,210
--------------
1,749,572
--------------
TOTAL MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $16,947,908)............................................... 16,960,036
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS (17.6%)
U.S. GOVERNMENT AGENCIES (14.8%)
940 Federal Home Loan Mortgage Corp. G 17 F............ 7.00+ 07/25/23 938,797
1,153 Federal National Mortgage Assoc. 1990-60 J (PAC)... 9.00 06/25/17 1,169,840
535 Federal National Mortgage Assoc. 1991-49 D (PAC)... 8.00 05/25/05 537,887
1,219 Federal National Mortgage Assoc. 1991-113 (PAC).... 8.50 11/25/18 1,230,117
1,164 Federal National Mortgage Assoc. Strip I2.......... 11.50 04/01/09 1,289,246
--------------
5,165,887
--------------
PRIVATE ISSUES (2.8%)
1 Resolution Funding Corp. 1992-S2 A17 (TAC I/O)..... 7.92+ 01/25/22 458
973 Resolution Trust Corp. 1992-9 A2B.................. 8.00 07/25/29 977,631
--------------
978,089
--------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(IDENTIFIED COST $9,241,866)................................................ 6,143,976
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
ASSET-BACKED SECURITIES (28.5%)
$ 1,000 Banc One Credit Card Master Trust
1994-B A........................................... 7.55 % 12/15/99 $ 1,013,120
1,500 Chase Manhattan Credit Card Master Trust 1991-1
A.................................................. 8.75 08/15/99 1,527,645
1,400 Colonial Credit Card Trust 1992-A A................ 6.80 08/15/97 1,401,750
1,100 First Chicago Master Trust II 1991-D A............. 8.40 06/15/98 1,116,500
1,000 First Chicago Master Trust II 1992-E A............. 6.25 08/15/99 982,810
1,400 First USA Credit Card Master Trust
1994-4 A........................................... 7.144+ 08/15/03 1,402,184
1,500 Household Affinity Credit Card Master Trust 1
1993-1 A........................................... 6.957+ 09/15/00 1,495,305
1,000 MBNA Master Credit Card Trust 1994-C A............. 7.012+ 03/15/04 1,000,000
--------------
TOTAL ASSET-BACKED SECURITIES
(IDENTIFIED COST $9,931,293)................................................ 9,939,314
--------------
SHORT-TERM INVESTMENT (0.4%)
REPURCHASE AGREEMENT
161 Bank of New York (dated 04/28/95, proceeds
$160,912, collateralized by $163,386 U.S. Treasury
Note 7.50% due 02/29/96 valued at $166,798)
(Identified Cost $160,831)......................... 6.0625 05/01/95 160,831
--------------
TOTAL INVESTMENTS
(IDENTIFIED COST $40,303,135) (A)................ 106.7 $37,257,938
LIABILITIES IN EXCESS OF OTHER ASSETS............ (6.7) (2,345,979)
----- -----------
NET ASSETS....................................... 100.0 % $34,911,959
----- -----------
----- -----------
<FN>
- ---------------------
ARM Adjustable rate mortgage.
I/O Interest-only security.
PC Participation Certificate.
PAC Planned Amortization Class.
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 April 30,
1995.
++ Some or all of these securities are pledge as collateral in connection
with the reverse repurchase agreement.
(a) The aggregate cost of investments for federal income tax purposes is
$40,304,015; the aggregate gross unrealized appreciation is $430,049 and
the aggregate gross unrealized depreciation is $3,476,126, resulting in
net unrealized depreciation of $3,046,077.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $40,303,135)............................. $37,257,938
Receivable for:
Investments sold........................................ 4,802,367
Interest................................................ 276,752
Principal paydowns...................................... 26,880
Shares of beneficial interest sold...................... 14,647
Deferred organizational expenses............................ 35,057
Prepaid expenses and other assets........................... 31,290
-----------
TOTAL ASSETS........................................... 42,444,931
-----------
LIABILITIES:
Reverse repurchase agreements............................... 4,355,070
Payable for:
Investments purchased................................... 3,046,562
Interest purchased...................................... 14,917
Investment management fee............................... 14,514
Dividends to shareholders............................... 11,123
Plan of distribution fee................................ 5,806
Shares of beneficial interest repurchased............... 1,400
Accrued expenses and other payables......................... 83,580
-----------
TOTAL LIABILITIES...................................... 7,532,972
-----------
NET ASSETS:
Paid-in-capital............................................. 44,357,836
Net unrealized depreciation................................. (3,045,197)
Accumulated undistributed net investment income............. 91,658
Accumulated net realized loss............................... (6,492,338)
-----------
NET ASSETS............................................. $34,911,959
-----------
-----------
NET ASSET VALUE PER SHARE,
4,001,539 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$8.72
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $1,531,025
----------
EXPENSES
Investment management fee................................... 94,946
Professional fees........................................... 52,910
Shareholder reports and notices............................. 35,347
Plan of distribution fee.................................... 31,673
Transfer agent fees and expenses............................ 22,321
Registration fees........................................... 18,307
Organizational expenses..................................... 14,860
Trustees' fees and expenses................................. 11,932
Custodian fees.............................................. 7,470
Other....................................................... 6,985
----------
TOTAL OPERATING EXPENSES............................... 296,751
Interest expense............................................ 55,567
----------
TOTAL EXPENSES......................................... 352,318
----------
NET INVESTMENT INCOME.................................. 1,178,707
----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss........................................... (74,765)
Net change in unrealized depreciation....................... 379,293
----------
NET GAIN............................................... 304,528
----------
NET INCREASE................................................ $1,483,235
----------
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<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, 1995 ENDED
(UNAUDITED) OCTOBER 31, 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 1,178,707 $ 3,268,827
Net realized loss........................................... (74,765) (1,183,176)
Net change in unrealized depreciation....................... 379,293 (1,276,352)
------------------ ----------------
NET INCREASE........................................... 1,483,235 809,299
------------------ ----------------
Dividends to shareholders from net investment income........ (1,763,550) (3,900,882)
Net decrease from transactions in shares of beneficial
interest.................................................. (8,682,986) (43,293,361)
------------------ ----------------
TOTAL DECREASE......................................... (8,963,301) (46,384,944)
NET ASSETS:
Beginning of period......................................... 43,875,260 90,260,204
------------------ ----------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$91,658 AND $676,501, RESPECTIVELY)..................... $34,911,959 $ 43,875,260
------------------ ----------------
------------------ ----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
INCREASE (DECREASE) IN CASH:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net investment income....................................... $ 1,178,707
Adjustments to reconcile net investment income to net cash
from operating activities:
Decrease in receivables and other assets related to
operations............................................ 85,394
Increase in payables related to operations.............. 1,748
Net amortization of discount/premium.................... (75,451)
------------
NET CASH FROM OPERATING ACTIVITIES..................... 1,190,398
------------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Purchases of investments.................................... (77,995,547)
Principal sales/prepayments of investments.................. 79,091,063
Net sales of short-term investments......................... 3,940,206
------------
NET CASH PROVIDED BY INVESTING ACTIVITIES.............. 5,035,722
------------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Shares of beneficial interest sold.......................... 176,397
Shares of beneficial interest repurchased................... (10,063,240)
Net proceeds from issuance of reverse repurchase
agreements................................................ 4,355,070
------------
(5,531,773)
Dividends to shareholders (net of reinvested dividends of
$1,078,565)............................................... (700,027)
------------
NET CASH USED FOR FINANCING ACTIVITIES................. (6,231,800)
------------
Net decrease in cash........................................ (5,680)
Cash at beginning of year................................... 5,680
------------
Cash At End Of Year..................................... $ --
------------
------------
CASH PAID DURING THE YEAR FOR INTEREST................. $ 53,192
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (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. The Fund was organized as a Massachusetts
business trust on March 27, 1991 and commenced operations on July 1, 1991.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York or American Stock Exchange is valued at its latest sale price on that
exchange prior to the time when assets are valued; if there were no sales that
day, the security is valued at the latest bid price; (2) all other portfolio
securities for which over-the-counter market quotations are readily available
are valued at the latest available bid price prior to the time of valuation; (3)
when market quotations are not readily available, 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); (4)
certain of the Fund's portfolio securities may be valued by an outside pricing
service approved by the Trustees. The pricing service utilizes a matrix system
incorporating security quality, maturity and coupon as the evaluation model
parameters, and/or research and evaluations by its staff, including review of
broker-dealer market price quotations, if available, in determining what it
believes is the fair valuation of the portfolio securities valued by such
pricing service; and (5) short-term debt securities having a maturity date of
more than sixty days at time of purchase are valued on a mark-to-market basis
until sixty days prior to maturity and thereafter at amortized cost based on
their value on the 61st day. Short-term debt securities having a maturity date
of sixty days or less at the time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method. In
computing net investment income, the Fund amortizes premiums and accrues
discounts on securities purchased based on the respective life of the
securities. Interest income is accrued daily.
C. DOLLAR ROLLS -- The Fund may enter into dollar rolls in which the Fund sells
securities for delivery and simultaneously contracts to repurchase substantially
similar securities at the current
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) CONTINUED
sales price on a specified future date. The difference between the current sales
price and the lower forward price for the future purchase (often referred to as
the "drop") is amortized over the life of the dollar roll.
D. 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.
E. 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 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.
F. ORGANIZATIONAL EXPENSES -- Dean Witter InterCapital Inc. (the "Investment
Manager") paid the organizational expenses of the Fund in the amount of
approximately $150,000. Such expenses have been deferred and are being amortized
on the straight-line method over a period not to exceed five years from the
commencement of operations.
2. INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
Pursuant to an Investment Management Agreement, the Fund pays its Investment
Manager a management fee, accrued daily and payable monthly, by applying the
annual rate of 0.50% to the net assets of the Fund determined as of the close of
each business day.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) CONTINUED
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, Inc. (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 February 28, 1995, the Sub-Advisor was acquired by PNC Bank, NA ("PNC").
Following the acquisition, the Sub-Advisor has become a wholly-owned corporate
subsidiary of PNC Asset Management Group, the holding company for PNC's asset
management business.
3. PLAN OF DISTRIBUTION
Dean Witter Distributors Inc. (the "Distributor"), an affiliate of the
Investment Manager, is the distributor of the Fund's shares and, in accordance
with a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act,
finances certain expenses 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, and expenses of Account Executive of Dean Witter Reynolds Inc.,
an affiliate of the Investment Manager and Distributor, and other selected
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
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) CONTINUED
reimbursement payment may in no event exceed an amount equal to a payment at the
annual rate of 0.20% of the Fund's average daily net assets during the month.
For the six months ended April 30, 1995, the distribution fee was accrued at the
annual rate of 0.17%.
The Distributor has informed the Fund that for the six months ended April 30,
1995, it received approximately $700 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 beneficial interest.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales/prepayments of portfolio
securities, excluding short-term investments, for the six months ended April 30,
1995 were $76,676,123, and $79,940,956, respectively. Included in the
aforementioned are purchases and sales of U.S. Government securities of
$68,734,892 and $69,386,975, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At April 30, 1995, the Fund had
transfer agent fees and expenses payable of approximately $2,000.
The Fund adopted an unfunded noncontributory defined benefit pension plan
covering all independent Trustees of the Fund who will have served as
independent Trustees for at least five years at the time of retirement. Benefits
under this plan are based on years of service and compensation during the last
five years of service. Aggregate pension costs for the six months ended April
30, 1995, included in Trustees' fees and expenses in the Statement of Operations
amounted to $2,186. At April 30, 1995, the Fund had an accrued pension liability
of $11,362 which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
APRIL 30, 1995 OCTOBER 31, 1994
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 21,901 $ 188,813 188,157 $ 1,689,901
Reinvestment of dividends........................................ 125,132 1,078,565 251,787 2,249,370
----------- -------------- ----------- ------------
147,033 1,267,378 439,944 3,939,271
Repurchased...................................................... (1,146,653) (9,950,364) (5,271,058) (47,232,632)
----------- -------------- ----------- ------------
Net decrease..................................................... (999,620) $ (8,682,986) (4,831,114) $(43,293,361)
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) CONTINUED
6. FEDERAL INCOME TAX STATUS
At October 31, 1994, the Fund had an approximate net capital loss carryover of
$6,417,000 of which $1,180,000 which will be available through October 31, 2002
and $5,235,000 which will be available through October 31, 2001 to offset future
capital gains to the extent provided by regulations.
7. REVERSE REPURCHASE AND DOLLAR ROLL AGREEMENTS
Reverse repurchase agreements and dollar rolls involve the risk that the market
value of the securities the Fund is obligated to repurchase under the agreement
may decline below the repurchase price. In the event the buyer of securities
under a reverse repurchase agreement or dollar roll files for bankruptcy or
becomes insolvent, the Fund's use of proceeds of the agreement may be restricted
pending a determination by the other party, or its trustee or receiver, whether
to enforce the Fund's obligation to repurchase the securities and the Fund's use
of the proceeds of the reverse repurchase agreement may also effectively be
restricted pending such decision.
Reverse repurchase agreements are collateralized by Fund securities with a
market value in excess of the Fund's obligation under the contract. Securities
valued at $4,572,834 were pledged as collateral.
At April 30, 1995, the reverse repurchase agreements outstanding were $4,355,070
with a weighted average interest rate of 6.04% maturing within 7 days. The
maximum and average daily amounts outstanding during the period were $10,760,000
and $989,000, respectively. The weighted average interest rate during the period
was 5.80%.
<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 FOR THE
SIX PERIOD
MONTHS JULY 1,
ENDED FOR THE YEAR ENDED 1991*
APRIL 30, OCTOBER 31 THROUGH
1995 ------------------------------- OCTOBER
(UNAUDITED) 1994 1993 1992 31, 1991
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of period............... $ 8.77 $ 9.18 $ 9.69 $ 9.95 $ 9.60
---------- --------- --------- --------- ---------
Net investment income.............. 0.29 0.54 0.73 0.71 0.26
Net realized and unrealized gain
(loss)............................ 0.06 (0.41) (0.45) (0.21) 0.37
---------- --------- --------- --------- ---------
Total from investment operations... 0.35 0.13 0.28 0.50 0.63
---------- --------- --------- --------- ---------
Dividends and distributions from:
Net investment income........... (0.40) (0.54) (0.61) (0.71) (0.26)
Net realized gain............... -- -- (0.18) (0.05) (0.02)
---------- --------- --------- --------- ---------
Total dividends and
distributions..................... (0.40) (0.54) (0.79) (0.76) (0.28)
---------- --------- --------- --------- ---------
Net asset value, end of period..... $ 8.72 $ 8.77 $ 9.18 $ 9.69 $ 9.95
---------- --------- --------- --------- ---------
---------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN+........... 4.11%(1) 1.44% 2.87% 5.18% 6.41%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses:
Operating....................... 1.57%(2) 1.24% 0.95% 0.99% 0.85%(2)
Interest........................ 0.29%(2) 0.34% 0.65% 0.61% 0.84%(2)
---------- --------- --------- --------- ---------
Total.............................. 1.86%(2) 1.58% 1.60% 1.60% 1.69%(2)(3)
---------- --------- --------- --------- ---------
---------- --------- --------- --------- ---------
Net investment income.............. 6.21%(2) 5.32% 7.32% 7.05% 7.50%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $34,912 $43,875 $90,260 $154,860 $132,219
Portfolio turnover rate............ 199%(1) 393% 412% 254% 91%(1)
<FN>
- ---------------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all expenses that were assumed or waived by the
Investment Manager, the above annualized expense and net investment income
ratios would have been 1.85% and 7.34%, respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER
PREMIER INCOME
TRUST
[PHOTO]
SEMIANNUAL REPORT
APRIL 30, 1995
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center -- Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
SUB-ADVISOR
BlackRock Financial Management, Inc.
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.
