<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- - -----------------------------------------------------------------------------
The twelve months ended October 31, 1994 have been difficult for the
fixed-income markets. Interest rates have risen dramatically as strong
economic growth has raised concerns about inflation. Since February 1994, the
Federal Reserve Board has undertaken a series of "preemptive strikes" against
potential inflationary pressures by raising the federal-funds rate, the
interest rate that banks charge each other for overnight loans, from 3.00
percent to 4.75 percent by the end of the reporting period. Over this same
period, the discount rate, the interest rate the Federal Reserve charges member
banks for loans, was increased from 3.00 percent to 4.00 percent. (Following
the end of the current reporting period, the Federal Reserve Board raised the
federal-funds rate and the discount rate to 5.50 percent and 4.75 percent,
respectively.) Long-term rates have also increased significantly. During the
reporting period, the yield on the 10-year U.S. Treasury note rose from
5.43 percent to 7.81 percent, while the 30-year U.S. Treasury bond's yield rose
from 5.97 percent to 7.97 percent. This sharp rise in both short- and
long-term interest rates has negatively impacted most of the financial
markets.
DEAN WITTER DIVERSIFIED INCOME TRUST
GROWTH OF $10,000
($ IN THOUSANDS)
LEHMAN GOVERNMENT/
CORPORATE INTERMEDIATE
DATE TOTAL INDEX
---- ----- -----
April 9, 1992 $10,000 $10,000
October 31, 1992 $10,373 $10,620
October 31, 1993 $11,410 $11,679
October 31, 1994 $11,050 (3) $11,454
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR LIFE OF FUND
------ ------------
-0.69 (1) 5.00 (1)
-5.28 (2) 3.98 (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 the deduction of the maximum applicable contingent
deferred sales charge (CDSC) (1 Year-5%, since inception-3%). See the
Fund's current prospectus for complete details on fees and sales charges.
(3) Closing value after the deduction of a 3% CDSC, assuming a complete
redemption on October 31, 1994.
(4) The Lehman Brothers Mutual Fund Government/Corporate Intermediate Bond
Index tracks the performance of government and corporate bonds, including
U.S. Government agency and U.S. Treasury securities and corporate
andyankee bonds with maturities of 1 to 10 years. Unlike the fund, the
index does not include any expenses, fees or charges.
<PAGE>
<PAGE>
Against this difficult market environment, Dean Witter Diversified Income
Trust declined by 0.69 percent (not reflecting a deduction for the applicable
sales charge) for the twelve-month period ended October 31, 1994, compared to
a decline of 1.93 percent for the Lehman Brothers Government/Corporate
Intermediate Bond Index. The Fund's diversification globally, as well as
among different sectors of the fixed-income markets with varying maturities,
has been a major factor in offsetting some of the weakness associated with
rising U.S. interest rates. The accompanying chart illustrates the growth of
a $10,000 investment in the Fund from inception through the fiscal year ended
October 31, 1994 versus the performance of a similar investment in the
broad-based, unmanaged Lehman Brothers Mutual Fund Government/Corporate
Intermediate Bond Index.
As of October 31, 1994, the Fund's net assets totaled $407 million. Assets
were divided equally among shorter-term global securities (principally U.S.
and foreign government securities), U.S. government and agency
mortgage-backed securities and higher-yielding corporate bonds. During the
fiscal year, the Fund's distributions totaled approximately $0.77 per share.
<PAGE>
<PAGE>
SHORT-TERM GLOBAL SECTOR
Interest rates in the global bond markets rose during the period in
response to the rise in U.S. interest rates, as well as to improving
fundamentals in many overseas economies. In Germany, yields on three-year
bonds rose by about 205 basis points (2.05 percent), while in Australia
yields on three-year bonds rose by 415 basis points (4.15 percent).
Concurrently, the U.S. dollar declined against most major currencies,
registering losses in excess of 10 percent against the Deutschemark and the
Australian dollar. To take advantage of these market conditions, the Fund
invested one-third of its total assets in Europe and the dollar-bloc
countries of Canada, Australia and New Zealand. These investments consisted
of government securities of varying maturities up to three years and an
overall average maturity of 1.75 years.
The Fund's positions in the dollar-bloc countries were unhedged whereas
those in Europe were partially hedged. This strategy enabled the Fund to
minimize the negative effects of rising interest rates, to reduce the
currency risk associated with the more volatile European securities, and to
take advantage of the rising value of the foreign currencies. During the
fiscal year, the Fund's global securities continued to generate higher income
than those in the U.S. with similar maturities.
U.S. GOVERNMENT/MORTGAGE SECTOR
Rising interest rates have affected mortgage-backed securities to the same
degree as the U.S. Treasury market. Recognizing this, the Fund periodically
purchased current coupon mortgages at attractive levels, enhancing the Fund's
prospects for future high income and capital appreciation.
As of October 31, 1994, this sector of the Fund was diversified with ten
percent in U.S. Treasuries, eighty-five percent in mortgaged-backed
securities issued by the Federal National Mortgage Association (6.5 percent
to 8.5 percent coupons) and Government National Mortgage Association (6.50
percent to 8.0 percent coupons) and the remaining five percent invested in
FNMA and Treasury strips.
HIGH-YIELD SECTOR
For the Fund's high-yield sector, the fiscal year began on a positive note
with the high-yield bond market benefiting from the continuing improvement in
corporate credit quality. This credit quality improvement, driven by the
economic recovery, as well as corporate refinancing and deleveraging
activity, helped to boost the underlying values of most high-yield issues.
However, in sharp contrast, the second half of the fiscal year proved
disappointing for the high-yield market as fixed-income investors worried
about rising interest rates and possible further tightening moves by the
Federal Reserve Board.
The Fund's high-yield sector began 1994 in a relatively defensive
position. Rising Treasury yields had begun to reduce the relative
attractiveness of high-yield bonds, as the yield advantage between Treasury
securities and high-yield issues narrowed. In addition, given the strength of
the high-yield market earlier in the fiscal year, finding attractively priced
discounted issues for investment became difficult. In light of this, this
sector positioned itself with close to half of its assets in very defensive,
high-coupon/short-duration securities, which provided a cushion during the
high yield market's first quarter decline.
During the second quarter of 1994, the Fund became a buyer as the market's
correction pushed prices back to more attractive levels. Despite the fact
that corporate credit quality in most cases remained strong, B-rated issues
could now be purchased at 13 percent yield levels versus the 10 percent
<PAGE>
<PAGE>
levels that existed earlier in the year, and at significant discounts to par.
Despite these more attractive levels, the high-yield market has remained weak
through the end of this reporting period, as general nervousness continues to
pervade all of the financial markets.
LOOKING AHEAD
Looking ahead, the possibility of further Federal Reserve Board action is
a possibility if the U.S. economy does not exhibit signs of slowing down and
if inflationary pressures begin to build. With this in mind, the Fund will
continue to diversify its portfolio both globally, as well as across
different sectors of the fixed-income markets. The Fund will continue to
pursue a defensive strategy when making new investments until market
conditions warrant a more aggressive approach. We believe this strategy will
allow the Fund to generate high current income with maximum stability.
We thank you for your continued support of Dean Witter Diversified Income
Trust and look forward to continuing to serve your investment needs.
Very truly yours,
Charles A. Fiumefreddo
Chairman of the Board
<PAGE>
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
PORTFOLIO OF INVESTMENTS October 31, 1994
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- - ----------------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
GOVERNMENT & CORPORATE BONDS (90.1%)
AUSTRALIA (2.5%)
GOVERNMENT OBLIGATIONS (2.5%)
Au$ 7,600 New South Wales Treasury Corp. (e) .......... 8.50 % 3/ 1/96 $ 5,627,998
6,500 Queensland Treasury Corp. (e) ............... 8.00 5/14/97 4,672,815
-------------
TOTAL AUSTRALIA ....................................................... 10,300,813
-------------
CANADA (5.2%)
GOVERNMENT OBLIGATIONS (5.2%)
Ca$ 5,730 Government of Canada Treasury Bond (e) ..... 10.25 3/ 1/96 4,393,933
5,100 Government of Canada Treasury Bond (e) ..... 9.25 5/ 1/96 3,867,066
14,930 Government of Canada Treasury Bond (e) ..... 9.25 10/ 1/96 11,341,631
2,100 Government of Ontario Province .............. 10.00 9/30/96 1,600,866
-------------
TOTAL CANADA .......................................................... 21,203,496
-------------
DENMARK (1.0%)
GOVERNMENT OBLIGATION (1.0%)
DKr 25,000 Government of Denmark Treasury Note ........ 6.25 2/10/97 4,072,335
-------------
FINLAND (2.1%)
GOVERNMENT OBLIGATION (2.1%)
FMk 40,000 Government of Finland Treasury Note (e) .... 6.50 9/15/96 8,401,452
-------------
FRANCE (3.0%)
GOVERNMENT OBLIGATIONS (3.0%)
FFr 35,074 Government of France Treasury Bond (e) ..... 9.80 1/30/96 7,051,427
25,000 Government of France Treasury Bond (e) ..... 8.50 3/12/97 4,968,826
-------------
TOTAL FRANCE .......................................................... 12,020,253
-------------
IRELAND (2.4%)
GOVERNMENT OBLIGATION (2.4%)
IEP 6,100 Ireland Treasury Gilt (e) ................... 9.00 7/30/96 9,918,713
-------------
ITALY (1.9%)
GOVERNMENT OBLIGATIONS (1.9%)
ITL 4,590,000 Government of Italy Treasury Bond (e) ...... 12.00 1/ 1/96 3,004,720
7,400,000 Government of Italy Treasury Bond ........... 9.00 10/ 1/96 4,646,322
-------------
TOTAL ITALY ........................................................... 7,651,042
-------------
NEW ZEALAND (5.4%)
GOVERNMENT OBLIGATIONS (5.4%)
NZ$ 3,732 Government of New Zealand Treasury Bond .... 10.00 2/15/95 2,304,167
21,814 Government of New Zealand Treasury Bond (e) 8.00 11/15/95 13,336,013
10,200 Government of New Zealand Treasury Bond .... 9.00 11/15/96 6,291,510
-------------
TOTAL NEW ZEALAND ..................................................... 21,931,690
-------------
SPAIN (1.0%)
GOVERNMENT OBLIGATION (1.0%)
ESP 500,000 Government of Spain Treasury Bond ........... 10.55 11/30/96 3,995,225
-------------
UNITED KINGDOM (1.7%)
GOVERNMENT OBLIGATIONS (1.7%)
pounds
sterling 1,700 United Kingdom Treasury Gilt (e) ............ 12.75 11/15/95 2,919,943
2,209 United Kingdom Treasury Gilt (e) ............ 13.25 5/15/96 3,881,901
-------------
TOTAL UNITED KINGDOM .................................................. 6,801,844
<PAGE>
<PAGE>
<CAPTION>
DEAN WITTER DIVERSIFIED INCOME TRUST
PORTFOLIO OF INVESTMENTS October 31, 1994 (continued)
- - -----------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- - ----------------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
UNITED STATES (63.9%)
AIRLINES (1.0%)
US$ 5,000 GPA Delaware, Inc. .......................... 8.75 % 12/15/98 $ 4,137,500
-------------
AUTOMOTIVE (1.7%)
5,000 Envirotest Systems Corp. .................... 9.625 4/ 1/03 4,475,000
2,500 Harvard Industries, Inc. .................... 12.00 7/15/04 2,537,500
-------------
7,012,500
-------------
CABLE & TELECOMMUNICATIONS (0.4%)
3,000 Marcus Cable Co. ............................ 13.50 ++ 8/ 1/04 1,605,000
-------------
CHEMICALS (0.6%)
2,500 Georgia Gulf Corp. .......................... 15.00 4/15/00 2,600,000
-------------
COMPUTER EQUIPMENT (0.7%)
2,550 Unisys Corp. ................................ 13.50 7/ 1/97 2,754,000
-------------
CONSUMER PRODUCTS (1.3%)
2,500 J.B. Williams Holdings, Inc.-144A (b) ...... 12.50 3/ 1/04 2,406,250
2,000 Playtex Family Products, Inc. ............... 9.00 12/15/03 1,730,000
2,000 Revlon Worldwide Corp. (Series B) ........... 0.00 3/15/98 1,105,000
-------------
5,241,250
-------------
CONTAINERS (1.2%)
2,695 Container Corp .............................. 14.00 12/ 1/01 2,893,756
5,000 Ivex Holdings Corp. (Series B) .............. 13.25 ++ 3/15/05 2,200,000
-------------
5,093,756
-------------
ELECTRICAL & ALARM SYSTEMS (0.8%)
5,000 Mosler, Inc. ................................ 11.00 4/15/03 3,337,500
-------------
ENTERTAINMENT, GAMING & LODGING (4.3%)
4,000 Hollywood Casino Corp. (Series B) ........... 14.00 4/ 1/98 3,920,000
2,500 Motels of America, Inc. ..................... 12.00 4/15/04 2,825,000
6,753 Spectravision, Inc. ......................... 11.65 + 12/ 1/02 2,870,025
2,000 Treasure Bay Gaming & Resort, Inc.-144A (b) 12.25 11/15/00 600,440
4,000 Trump Castle Funding, Inc. .................. 11.75 11/15/03 2,200,000
7,628 Trump Plaza Holding Assoc. .................. 12.50 + 6/15/03 4,958,026
-------------
17,373,491
-------------
FOOD & BEVERAGES (1.2%)
3,500 Envirodyne Industries, Inc. ................. 10.25 12/ 1/01 2,835,000
5,000 Specialty Foods Acquisition Corp. (Series B) 13.00 ++ 8/15/05 2,150,000
-------------
4,985,000
-------------
FOREST & PAPER PRODUCTS (0.5%)
2,000 Fort Howard Corp. ........................... 14.125++ 11/ 1/04 2,015,000
-------------
MANUFACTURING (2.0%)
2,500 Berry Plastics Corp. (Units)** .............. 12.25 4/15/04 2,475,000
4,300 MS Essex Holdings, Inc. ..................... 16.00 ++ 5/15/04 4,154,875
2,000 Uniroyal Technology Corp. ................... 11.75 6/ 1/03 1,740,000
-------------
8,369,875
-------------
<PAGE>
<PAGE>
<CAPTION>
DEAN WITTER DIVERSIFIED INCOME TRUST
PORTFOLIO OF INVESTMENTS October 31, 1994 (continued)
----------------------------------------------------------------------------
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- - ----------------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
MANUFACTURING -DIVERSIFIED (1.4%)
US$ 2,000 Interlake Corp. .............................. 12.125% 3/ 1/02 $ 1,920,000
2,500 J.B. Poindexter, Inc. ........................ 12.50 5/15/04 2,443,750
2,500 Jordan Industries, Inc. ...................... 11.75 ++ 8/ 1/05 1,325,000
-------------
5,688,750
-------------
OIL & GAS (2.6%)
4,000 Deeptech International, Inc. ................. 12.00 12/15/00 3,760,000
2,500 Empire Gas Corp. (Units)** ................... 7.00 * 7/15/04 1,912,500
4,800 Presidio Oil Co. (Series B) .................. 14.25 *** 7/15/02 4,704,000
-------------
10,376,500
-------------
PUBLISHING (2.2%)
2,000 Affiliated Newspapers Inv., Inc. ............. 13.25 ++ 7/ 1/06 1,030,000
3,800 BFP Holdings, Inc. (Series B) ................ 13.50 ++ 4/15/04 2,023,500
2,500 Garden State Newspapers, Inc. ................ 12.00 7/ 1/04 2,475,000
2,000 U.S. Banknote Corp. .......................... 10.375 6/ 1/02 1,720,000
2,000 U.S. Banknote Corp. .......................... 11.625 8/ 1/02 1,790,000
-------------
9,038,500
-------------
RESTAURANTS (2.9%)
6,000 American Restaurant Group Holdings, Inc. .... 14.00 ++ 12/15/05 2,880,000
5,000 Carrols Corp. ................................ 11.50 8/15/03 4,675,000
5,000 Flagstar Corp. ............................... 11.25 11/ 1/04 4,250,000
-------------
11,805,000
-------------
RETAIL (2.5%)
3,330 Cort Furniture Rental Corp. .................. 12.00 9/ 1/00 3,246,750
2,000 County Seat Stores, Inc. ..................... 12.00 10/ 1/01 2,000,000
5,000 Thrifty Payless Holdings, Inc. ............... 12.25 4/15/04 4,750,000
-------------
9,996,750
-------------
RETAIL -FOOD CHAINS (2.5%)
4,000 Food 4 Less Holdings, Inc. ................... 15.25 ++ 12/15/04 3,000,000
23,250 Grand Union Capital Corp. (Series A) ........ 0.00 1/15/07 1,017,188
2,000 Pathmark, Inc. ............................... 9.625 5/ 1/03 1,767,500
5,000 Purity Supreme, Inc. (Series B) .............. 11.75 8/ 1/99 4,300,000
-------------
10,084,688
-------------
TEXTILES (1.0%)
5,195 JPS Textile Group, Inc ....................... 9.85 6/ 1/99 3,947,911
-------------
U.S. GOVERNMENT AGENCIES & OBLIGATIONS (33.1%)
Federal National Mortgage Assoc. (21.3%)
5,000 Principal Strip ................................ 0.00 12/20/01 4,128,125
22,494 ............................................... 6.50 10/1/08-2/1/24 20,468,383
25,601 ............................................... 7.00 8/1/08-6/1/24 23,454,510
13,820 ............................................... 7.50 2/1/22-2/1/23 12,969,067
2,094 ............................................... 8.00 6/ 1/22 2,020,308
24,070 ............................................... 8.50 7/1/17-10/1/24 23,867,154
-------------
86,907,547
<PAGE>
<PAGE>
<CAPTION>
DEAN WITTER DIVERSIFIED INCOME TRUST
PORTFOLIO OF INVESTMENTS October 31, 1994 (continued)
- - -----------------------------------------------------------------------------------------------------------------
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- - ----------------- -------- ---------------- -------------
<S> <C> <C> <C> <C>
Government National Mortgage Assoc. (7.8%)
US$ 5,015 ............................................... 6.50 % 11/20/23-2/20/24 $ 4,309,562
4,038 ............................................... 7.00 12/15/22-3/15/24 3,619,073
10,046 ............................................... 7.50 4/15/22-7/15/24 9,326,812
9,975 ............................................... 8.00 1/15/22-10/15/24 9,560,089
5,000 ............................................... 8.50 **** 4,921,875
------------
31,737,411
------------
U.S. Treasury Strips (0.8%)
4,000 (e) ............................................ 0.00 5/15/97 3,355,165
------------
U.S. Treasury Notes (3.2%)
6,000 ............................................... 12.625 5/15/95 6,222,188
2,000 (e) ...................... ..................... 3.875 8/31/95 1,965,000
2,000 (e) ...................... ..................... 3.875 10/31/95 1,955,000
1,000 (e) ...................... ..................... 4.75 9/30/98 912,969
2,000 (e) ...................... ..................... 4.75 10/31/98 1,822,188
------------
12,877,345
------------
TOTAL UNITED STATES ........................................................... 260,340,439
------------
TOTAL GOVERNMENT & CORPORATE BONDS (IDENTIFIED COST $388,006,974) ............. 366,637,302
------------
<CAPTION>
SHARES
- - ---------
<S> <C> <C>
COMMON STOCKS (a)(0.2%)
ENTERTAINMENT, GAMING & LODGING (0.0%)
2,000 Motels of America, Inc.-144A (b) ................................................ 200,000
--------------
FOOD & BEVERAGES (0.0%)
15,000 Specialty Foods Aquisition Corp.-144A (b) ...................................... 15,000
--------------
PUBLISHING (0.1%)
2,000 Affiliated Newspapers Inv., Inc. (Class B) ..................................... 50,000
30,400 BFP Holdings, Inc.-144A (b) (Class D) ........................................... 258,400
--------------
308,400
--------------
RESTAURANTS (0.0%)
6,000 American Restaurant Group Holdings, Inc.-144A (b)................................ 132,000
--------------
RETAIL -DRUG STORES (0.1%)
76,000 Thrifty Payless Holdings, Inc. (Class C) ....................................... 228,000
--------------
TOTAL COMMON STOCKS (IDENTIFIED COST $962,016)................................... 883,400
--------------
</TABLE>
<PAGE>
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
PORTFOLIO OF INVESTMENTS October 31, 1994 (continued)
----------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
- - ------------ ------------ --------------
<S> <C> <C> <C>
WARRANTS (A)(0.1%) CONTAINERS (0.0%)
2,000 Crown Packaging Holdings, Ltd.-144A (b) ...................... 10/15/03 $ 110,000
--------------
ENTERTAINMENT, GAMING & LODGING (0.0%)
10,000 Treasure Bay Gaming & Resorts, Inc.-144A (b).................. 11/15/98 10,000
--------------
MANUFACTURING (0.0%)
20,000 Uniroyal Technology Corp. .................................... 6/ 1/03 20,000
--------------
RETAIL (0.1%)
109,890 New Cort Holdings Corp. ...................................... 9/ 1/98 164,835
2,000 County Seat Stores, Inc. ..................................... 10/15/98 30,000
--------------
194,835
--------------
TOTAL WARRANTS (IDENTIFIED COST $379,420).......................................... 334,835
--------------
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE
- - ----------------- ---------- ----------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS (7.1%)
AUSTRALIA (C)(2.8%)
GOVERNMENT OBLIGATION (2.8%)
Au$ 15,240 Government of Australia Treasury Note (Identified Cost
$11,196,488)(e) ............................................. 5.90 % 12/28/94 11,327,491
-------------
IRELAND (C)(2.5%) GOVERNMENT OBLIGATION (2.5%)
IEP 6,831 Irish Government Exchequer Note (Identified Cost
$9,752,302)(e) .............................................. 7.24 9/ 7/95 10,339,715
-------------
PORTUGAL (1.7%) BANKING -INTERNATIONAL (d) (1.7%)
PTE 1,076,992 Chase Manhattan Bank Time Deposit (Identified Cost
$7,013,950) ................................................. 9.375 11/21/94 6,975,335
-------------
UNITED STATES (0.1%) REPURCHASE AGREEMENT (0.1%)
US$ 378 The Bank of New York (dated 10/31/94; proceeds
$377,958; collateralized by $375,825 U.S.Treasury Note 7.50%
due 2/28/96 valued at $385,466) (Identified Cost $377,908) .. 4.813 11/ 1/94 377,908
-------------
TOTAL SHORT-TERM INVESTMENTS (IDENTIFIED COST $28,340,648) .................... 29,020,449
-------------
TOTAL INVESTMENTS (IDENTIFIED COST $417,689,058) (f) ................. 97.5% 396,875,986
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ....................... 2.5 10,162,412
----- -------------
NET ASSETS ........................................................... 100.0% $407,038,398
=============
<FN>
- - ---------------
* Adjustable rate. Rate shown is the rate in effect at October 31, 1994.
** Consists of more than one class of securities traded together as a
unit; generally bonds with attached stocks/warrants.
*** Base interest rate is 13.25%, additional interest if any, is linked
to the Gas Index. Rate shown is the rate in effect at October 31, 1994.
**** 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.
+ Payment in kind security.
++ Currently zero coupon bond and will pay interest at the rate shown at a
future specified date.
(a) Non-income producing.
(b) Resale is restricted to qualified institutional investors.
(c) Security was purchased on a discount basis. The interest rate shown
has been adjusted to reflect a bond equivalent yield. The bond
equivalent yield for the foreign securities does not reflect the effect
of exchange rates.
(d) Subject to withdrawal restrictions until maturity.
(e) Some or all of these securities are segregated in connection with open
forward foreign currency contracts and securities purchased on a
forward commitment basis.
(f) The aggregate cost for federal income tax purposes is $417,716,558;
the aggregate gross unrealized appreciation is $4,738,786 and the
aggregate gross unrealized depreciation is $25,579,358, resulting in
net unrealized depreciation of $20,840,572.
</TABLE>
<PAGE>
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
PORTFOLIO OF INVESTMENTS October 31, 1994 (continued)
- - -----------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCTOBER 31, 1994:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO IN EXCHANGE DELIVERY APPRECIATION/
DELIVER FOR DATE (DEPRECIATION)
------------------------------------ ---------- ---------------
<S> <C> <C> <C> <C> <C>
BFr 71,152,278 US$ 2,305,647 4/24/95 $ 12,832
DEM 6,602,440 US$ 3,947,647 11/14/94 (424,326)
DEM 1,800,000 US$ 1,092,564 2/27/95 (99,780)
DEM 1,400,000 US$ 933,956 5/ 2/95 39
DEM 29,678,000 US$ 19,050,003 9/ 6/95 (757,764)
DEM 2,300,000 US$ 1,492,925 9/26/95 (36,214)
DEM 5,400,000 US$ 3,587,325 11/ 1/95 38,952
FFr 29,000,000 US$ 5,457,796 12/22/94 (150,445)
FFr 24,297,000 US$ 4,561,703 3/ 9/95 (125,397)
ITL 11,900,000,000 US$ 7,464,091 12/23/94 (199,456)
NKR 15,180,000 US$ 2,130,078 11/30/94 (180,763)
US$ 1,973,236 Au$ 2,692,000 9/21/95 (4,711)
------------
Net unrealized depreciation...... $(1,927,033)
============
</TABLE>
See Notes to Financial Statements
<PAGE>
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
FINANCIAL STATEMENTS
- - -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1994
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $417,689,058) (Note 1) . $396,875,986
Unrealized appreciation on open forward
foreign currency contracts (Note 1) ..... 51,823
Cash (including $38,030 in foreign
currency) ................................ 6,040,698
Receivable for:
Interest ................................. 8,262,128
Investments sold ......................... 5,103,382
Shares of beneficial interest sold ...... 1,548,416
Compensated forward foreign currency
contracts (Note 1) ...................... 361,656
Deferred organizational expense (Note 1) . 73,607
Prepaid expenses .......................... 16,257
--------------
TOTAL ASSETS ............................ 418,333,953
--------------
LIABILITIES:
Unrealized depreciation on open forward
foreign currency contracts (Note 1) ..... 1,978,856
Payable for:
Investments purchased .................... 6,008,007
Compensated forward foreign currency
contracts (Note 1) ...................... 1,521,334
Shares of beneficial interest repurchased 565,724
Dividend to shareholders ................. 498,617
Plan of distribution fee (Note 3) ....... 292,586
Investment management fee (Note 2) ......... 137,687
Accrued expenses and other payables
(Note 4) ................................. 292,744
--------------
TOTAL LIABILITIES ....................... 11,295,555
--------------
NET ASSETS:
Paid-in-capital ........................... 431,797,003
Accumulated net realized loss ............. (3,130,557)
Net unrealized depreciation ............... (22,626,791)
Accumulated undistributed net investment
income ................................... 998,743
--------------
NET ASSETS .............................. $407,038,398
==============
NET ASSET VALUE PER SHARE, 43,443,638
shares outstanding (unlimited authorized
shares of $.01 par value) ................ $9.37
==============
</TABLE>
<PAGE>
STATEMENT OF OPERATIONS
For the year ended October 31, 1994
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
INTEREST INCOME (net of $113,555 in
foreign withholding tax) ............... $29,600,071
--------------
EXPENSES
Plan of distribution fee (Note 3) ..... 2,672,003
Investment management fee (Note 2) .... 1,257,413
Transfer agent fees and expenses
(Note 4) .............................. 232,010
Registration fees ...................... 188,597
Custodian fees ......................... 179,411
Professional fees ...................... 88,940
Trustees' fees and expenses (Note 4) .. 35,034
Shareholder reports and notices ....... 33,070
Organizational expenses (Note 1) ...... 30,188
Other .................................. 21,405
--------------
TOTAL EXPENSES ........................ 4,738,071
--------------
NET INVESTMENT INCOME ................ 24,862,000
--------------
NET REALIZED AND UNREALIZED LOSS
(Note 1):
Net realized loss on:
Investments ............................ (1,863,769)
Foreign exchange transactions .......... (5,547,591)
--------------
(7,411,360)
--------------
Net change in unrealized depreciation
on:
Investments ............................ (20,380,893)
Translation of open forward foreign
currency contracts and other assets
and liabilities denominated in foreign
currencies ............................ (1,793,752)
--------------
(22,174,645)
--------------
NET LOSS .............................. (29,586,005)
--------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS ........... $(4,724,005)
==============
</TABLE>
<PAGE>
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- - -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
-----------------------------
1994 1993
-------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Investment income ...................................................... $ 24,862,000 $ 8,252,954
Net realized gain (loss) ............................................... (7,411,360) 875,012
Net change in unrealized depreciation .................................. (22,174,645) (18,134)
-------------- -------------
Net increase (decrease) in net assets resulting from operations ...... (4,724,005) 9,109,832
-------------- -------------
Dividends and distributions to shareholders from:
Net investment income .................................................. (20,310,107) (7,590,502)
Net realized gain ...................................................... (281,210) (339,284)
Paid-in-capital ........................................................ (3,939,838) --
-------------- -------------
(24,531,155) (7,929,786)
-------------- -------------
Net increase from transactions in shares of beneficial interest (Note 5) 269,156,860 110,659,806
-------------- -------------
Total increase ........................................................ 239,901,700 111,839,852
NET ASSETS:
Beginning of period ..................................................... 167,136,698 55,296,846
-------------- -------------
END OF PERIOD (including undistributed net investment income of
$998,743 and $755,304, respectively) ................................... $407,038,398 $167,136,698
============== =============
</TABLE>
See Notes to Financial Statements
<PAGE>
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
NOTES TO FINANCIAL STATEMENTS
- - -----------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES--Dean Witter Diversified 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 December
20, 1991 and commenced operations on April 9, 1992.
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 or other domestic or foreign 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). In cases where securities are traded on more
than one exchange, the securities are valued on the exchange designated as
the primary market by the Trustees; (2) listed options are valued at the
latest sale price on the exchange on which they are listed unless no sales of
such options have taken place that day, in which case they will be valued at
the mean between their latest bid and asked prices. (3) 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;
(4) when market quotations are not readily available, including circumstances
under which it is determined by the Investment Manager that sale or bid
prices are not reflective of a security's market value, 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); (5) 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, in
determining what it believes is the fair valuation of the portfolio
securities valued by such pricing service; (6) 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; and (7) all other securities and other
assets are valued at their fair value as determined in good faith under
procedures established by and under the supervision of the Trustees.
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 on the identified cost
method. Discounts on securities purchased are amortized over the life of the
respective securities. The Fund does not amortize premiums on securities.
Interest income is accrued daily.
C. Option Accounting Principles--When the Fund writes a call option, an
amount equal to the premium received is included in the Statement of Assets
and Liabilities as a liability which is subsequently marked-to-market to
reflect the current market value of the option written. If a written option
either expires or the Fund enters into a closing purchase transaction, the
Fund realizes a gain or loss without regard to any unrealized gain or loss on
the underlying security or currency and the liability related to such option
is extinguished.
<PAGE>
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
- - -----------------------------------------------------------------------------
When the Fund purchases a call or put option, the premium paid is
recorded as an investment and is subsequently marked-to-market to reflect the
current market value. If a purchased option expires, the Fund will realize a
loss to the extent of the premium paid. If the Fund enters into a closing
sale transaction, a gain or loss is realized for the difference between the
proceeds from the sale and the cost of the option. If a put option is
exercised, the cost of the security or currency sold upon exercise will be
increased by the premium originally paid. If a call option is exercised, the
cost of the security purchased upon exercise will be increased by the premium
originally paid.
D. Foreign Currency Translation--The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value
of investment securities, other assets and liabilities and forward contracts
are translated at the exchange rates prevailing at the end of the period; and
(2) purchases, sales, income and expenses are translated at the exchange
rates prevailing on the respective dates of such transactions. The resultant
exchange gains and losses are included in the Statement of Operations as
realized and unrealized gain/loss on foreign exchange transactions. Pursuant
to U.S. Federal income tax regulations, certain foreign exchange gains/losses
included in realized and unrealized gain/loss are included in or are a
reduction of ordinary income for federal income tax purposes. The Fund does
not isolate that portion of the results of operations arising as a result of
changes in the foreign exchange rates from the changes in the market prices
of the securities.
E. Forward Foreign Currency Contracts--The Fund may enter into forward
foreign currency contracts as a hedge against fluctuations in foreign
exchange rates. Forward contracts are valued daily at the appropriate
exchange rates. The resultant exchange gains and losses are included in the
Statement of Operations as unrealized gain/loss on foreign exchange
transactions. The Fund records realized gains or losses on delivery of the
currency or at the time the forward contract is extinguished (compensated) by
entering into a closing transaction prior to delivery.
F. 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.
G. 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.
H. Organizational Expenses--Dean Witter InterCapital Inc. (the "Investment
Manager") paid the organizational expenses of the Fund in the amount of
approximately $151,000. The Fund has
<PAGE>
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
- - -----------------------------------------------------------------------------
reimbursed the Investment Manager for these expenses, exclusive of any
amounts assumed by the Investment Manager. 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 AGREEMENT--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 0.40% 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.
3. PLAN OF DISTRIBUTION--Shares of the Fund are distributed by Dean Witter
Distributors Inc. (the "Distributor"), an affiliate of the Investment
Manager. The Fund has adopted a Plan of Distribution (the "Plan") pursuant to
Rule 12b-1 under the Act pursuant to which the Fund pays the Distributor
compensation, accrued daily and payable monthly, at an annual rate of 0.85%
of the lesser of: (a) the average daily aggregate gross sales of the Fund's
shares since the Fund's inception (not including reinvestment of dividends or
capital gains distributions) less the average daily aggregate net asset value
of the Fund's shares redeemed since the Fund's inception upon which a
contingent deferred sales charge has been imposed or upon which such charge
has been waived; or (b) the Fund's average daily net assets. Amounts paid
under the Plan are paid to the Distributor to compensate it for the services
provided and the expenses borne by it and others in the distribution of the
Fund's shares, including the payment of commissions for sales of the Fund's
shares and incentive 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 who engage in or
support distribution of the Fund's shares or who service shareholder
accounts, including overhead and telephone expenses, printing and
distribution of prospectuses and reports used in connection with the offering
of the Fund's shares to other than current shareholders and preparation,
printing and distribution of sales literature and advertising materials. In
addition, the Distributor may be compensated under the Plan for its
opportunity costs in advancing such amounts, which compensation would be in
the form of a carrying charge on any unreimbursed expenses by the
Distributor.
Provided that the Plan continues in effect, any cumulative expenses
incurred but not yet recovered may be recovered through future distribution
fees from the Fund and contingent deferred sales charges from the Fund's
shareholders.
The Distributor has informed the Fund that for the year ended October 31,
1994, it received approximately $726,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares. The Fund's shareholders pay
such charges which are not an expense of the Fund.
<PAGE>
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
- - -----------------------------------------------------------------------------
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES--The cost of
purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended October 31, 1994 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
-------------- -------------
<S> <C> <C>
U.S. Corporate Bonds ..................................... $182,685,624 $99,312,514
Foreign Government Obligations ........................... 116,623,705 65,063,121
U.S. Government Agencies and Obligations.................. 92,414,537 15,565,617
<CAPTION>
CURRENCY
TRANSACTIONS IN WRITTEN OPTIONS WERE AS FOLLOWS: AMOUNT PREMIUMS
-------------- -------------
<S> <C> <C> <C>
Options written: outstanding at beginning of
period ........................................... -- --
Options written ................................... DEM 15,000,000 $ 17,452
Options expired ................................... (15,000,000) (17,452)
-------------- -------------
Options written: outstanding at end of period .... DEM -- $ --
============== =============
</TABLE>
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At October 31, 1994, the Fund had
transfer agent fees and expenses payable of approximately $28,000.
On January 1, 1994, 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 year ended October 31, 1994, included in Trustees' fees and expenses
in the Statement of Operations, amounted to $10,000. At October 31, 1994, the
Fund had an accrued pension liability of $10,000 which is included in accrued
expenses and other payables in the Statement of Assets and Liabilities.
<PAGE>
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
NOTES TO FINANCIAL STATEMENTS (continued)
- - -----------------------------------------------------------------------------
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, 1994 OCTOBER 31, 1993
------------------------------ -----------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Sold ....................................... 36,245,110 $358,205,287 13,123,934 $133,844,244
Reinvestment of dividends and distributions 1,119,356 10,865,837 395,578 4,018,772
-------------- -------------- ------------- --------------
37,364,466 369,071,124 13,519,512 137,863,016
Repurchased ................................ (10,300,421) (99,914,264) (2,665,659) (27,203,210)
-------------- -------------- ------------- --------------
Net increase ............................... 27,064,045 $269,156,860 10,853,853 $110,659,806
============== ============== ============= ==============
</TABLE>
6. FEDERAL INCOME TAX STATUS--At October 31, 1994, the Fund had net capital
loss carryovers of approximately $3,103,000 which will be available through
October 31, 2002 to offset future capital gains to the extent provided by
regulations. To the extent that these carryover losses are used to offset
future capital gains, it is probable that the gains so offset will not be
distributed to shareholders.
As of October 31, 1994, the Fund had temporary book/tax differences
primarily attributable to the mark-to-market of open forward foreign currency
contracts and compensated forward foreign currency contracts and permanent
book/tax differences primarily attributable to foreign currency losses. To
reflect cumulative reclassifications arising from permanent book/tax
differences as of October 31, 1993, accumulated net realized loss was charged
and accumulated undistributed net investment income was credited $89,258. To
reflect reclassifications arising from permanent book/tax differences for the
year ended October 31, 1994, accumulated undistributed net investment income
was charged and accumulated net realized loss was credited $4,308,454.
7. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK--As of October 31, 1994,
the Fund had outstanding forward foreign currency contracts ("forward
contracts") as a hedge against changes in foreign exchange rates. Forward
contracts involve elements of market risk in excess of the amount reflected
in the Statement of Assets and Liabilities. The Fund bears the risk of an
unfavorable change in the foreign exchange rates underlying the forward
contracts. Risks may also arise upon entering into these contracts from the
potential inability of the counterparties to meet the terms of their
contracts.
<PAGE>
<PAGE>
DEAN WITTER DIVERSIFIED 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
APRIL 9, 1992*
FOR THE YEAR ENDED OCTOBER 31, THROUGH
1994 1993 OCTOBER 31, 1992
------- ----------- -----------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ... $ 10.20 $ 10.01 $ 10.00
---------- -------- -----------
Investment income ....................... 0.74 0.77 0.37
Realized and unrealized gain (loss) .... (0.80) 0.20 --
---------- -------- -----------
Total from investment operations ....... (0.06) 0.97 0.37
---------- -------- -----------
Less dividends and distributions from:
Net investment income .................. (0.64) (0.73) (0.36)
Net realized gains on investments ..... (0.01) (0.05) --
Paid-in-capital ........................ (0.12) -- --
---------- -------- -----------
Total dividends and distributions ...... (0.77) (0.78) (0.36)
---------- -------- -----------
Net asset value, end of period .......... $ 9.37 $ 10.20 $ 10.01
========== ======== ===========
TOTAL INVESTMENT RETURN+ ................ (0.69)% 10.00% 3.73%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $407,038 $167,137 $55,297
Ratios to average net assets: ...........
Expenses ............................... 1.51% 1.58%(4) 0.85%(2)(3)
Net investment income .................. 7.91% 7.92%(4) 7.86%(2)(3)
Portfolio turnover rate ................. 60% 117% 37%(1)
</TABLE>
- - ---------------
* 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
Investment Manager, the above annualized expense and net investment
income ratios would have been 2.08% and 6.63%, respectively.
(4) 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 1.66% and 7.84%, respectively.
See Notes to Financial Statements
<PAGE>
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
- - -----------------------------------------------------------------------------
To the Shareholders and Trustees of Dean Witter Diversified Income Trust
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of Dean Witter
Diversified Income Trust (the "Fund") at October 31, 1994, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the financial highlights for each
of the two years in the period then ended and for the period April 9, 1992
(commencement of operations) through October 31, 1992, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities owned at
October 31, 1994 by correspondence with the custodians and brokers, provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
New York, New York
December 13, 1994
1994 FEDERAL TAX NOTICE (unaudited)
During the year ended October 31, 1994, the Fund paid to shareholders $.0049
per share from long-term capital gains.
<PAGE>
<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
Peter M. Avelar
Vice President
Rajesh K. Gupta
Vice President
Vinh Q. Tran
Vice President
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
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
DIVERSIFIED
INCOME TRUST
ANNUAL REPORT
OCTOBER 31, 1994
