<PAGE>
DEAN WITTER PREMIER INCOME TRUST TWO WORLD TRADE CENTER, NEW YORK, NEW YORK
10048
LETTER TO THE SHAREHOLDERS APRIL 30, 1996
DEAR SHAREHOLDER:
The six-month period ended April 30, 1996 witnessed two profoundly different
market environments for fixed-income securities. The U.S. Treasury market rally
of 1995 continued into the middle of February 1996, as market demand for
fixed-income securities remained strong due to a combination of moderate
economic growth, low absolute levels of inflation and two reductions in the
federal-funds target rate.
However, investor sentiment reversed in mid-February, as data indicating
accelerated economic growth, in conjunction with a sharp rise in commodity
prices, rekindled inflationary concerns. Economic strength was most emphatically
demonstrated in the February employment report, which showed a gain of over
700,000 new jobs. This forced investors to reconsider and adjust their
assumptions regarding the weakness of the U.S. economy. This number, although
subsequently revised downward, was more than double economists' estimates and
produced the largest one-day price decline in U.S. bond prices in over seven
years. For the first quarter of 1996, GDP grew 2.8 percent, which represented a
strong rebound from the 0.5 percent gain posted in the fourth quarter of 1995.
Interest rate movements over the six-month period illustrated the change in
investor sentiment. Interest rates across the U.S. Treasury yield curve fell
dramatically from November to mid-February, before rising sharply. Ultimately,
the yield of the two-year U.S. Treasury security ended the reporting period at
6.04 percent, an increase of approximately 42 basis points (0.42 percentage
points) from its October 31, 1995 level.
PERFORMANCE AND PORTFOLIO
Against this backdrop, Dean Witter Premier Income Trust produced a total return
of 1.83 percent for the six-month period ended April 30, 1996, compared to a
return of 2.10 percent for the Lehman Brothers Short (1-3 year) U.S. Government
Index. During the reporting period, the Fund paid distributions totaling
approximately $0.25 per share.
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
LETTER TO THE SHAREHOLDERS APRIL 30, 1996, CONTINUED
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-adviser,
BlackRock Financial Management, allocates the Fund's assets to reflect its
relative value analysis of different securities and sectors. In searching for
relative value opportunities, BlackRock targets securities and sectors 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 4/30/96 10/31/95
- -------------------------------------------------- -------- --------
<S> <C> <C>
Adjustable Rate Mortgage Securities............... 41.6% 58.2%
Fixed-Rate Asset Backed Securities................ 15.7 9.3
Floating Rate Asset Backed Securities............. 8.7 --
U.S. Treasury Securities.......................... 14.3 5.8
Short Avg. Life Mortgage Backed Securities........ 14.0 18.2
Collateralized Mortgage Obligations............... 5.7 7.6
Cash.............................................. -- 0.9
</TABLE>
Over the past six months, the Fund has increased its overall exposure to both
fixed- and floating-rate asset-backed securities (ABS) and U.S. Treasuries while
reducing its adjustable rate mortgage positions (ARMs). Asset-backed securities
performed well over the period despite a significant increase in supply. This
was due primarily to strong investor demand, which allowed ABS yield spreads to
comparable maturity U.S. Treasuries to remain fairly stable despite the high
levels of new issuance. The Fund increased its allocation to floating-rate ABS,
which offer better value than fixed-rate ABS. The creditworthiness of the ABS
market has become more of a focus as the levels of consumer debt have risen. On
a historical basis, however, the level of delinquencies has not increased
dramatically.
Adjustable rate mortgage securities were sold during the period as BlackRock
believed that this sector was poised for underperformance due to increased ARM
prepayment speeds resulting from the decline in interest rates and a narrowing
spread between fixed- and adjustable rate mortgages. The rising interest rate
environment during the first four months of 1996 produced mixed
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
LETTER TO THE SHAREHOLDERS APRIL 30, 1996, CONTINUED
performance in the ARM market. Currently, the adjustable-rate mortgage sector
represents attractive value, particularly seasoned GNMA ARMs, which are expected
to perform well as prepayment rates should slow in response to the higher
interest rate environment.
LOOKING AHEAD
BlackRock is currently neutral on the domestic fixed-income markets, as recent
economic data has failed to paint a clear picture as to the direction of the
U.S. economy. However, they believe that current inflationary fears will
subside. Their longer-term belief is that the level of consumer debt will
significantly restrict economic growth, since consumer debt as a percentage of
disposable income has risen to levels last seen during the recession of 1990.
With consumers accounting for two-thirds of GDP growth, they feel that sustained
growth cannot occur in an environment of rising personal bankruptcies and high
credit card debt.
During February and March, commentary from the Federal Reserve Board officials
acknowledged that increased economic activity contributed to negative
performance in those months. BlackRock believes that U.S. economic growth will
decline from its currently accelerated pace and level out at approximately 2.0
percent to 2.5 percent. In this environment, the Federal Reserve is likely to
remain on hold until more consistent economic data is released. Over the longer
term, BlackRock believes that the fixed-income markets are poised for positive
performance and lower absolute yields.
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 APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
MORTGAGE-BACKED SECURITIES (68.3%)
U.S. GOVERNMENT AGENCIES
$ 884 Federal Home Loan Mortgage Corp. ARM............... 6.77+ % 02/01/18 $ 888,362
1,500 Federal Home Loan Mortgage Corp. ARM............... 7.86+ * 1,530,000
1,022 Federal Home Loan Mortgage Corp. ARM............... 7.89+ 09/01/23 1,042,030
831 Federal Home Loan Mortgage Corp. PC Gold........... 8.50 07/01/06 856,883
2,437 Federal Home Loan Mortgage Corp. PC Gold........... 9.00 05/01/06 2,539,502
--------------
6,856,777
--------------
2,595 Federal National Mortgage Assoc. ARM............... 6.75+ 04/01/19 2,599,697
1,160 Federal National Mortgage Assoc. ARM............... 7.90+ 12/01/20 1,179,539
749 Federal National Mortgage Assoc. ARM............... 7.61+ 12/01/22 764,578
774 Federal National Mortgage Assoc. ARM++............. 7.38+ 01/01/25 792,358
699 Federal National Mortgage Assoc. ARM............... 7.75+ 01/01/25 716,313
1,231 Federal National Mortgage Assoc. ARM++............. 7.09+ 09/01/25 1,257,614
--------------
7,310,099
--------------
1,397 Government National Mortgage Assoc................. 7.25 11/15/04-
04/15/06 1,401,489
2,723 Government National Mortgage Assoc. II ARM......... 6.50+ 11/20/25-
02/20/21 2,745,740
777 Government National Mortgage Assoc. II ARM......... 7.25+ 09/20/22 792,304
--------------
4,939,533
--------------
TOTAL MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $19,073,780)............................................... 19,106,409
--------------
ASSET-BACKED SECURITIES (29.9%)
776 Daimler-Benz Auto Grantor Trust.................... 5.85 05/15/02 772,776
1,000 Discover Card Master Trust (Note 4)................ 5.85+ 10/16/04 1,006,560
1,156 Fifth Third Auto Grantor Trust..................... 6.20 09/15/01 1,154,388
1,000 First USA Credit Card Master Trust................. 5.87+ 08/15/03 1,006,560
1,000 Household Affinity Credit Card Master Trust........ 7.00 12/15/99 1,012,500
982 MLCC Mortgage Investors, Inc....................... 5.93+ 02/15/21 982,238
1,438 NationsBank Auto Grantor Trust..................... 5.85 06/15/02 1,431,530
1,000 Standard Credit Card Master Trust.................. 8.625 01/07/02 1,014,370
--------------
TOTAL ASSET-BACKED SECURITIES
(IDENTIFIED COST $8,421,832)................................................ 8,380,922
--------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS (17.6%)
1,100 Resolution Funding Corp. Coupon Strip.............. 0.00 10/15/98 945,515
1,100 U.S. Treasury Note................................. 6.125 03/31/98 1,101,547
2,695 U.S. Treasury Note++............................... 5.50 11/15/98 2,652,890
55 U.S. Treasury Note................................. 5.00 02/15/99 53,350
180 U.S. Treasury Note................................. 6.25 02/15/03 176,766
--------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(IDENTIFIED COST $4,995,634)................................................ 4,930,068
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
PORTFOLIO OF INVESTMENTS APRIL 30, 1996 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ---------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS (6.9%)
U.S. GOVERNMENT AGENCIES (5.7%)
$ 149 Federal National Mortgage Assoc. 1991-49 D (PAC)... 8.00 % 05/25/05 $ 148,545
345 Federal National Mortgage Assoc. 1990-60 J (PAC)... 9.00 06/25/17 345,255
990 Federal National Mortgage Assoc. Strip Series I
Class 2............................................ 11.50 04/01/09 1,102,496
--------------
1,596,296
--------------
PRIVATE ISSUES (1.2%)
344 Collateralized Mortgage Obligation Trust 59 G...... 9.00 07/01/17 343,929
1 Resolution Funding Corp. 1992-S2 A17 (TAC I/O)..... 7.96+ 01/25/22 371
--------------
344,300
--------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(IDENTIFIED COST $5,215,406)................................................ 1,940,596
--------------
TOTAL INVESTMENTS
(IDENTIFIED COST $37,706,652) (A).............................. 122.7% 34,357,995
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS................. (22.7 ) (6,367,141)
----- ------------
NET ASSETS..................................................... 100.0% $ 27,990,854
----- ------------
----- ------------
<FN>
- ---------------------
ARM Adjustable rate mortgage.
I/O Interest-only security.
PAC Planned Amortization Class.
PC Participation Certificate.
TAC Targeted Amortization Class.
* Securities purchased on a forward commitment basis with an approximate
principal amount and no definite maturity date; the actual principal
amount and maturity date will be determined upon settlement.
+ Floating rate securities. Rate shown is the rate in effect at April 30,
1996.
++ Some or all of these securities are pledged as collateral in connection
with the reverse repurchase agreement.
(a) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation was $82,833 and the
aggregate gross unrealized depreciation was $3,431,490, resulting in net
unrealized depreciation of $3,348,657.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $37,706,652)............................. $34,357,995
Cash........................................................ 63,306
Receivable for:
Interest................................................ 262,270
Principal paydowns...................................... 142,410
Shares of beneficial interest sold...................... 4,850
Deferred organizational expenses............................ 5,069
Prepaid expenses and other assets........................... 56,812
-----------
TOTAL ASSETS........................................... 34,892,712
-----------
LIABILITIES:
Reverse repurchase agreements............................... 4,433,000
Payable for:
Investments purchased................................... 2,332,101
Shares of beneficial interest repurchased............... 25,376
Dividends to shareholders............................... 14,746
Investment management fee............................... 12,348
Plan of distribution fee................................ 4,939
Interest................................................ 3,939
Accrued expenses and other payables......................... 75,409
-----------
TOTAL LIABILITIES...................................... 6,901,858
-----------
NET ASSETS:
Paid-in-capital............................................. 37,479,886
Net unrealized depreciation................................. (3,348,657)
Accumulated undistributed net investment income............. 15,986
Accumulated net realized loss............................... (6,156,361)
-----------
NET ASSETS............................................. $27,990,854
-----------
-----------
NET ASSET VALUE PER SHARE,
3,219,030 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$8.70
-----------
-----------
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 3.09% OF NET ASSET VALUE)*..........
$8.97
-----------
-----------
</TABLE>
- ---
* On sales of $100,000 or more, the offering price is reduced.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $1,285,903
----------
EXPENSES
Investment management fee................................... 73,515
Professional fees........................................... 42,487
Shareholder reports and notices............................. 29,582
Plan of distribution fee.................................... 24,706
Transfer agent fees and expenses............................ 15,891
Organizational expenses..................................... 14,912
Trustees' fees and expenses................................. 14,640
Registration fees........................................... 11,361
Custodian fees.............................................. 9,181
Other....................................................... 6,325
----------
TOTAL OPERATING EXPENSES............................... 242,600
Interest expense............................................ 231,304
----------
TOTAL EXPENSES......................................... 473,904
----------
NET INVESTMENT INCOME.................................. 811,999
----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain........................................... 23,145
Net change in unrealized depreciation....................... (292,024)
----------
NET LOSS............................................... (268,879)
----------
NET INCREASE................................................ $ 543,120
----------
----------
</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, 1996 ENDED
(UNAUDITED) OCTOBER 31, 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 811,999 $ 2,078,835
Net realized gain........................................... 23,145 238,067
Net change in unrealized depreciation....................... (292,024) 367,857
------------------ ----------------
NET INCREASE........................................... 543,120 2,684,759
Dividends from net investment income........................ (837,911) (2,713,438)
Net decrease from transactions in shares of beneficial
interest.................................................. (2,973,245) (12,587,691)
------------------ ----------------
TOTAL DECREASE......................................... (3,268,036) (12,616,370)
NET ASSETS:
Beginning of period......................................... 31,258,890 43,875,260
------------------ ----------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$15,986 AND $41,898, RESPECTIVELY)...................... $27,990,854 $ 31,258,890
------------------ ----------------
------------------ ----------------
</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, 1996 (UNAUDITED)
<TABLE>
<S> <C>
INCREASE (DECREASE) IN CASH:
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net investment income................................................................. $ 811,999
Adjustments to reconcile net investment income to net cash provided by operating
activities:
Increase in receivables and other assets related to operations........................ (27,863)
Decrease in payables related to operations............................................ (36,648)
Net amortization of discount/premium.................................................. 5,991
---------------
NET CASH PROVIDED BY OPERATING ACTIVITIES........................................ 753,479
---------------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
Purchases of investments.............................................................. (42,687,869)
Principal prepayments/sales of investments............................................ 48,891,088
Net sales of short-term investments................................................... 351,203
---------------
NET CASH PROVIDED BY INVESTING ACTIVITIES........................................ 6,554,422
---------------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Net proceeds from shares of beneficial interest sold.................................. 191,545
Net payments for shares of beneficial interest repurchased............................ (3,682,975)
Net proceeds from maturities of reverse repurchase agreements......................... (3,430,188)
Dividends to shareholders from net investment income.................................. (322,977)
---------------
NET CASH USED FOR FINANCING ACTIVITIES........................................... (7,244,595)
---------------
NET INCREASE IN CASH............................................................. 63,306
CASH AT BEGINNING OF PERIOD........................................................... --
---------------
CASH BALANCE AT END OF PERIOD......................................................... $ 63,306
---------------
---------------
CASH PAID DURING THE PERIOD FOR INTEREST.............................................. $ 239,526
---------------
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 (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) 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 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 APRIL 30, 1996 (UNAUDITED) 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 AUB-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 APRIL 30, 1996 (UNAUDITED) 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 aquired 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 employees 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 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, 1996, the
distribution fee was accrued at the annual rate of 0.17%.
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 (UNAUDITED) CONTINUED
The Distributor has informed the Fund that for the six months ended April 30,
1996, it received approximately $5,900 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,
1996 were $42,401,144 and $47,935,191, respectively. Included in the
aforementioned are purchases of Discover Card Master Trust, an affiliate of the
Investment Manager, of $1,007,821, and purchases and sales of U.S. Government
securities of $25,831,842 and $35,137,267, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At April 30, 1996, the Fund had
transfer agent fees and expenses payable of approximately $3,100.
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 six months ended April 30, 1996
included in Trustees' fees and expenses in the Statement of Operations amounted
to $6,244. At April 30, 1996, the Fund had an accrued pension liability of
$16,447 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
APRIL 30, 1996
---------------------------- FOR THE YEAR ENDED
OCTOBER 31, 1995
(UNAUDITED) --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 21,616 $ 190,186 56,943 $ 496,711
Reinvestment of dividends........................................ 59,056 518,748 191,193 1,658,690
----------- -------------- ----------- ------------
80,672 708,934 248,136 2,155,401
Repurchased...................................................... (418,495) (3,682,179) (1,692,442) (14,743,092)
----------- -------------- ----------- ------------
Net decrease..................................................... (337,823) $ (2,973,245) (1,444,306) $(12,587,691)
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
<PAGE>
DEAN WITTER PREMIER INCOME TRUST
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1996 (UNAUDITED) CONTINUED
6. FEDERAL INCOME TAX STATUS
During the year ended October 31, 1995, the Fund utilized approximately $228,000
of its net capital loss carryover.
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 agreement or dollar roll 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 $4,702,862 were pledged as collateral.
At April 30, 1996, the reverse repurchase agreements outstanding were $4,433,000
with a weighted average interest rate of 5.33% maturing within 20 days. The
maximum and average daily amounts outstanding during the period were $12,305,942
and $8,102,913, respectively. The weighted average interest rate during the
period was 5.65%.
<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 1991*
APRIL 30, FOR THE YEAR ENDED OCTOBER 31 THROUGH
1996 ------------------------------------------ OCTOBER
(UNAUDITED) 1995 1994 1993 1992 31, 1991
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of period............... $ 8.79 $ 8.77 $ 9.18 $ 9.69 $ 9.95 $ 9.60
--------- --------- --------- --------- --------- ---------
Net investment income.............. 0.24 0.53 0.54 0.73 0.71 0.26
Net realized and unrealized gain
(loss)............................ (0.08) 0.14 (0.41) (0.45) (0.21) 0.37
--------- --------- --------- --------- --------- ---------
Total from investment operations... 0.16 0.67 0.13 0.28 0.50 0.63
--------- --------- --------- --------- --------- ---------
Dividends and distributions from:
Net investment income........... (0.25) (0.65) (0.54) (0.61) (0.71) (0.26)
Net realized gain............... -- -- -- (0.18) (0.05) (0.02)
--------- --------- --------- --------- --------- ---------
Total dividends and
distributions..................... (0.25) (0.65) (0.54) (0.79) (0.76) (0.28)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period..... $ 8.70 $ 8.79 $ 8.77 $ 9.18 $ 9.69 $ 9.95
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN+........... 1.83%(1) 7.97% 1.44% 2.87% 5.18% 6.41%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses:
Operating.......................... 1.64%(2) 1.57% 1.24% 0.95% 0.99% 0.85%(2)
Interest........................... 1.57%(2) 0.65% 0.34% 0.65% 0.61% 0.84%(2)
Total.............................. 3.21%(2) 2.22% 1.58% 1.60% 1.60% 1.69%(2)(3)
Net investment income.............. 5.51%(2) 5.83% 5.32% 7.32% 7.05% 7.50%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $27,991 $31,259 $43,875 $90,260 $154,860 $132,219
Portfolio turnover rate............ 114%(1) 366% 393% 412% 254% 91%(1)
- ---------------------
* Commencement of operations.
+ Does not reflect the deduction of sales load. Calculated based on the net
asset value as of the last business day of the period.
(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>
TRUSTEES
Michael Bozic DEAN WITTER
Charles A. Fiumefreddo PREMIER INCOME
Edwin J. Garn TRUST
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.
SEMIANNUAL REPORT
APRIL 30, 1996
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.
