<PAGE>
DEAN WITTER PREMIER INCOME TRUST TWO WORLD TRADE CENTER, NEW YORK, NEW YORK
10048
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1995
DEAR SHAREHOLDER:
The strong performance of the fixed-income markets since the fourth quarter of
1994 has dramatically affected the market environment for investors. The rally
in the U.S. Treasury market, which was sparked by a slowdown in economic growth
and modest inflationary expectations, began during the final months of 1994 and
continued to accelerate into 1995. Economic reports in 1995 have generally
provided statistical evidence that the U.S. economy has been growing at a
sustainable pace, causing investor confidence in fixed-income securities to
increase.
Over the past 12 months, interest rates have fallen substantially across the
U.S. Treasury yield curve. The yield on the 2-year U.S. Treasury note fell 122
basis points (1.22 percent) since October 31, 1994, to close at 5.61 percent at
the end of the current fiscal year.
PERFORMANCE AND PORTFOLIO
Against this backdrop, Dean Witter Premier Income Trust produced a total return
of 7.97 percent for the twelve months ended October 31, 1995, compared to a
return of 8.83 percent for the Lehman Brothers Short (1-3 year) U.S. Government
Index. The Fund continues to perform well against its peer group, the Lipper
adjustable rate mortgage fund category, which produced an average return of 1.53
percent during the same period. For the year ended October 31, 1995, the Fund
was ranked #8 of 64 funds in the category, according to Lipper Analytical
Services, Inc. The accompanying chart illustrates the performance of a $10,000
investment in the Fund since inception (July 1, 1991) through the fiscal year
ended October 31, 1995, versus the performance of a similar hypothetical
investment in the issues that comprise the Lehman Brothers Short (1-3 years)
U.S. Government Index.
Dean Witter Premier Income Trust's flexible investment strategy provides for
diversification across a number of sectors in the short-duration market,
including agency pass-through securities, adjustable rate mortgage securities
(ARMs), collateralized mortgage obligations (CMOs), fixed- and floating-rate
asset-backed securities (ABS) and U.S. Treasuries. The Fund's sub-advisor,
BlackRock Financial Management, Inc. ("BlackRock"), allocates the Fund's assets
to reflect its relative value analysis of different securities and sectors. In
searching for relative value opportunities, the Fund targets securities and
sectors
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1995, CONTINUED
within the short-duration market that have underperformed and have strong
potential for appreciation in value. Securities are purchased when they trade at
cheap or attractive yield levels, and sold upon price appreciation or
significant outperformance of other short-duration alternatives. The following
chart illustrates the asset allocations of the Fund's current portfolio, in
comparison with the portfolio at the start of the fiscal year.
<TABLE>
<CAPTION>
PERCENT OF FUND'S ASSETS
ON:
-------------------------
SECURITY TYPE 10/31/95 10/31/94
- ------------------------------------------------------- ----------- -----------
<S> <C> <C>
Adjustable Rate Mortgage Securities.................... 58.2% 25.1%
Fixed-Rate Asset Backed Securities..................... 9.3 18.8
Floating Rate Asset Backed Securities.................. 0.0 9.0
U.S. Treasuries........................................ 5.8 16.7
Short Avg. Life Mortgage Backed Securities............. 18.2 17.2
Collateralized Mortgage Obligations.................... 7.6 4.8
Cash................................................... 0.9 8.4
</TABLE>
[GRAPHIC]
Over the fiscal year, the Fund
significantly increased its allocation
to adjustable rate mortgage securities
("ARMs") from approximately 25.1
percent to 58.2 percent. BlackRock
believes that these securities offer
substantial relative value in addition
to less prepayment sensitivity than
fixed-rate mortgage pass-throughs of
similar maturity. (ARMs have coupon
rates which periodically adjust to
changes in interest rates, making the
value of these securities typically
less sensitive to fluctuations in rates
than fixed-rate securities.) Despite a
drop in interest rate volatility, which
should have a beneficial effect, ARMs
under performed during the third
quarter of 1995 due to an increase in
refinancing activity in these
securities. Consequentially, these
securities have continued to trade at
attractive levels relative to other
short-duration alternatives, and the
Fund has increased its exposure to this
sector in anticipation of capturing
potential performance.
[GRAPHIC]
Over the course of the fiscal year, the
Fund has reduced its position in U.S.
Treasuries from 16.7 percent to 5.8
percent as of October 31, 1995, to
capture the strong performance of this
sector as the fixed-income markets
rallied. Selling into the
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1995, CONTINUED
strength of market demand, the Fund also reduced its exposure to small business
administration floating-rate securities (SBAs).
These securities, which are backed by the full faith and credit of the U.S.
government, appreciated to very attractive levels during September, and the Fund
subsequently sold its entire position. At the same time, the Fund's holdings in
asset-backed securities were reduced in order to capitalize on their
appreciation in price.
LOOKING AHEAD
BlackRock maintains a positive outlook for the performance of the fixed-income
markets in 1996. Economic data continues to suggest that the U.S. economy is
growing at a slower, steadier rate than the torrid pace of 1994. In addition,
inflationary expectations are very low.
It appears that the Federal Reserve Board may have achieved the "soft landing"
for the economy (slow growth and low inflation) which they attempted to engineer
through a series of seven successive interest rate increases throughout 1994 and
the beginning of 1995. Market participants believe that the Federal Reserve
remains biased toward easing their monetary policy, and are optimistic for a
further reduction in the federal-funds target rate near the turn of the year.
Most importantly, investor confidence in fixed-income securities remains
positive. BlackRock believes the fixed-income markets and the short-duration
sector are well positioned to remain strong in the coming months.
We appreciate your support of Dean Witter Premier Income Trust and look forward
to continuing to serve your investment needs.
Very truly yours,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MORTGAGE-BACKED SECURITIES (99.0%)
U.S. GOVERNMENT AGENCIES
$ 929 Federal Home Loan Mortgage Corp. ARM............... 6.67+ % 02/01/18 $ 931,994
1,391 Federal Home Loan Mortgage Corp. ARM............... 7.90+ 09/01/23 1,419,899
1,805 Federal Home Loan Mortgage Corp. PC GOLD........... 8.50 02/01/00 1,867,849
2,726 Federal Home Loan Mortgage Corp. PC GOLD++......... 9.00 05/01/06 2,866,400
--------------
7,086,142
--------------
1,065 Federal National Mortgage Assoc.................... 8.00 * 1,093,131
2,773 Federal National Mortgage Assoc. ARM............... 6.63+ 04/01/19 2,775,937
1,218 Federal National Mortgage Assoc. ARM............... 7.86+ 12/01/20 1,244,237
1,034 Federal National Mortgage Assoc. ARM............... 7.45+ 12/01/22 1,057,378
554 Federal National Mortgage Assoc. ARM............... 7.19+ 07/01/24 566,269
1,391 Federal National Mortgage Assoc. ARM............... 6.82+ 12/01/24 1,416,156
935 Federal National Mortgage Assoc. ARM............... 6.81+ 01/01/25 955,165
896 Federal National Mortgage Assoc. ARM............... 7.08+ 01/01/25 916,291
887 Federal National Mortgage Assoc. ARM............... 7.41+ 01/01/25 907,664
1,500 Federal National Mortgage Assoc. ARM............... 6.34+ 09/01/25 1,534,688
--------------
12,466,916
--------------
1,517 Government National Mortgage Assoc................. 7.25 11/05/04-
04/15/06 1,547,794
2,171 Government National Mortgage Assoc. II ARM......... 6.50+ 02/20/21-
05/20/25 2,210,657
1,500 Government National Mortgage Assoc. II ARM......... 6.50+ * 1,516,875
927 Government National Mortgage Assoc. II ARM......... 7.25+ 07/20/24 945,576
5,051 Government National Mortgage Assoc. II ARM++....... 7.50+ 03/01/25-
06/20/25 5,170,381
--------------
11,391,283
--------------
TOTAL MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $30,789,954)............................................... 30,944,341
--------------
ASSET-BACKED SECURITIES (12.1%)
1,160 Chase Manhattan Credit Card........................ 6.00 09/17/01 1,161,183
1,457 First Chicago Master Trust......................... 7.30 10/15/99 1,480,057
1,113 General Motors Acceptance Corp..................... 7.15 03/15/00 1,129,287
--------------
TOTAL ASSET-BACKED SECURITIES
(IDENTIFIED COST $3,765,242)................................................ 3,770,527
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS (9.8%)
U.S. GOVERNMENT AGENCIES (7.5%)
790 Federal National Mortgage Assoc. 1990-60 J (PAC)... 9.00 06/25/17 793,535
340 Federal National Mortgage Assoc. 1991-49 D (PAC)... 8.00 05/25/05 340,776
1,087 Federal National Mortgage Assoc. Strip Series I
Class 2............................................ 11.50 04/01/09 1,213,668
--------------
2,347,979
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
PRIVATE ISSUES (2.3%)
$ 733 Collateralized Mortgage Obligation Trust 59 G...... 9.00 % 07/01/17 $ 737,391
1 Resolution Funding Corp. 1992-S2 A17 (TAC I/O)..... 7.98+ 01/25/22 415
--------------
737,806
--------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(IDENTIFIED COST $6,304,729)................................................ 3,085,785
--------------
U.S. GOVERNMENT OBLIGATIONS (7.6%)
1,800 U.S. Treasury Note ++.............................. 6.00 08/31/97 1,810,406
230 U.S. Treasury Note................................. 6.75 04/30/00 238,266
315 U.S. Treasury Note ++.............................. 6.125 09/30/00 318,790
--------------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $2,364,823)................................................ 2,367,462
--------------
SHORT-TERM INVESTMENT (1.1%)
REPURCHASE AGREEMENT
350 Nikko Securities Co. International, Inc. (Japan)
(dated 10/31/95; proceeds $350,057; collateralized
by $353,147 Federal Home Loan Mortgage Corp. 7.00%
due 08/01/99 valued at $358,003) (Identified Cost
$350,000).......................................... 5.90 11/01/95 350,000
--------------
TOTAL INVESTMENTS
(IDENTIFIED COST $43,574,748) (A)............... 129.6% 40,518,115
LIABILITIES IN EXCESS OF OTHER ASSETS........... (29.6) (9,259,225)
----- -----------
NET ASSETS...................................... 100.0% $31,258,890
----- -----------
----- -----------
<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 October 31,
1995.
++ Some or all of these securities are pledged as collateral in connection
with reverse repurchase agreements.
(a) The aggregate cost of investments for federal income tax purposes is
$43,574,748; the aggregate gross unrealized appreciation is $438,577 and
the aggregate gross unrealized depreciation is $3,495,210, resulting in
net unrealized depreciation of $3,056,633.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $43,574,748)............................. $40,518,115
Receivable for:
Investments sold........................................ 948,678
Interest................................................ 258,714
Principal paydowns...................................... 149,629
Shares of beneficial interest sold...................... 6,209
Deferred organizational expenses............................ 19,981
Prepaid expenses and other assets........................... 17,593
-----------
TOTAL ASSETS........................................... 41,918,919
-----------
LIABILITIES:
Reverse repurchase agreements............................... 7,863,188
Payable for:
Investments purchased................................... 2,618,826
Shares of beneficial interest repurchased............... 26,172
Dividends to shareholders............................... 18,560
Investment management fee............................... 13,818
Interest................................................ 12,161
Plan of distribution fee................................ 5,527
Accrued expenses and other payables......................... 101,777
-----------
TOTAL LIABILITIES...................................... 10,660,029
-----------
NET ASSETS:
Paid-in-capital............................................. 40,453,131
Net unrealized depreciation................................. (3,056,633)
Accumulated undistributed net investment income............. 41,898
Accumulated net realized loss............................... (6,179,506)
-----------
NET ASSETS............................................. $31,258,890
-----------
-----------
NET ASSET VALUE PER SHARE,
3,556,853 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$8.79
-----------
-----------
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 3.09% OF NET ASSET VALUE)*..........
$9.06
-----------
-----------
</TABLE>
<TABLE>
<S> <C>
<FN>
- ---------------------
* On sales of $100,000 or more, the offering price is reduced.
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $2,871,101
----------
EXPENSES
Investment management fee................................... 178,248
Professional fees........................................... 92,129
Shareholder reports and notices............................. 67,163
Plan of distribution fee.................................... 64,994
Transfer agent fees and expenses............................ 40,013
Registration fees........................................... 38,233
Organizational expenses..................................... 29,936
Trustees' fees and expenses................................. 21,870
Custodian fees.............................................. 15,941
Other....................................................... 11,244
----------
TOTAL OPERATING EXPENSES............................... 559,771
Interest expense............................................ 232,495
----------
TOTAL EXPENSES......................................... 792,266
----------
NET INVESTMENT INCOME.................................. 2,078,835
----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain........................................... 238,067
Net change in unrealized depreciation....................... 367,857
----------
NET GAIN............................................... 605,924
----------
NET INCREASE................................................ $2,684,759
----------
----------
</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 YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 2,078,835 $ 3,268,827
Net realized gain (loss).................................... 238,067 (1,183,176)
Net change in unrealized depreciation....................... 367,857 (1,276,352)
---------------- ----------------
NET INCREASE........................................... 2,684,759 809,299
Dividends from net investment income........................ (2,713,438) (3,900,882)
Net decrease from transactions in shares of beneficial
interest.................................................. (12,587,691) (43,293,361)
---------------- ----------------
TOTAL DECREASE......................................... (12,616,370) (46,384,944)
NET ASSETS:
Beginning of period......................................... 43,875,260 90,260,204
---------------- ----------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$41,898 AND $676,501, RESPECTIVELY)..................... $ 31,258,890 $ 43,875,260
---------------- ----------------
---------------- ----------------
</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, 1995
<TABLE>
<S> <C>
INCREASE (DECREASE) IN CASH:
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net investment income................................................................. $ 2,078,835
Adjustments to reconcile net investment income to net cash from operating activites:
Decrease in receivables and other assets related to operations........................ 132,205
Increase in payables related to operations............................................ 16,214
Net amortization of premium/discount.................................................. (21,927)
---------------
NET CASH PROVIDED BY OPERATING ACTIVITIES........................................ 2,205,327
---------------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Purchases of investments.............................................................. (143,207,512)
Principal prepayments/sales of investments............................................ 144,781,748
Net sales of short-term investments................................................... 3,752,385
---------------
NET CASH PROVIDED BY INVESTING ACTIVITIES........................................ 5,326,621
---------------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Net proceeds from shares of beneficial interest sold.................................. 492,733
Net payments from shares of beneficial interest repurchased........................... (14,831,196)
Net proceeds from issuance of reverse repurchase agreements........................... 7,863,188
Dividends to shareholders from net investment income.................................. (1,062,353)
---------------
NET CASH USED FOR FINANCING ACTIVITIES........................................... (7,537,628)
---------------
NET DECREASE IN CASH.................................................................. (5,680)
CASH AT BEGINNING OF YEAR............................................................. 5,680
---------------
CASH BALANCE AT END OF YEAR........................................................... $ --
---------------
---------------
CASH PAID DURING THE YEAR FOR INTEREST................................................ $ 220,334
---------------
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1995
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) portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (2) when market
quotations are not readily available, portfolio securities are valued at their
fair value as determined in good faith under procedures established by and under
the general supervision of the Trustees (valuation of debt securities for which
market quotations are not readily available may be based upon current market
prices of securities which are comparable in coupon, rating and maturity or an
appropriate matrix utilizing similar factors); (3) certain 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 (4) short-term
debt securities having a maturity date of more than sixty days at time of
purchase are valued on a mark-to-market basis until sixty days prior to maturity
and thereafter at amortized cost based on their value on the 61st day.
Short-term debt securities having a maturity date of sixty days or less at the
time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
The Fund amortizes premiums and accretes discounts 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 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.
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1995, CONTINUED
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 which have been reimbursed for the full amount thereof.
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 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 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.
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1995, CONTINUED
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 businesses.
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 executives of Dean Witter Reynolds
Inc., an affiliate of the Investment Manager and Distributor, and other
employees and 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 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 year ended October 31, 1995, the
distribution fee was accrued at the annual rate of 0.18%.
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1995, CONTINUED
The Distributor has informed the Fund that for the year ended October 31, 1995,
it received approximately $6,600 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 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 year ended October 31,
1995 were $141,460,352, and $141,900,701, respectively. Included in the
aforementioned are purchases and sales of U.S. Government securities of
$126,482,829 and $119,915,639, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At October 31, 1995, the Fund had
transfer agent fees and expenses payable of approximately $3,000.
The Fund has 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 year ended October 31, 1995 included
in Trustees' fees and expenses in the Statement of Operations amounted to
$2,186. At October 31, 1995, the Fund had an accrued pension liability of
$11,000 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 YEAR ENDED FOR THE YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 56,943 $ 496,711 188,157 $ 1,689,901
Reinvestment of dividends........................................ 191,193 1,658,690 251,787 2,249,370
----------- -------------- ----------- ------------
248,136 2,155,401 439,944 3,939,271
Repurchased...................................................... (1,692,442) (14,743,092) (5,271,058) (47,232,632)
----------- -------------- ----------- ------------
Net decrease..................................................... (1,444,306) $ (12,587,691) (4,831,114) $(43,293,361)
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
6. FEDERAL INCOME TAX STATUS
During the year ended October 31, 1995, the Fund utilized approximately $228,000
of its net capital loss carryover.
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1995, CONTINUED
At October 31, 1995, the Fund had a net capital loss carryover of approximately
$6,180,000 of which $5,009,000 will be available through October 31, 2001 and
$1,171,000 will be available through October 31, 2002 to offset future capital
gains to the extent provided by regulations.
7. REVERSE REPURCHASE AND DOLLAR ROLL AGREEMENTS
Reverse repurchase and dollar roll agreements 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 or dollar roll agreement files for bankruptcy or
becomes insolvent, the Fund's use of proceeds may be restricted pending a
determination by the other party, its trustee or receiver, whether to enforce
the Fund's obligation to repurchase the securities.
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 $8,025,466 were pledged as collateral.
At October 31, 1995, the reverse repurchase agreements outstanding* were
$7,863,188 with a weighted average interest rate of 5.80% maturing within 22
days. The maximum and average daily amounts outstanding during the period were
$11,409,000 and $5,574,786, respectively. The weighted average interest rate
during the period was 5.88%*.
- -------
* Computation is based on those days when such agreements were outstanding.
<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
JULY 1,
1991*
FOR THE YEAR ENDED OCTOBER 31 THROUGH
------------------------------------------ OCTOBER
1995 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.............. 0.53 0.54 0.73 0.71 0.26
Net realized and unrealized gain
(loss)............................ 0.14 (0.41) (0.45) (0.21) 0.37
--------- --------- --------- --------- ---------
Total from investment operations... 0.67 0.13 0.28 0.50 0.63
--------- --------- --------- --------- ---------
Dividends and distributions from:
Net investment income........... (0.65) (0.54) (0.61) (0.71) (0.26)
Net realized gain............... -- -- (0.18) (0.05) (0.02)
--------- --------- --------- --------- ---------
Total dividends and
distributions..................... (0.65) (0.54) (0.79) (0.76) (0.28)
--------- --------- --------- --------- ---------
Net asset value, end of period..... $ 8.79 $ 8.77 $ 9.18 $ 9.69 $ 9.95
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN+........... 7.97% 1.44% 2.87% 5.18% 6.41%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses:
Operating.......................... 1.57% 1.24% 0.95% 0.99% 0.85%(2)
Interest........................... 0.65% 0.34% 0.65% 0.61% 0.84%(2)
Total.............................. 2.22% 1.58% 1.60% 1.60% 1.69%(2)(3)
Net investment income.............. 5.83% 5.32% 7.32% 7.05% 7.50%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $31,259 $43,875 $90,260 $154,860 $132,219
Portfolio turnover rate............ 366% 393% 412% 254% 91%(1)
<FN>
- ---------------------
* Commencement of operations.
+ Does not reflect the deduction of sales load.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all expenses that were assumed or waived by the 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
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, 1995, 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 four 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 at October 31, 1995 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
DECEMBER 14, 1995
<PAGE>
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.
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
[Graphic]
ANNUAL REPORT
OCTOBER 31, 1995
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
GROWTH OF $10,000
LEHMAN BROTHERS
DATE TOTAL GENERAL US GOVT.
1-3 YEAR INDEX
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
July 1, 1991 $ 9,700 $10,000
- --------------------------------------------------------------------------------
October 31, 1991 $10,322 $10,354
- --------------------------------------------------------------------------------
October 31, 1992 $10,857 $11,197
- --------------------------------------------------------------------------------
October 31, 1993 $11,169 $11,845
- --------------------------------------------------------------------------------
October 31, 1994 $11,330 $11,980
- --------------------------------------------------------------------------------
October 31, 1995 $12,233 (3) $13,038
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR LIFE OF FUND
------------------------------------
------------------------------------
7.97 (1) 5.50 (1)
------------------------------------
4.73 (2) 4.76 (2)
------------------------------------
------------------------------------
-----------------------------
-----------------------------
_____ Fund _____ Lehman (4)
-----------------------------
-----------------------------
Past performance is not predictive of future returns.
________________________________________
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and 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, 1995.
(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. Unlike the Fund, the index does not
include any expenses, fees or charges. The Index is unmanaged and should
not be considered an investment.
