<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
Two World Trade Center, New York, New York 10048
LETTER TO THE SHAREHOLDERS April 30, 1996
DEAR SHAREHOLDER:
Interest rates on intermediate- and long-term U.S. Treasury securities were
highly volatile during the six-month period ended April 30, 1996. During the
final two months of 1995, interest rates continued to decline ultimately
reaching levels last seen before the Federal Reserve Board began its
restrictive monetary policy in early 1994. Much of the bond market's strength
in late 1995 was attributed to economic data supporting the perception that
the economy had indeed slowed. By early 1996, however, the market's
perception of the economy had changed and interest rates began to climb. The
combined effect of the government shut-down and the severe winter weather of
1996 created pent-up demand by the consumer sector. Reinvigorated by low
mortgage rates, rebate-incentives by the auto dealers and extraordinary sale
prices at local retailers, retail sales and housing starts soared, signaling
a quickly rebounding economy, and possibly an inflation surge. Consequently,
interest rates rose dramatically during the first four months of 1996. On
April 30, 1996, the 30-year Treasury bond was yielding 6.91 percent compared
to 6.13 percent six-months ago.
The high-yield market, which performed nicely during the 1995 rally, held up
relatively well during the first four months of 1996, even as interest rates
moved up. While recent signs of an economic recovery have led to a sharp
increase in interest rates, this recovery bodes well for the future prospects
of many corporate issuers in the high-yield marketplace and helps erase some
of the recession fears that had plagued the high-yield market in late 1995.
Overall, the high-yield market is off to a relatively good start in early
1996.
Meanwhile, short-term interest rates in the European countries trended lower,
in reaction to their central banks' cuts of official short rates, as well as
ongoing weak growth of their economies. However, at the longer end of the
yield curves, rates went up slightly in the core countries, such as Germany
and France, in sympathy with the higher-rate pressures in the U.S. On the
other hand, three-year rates in Italy, Spain and Sweden
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
LETTER TO THE SHAREHOLDERS April 30, 1996, continued
declined as bond market participants took note of the ongoing progress that
these countries have made in reducing public spending and deficits, as well
as lower inflationary expectations. Thus, three-year yields in Italy declined
by about 1.6 percent since the beginning of the year, while yields on
three-year Spanish and Swedish bonds declined by approximately 1.1 percent.
In the foreign exchange markets, the U.S. dollar, in reaction to improving
interest rate differentials and a stronger U.S. economic growth outlook,
appreciated against most of the major currencies, with the dollar gaining
approximately 8.7 percent against the Deutschemark and 3.0 percent against
the Japanese yen. Overall, the trade weighted dollar gained about 5.1 percent
during the six-month period.
PERFORMANCE AND PORTFOLIO
Against this backdrop, Dean Witter Diversified Income Trust produced a total
return of 4.32 percent for the six-month period ended April 30, 1996. During
the reporting period, the Fund paid distributions totaling $0.36 per share.
The Fund's net assets exceeded $629 million on April 30, 1996.
SHORT-TERM GLOBAL SECTOR
The Investment strategy of the short-term global sector of the Fund was to
maintain its overweighted positions in the Italian, Spanish and Swedish
markets, taking advantage of higher yields and rising bond prices in these
markets. The weighting in the Australian market's short-term investments was
also increased in order to benefit from higher, but stable yields and
exchange rates. As of April 30, 1996, 11 percent of this sector's assets were
invested in Canada, 70 percent in Europe and 19 percent in Australia and New
Zealand. The average maturity of this sector was 1.8 years. Most of the
currency risks of the European investments were hedged back into the dollar
as the U.S. currency appreciated in value.
U.S. GOVERNMENT/MORTGAGE SECTOR
With the rise in interest rates during the past six months, current coupon
mortgage-backed securities rose from 7.0 percent in October 1995 to 7.5
percent in April 1996. Over this time period, these securities moderately
outperformed U.S. Treasury securities with similar maturities. Accordingly,
as cash flows permitted, we purchased current coupon mortgages at attractive
levels, enhancing the Fund's income and total return potential.
As of April 30, 1996, 91 percent of this sector was invested in mortgage
backed securities issued by Federal National Mortgage Association (FNMA),
Government National Mortgage Association (GNMA) and Federal Home Loan
Mortgage Corp. (FHLMC) with 6.50 percent to 8.00 percent coupons, 7 percent
in U.S. Treasury securities and the remaining 2 percent in U.S. Agency
strips.
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
LETTER TO THE SHAREHOLDERS April 30, 1996, continued
HIGH-YIELD SECTOR
The investment strategy for this sector of the Fund throughout 1995 and early
1996 has been to capitalize on the opportunities created by the 1994 market
correction by positioning the portfolio for a continued rebound in the
high-yield market. Despite the fact that corporate credit quality remained
strong, the 1994 market correction pushed yields on many B-rated issues
300-400 basis points higher (to the 13-14 percent range) and caused bond
prices in some cases to decline by as much as 15-20 percent. In light of this
correction, the Fund increased its emphasis on discounted issues during the
second half of 1994, which helped to provide more capital appreciation
potential for the Fund during the past six months. While the Fund's portfolio
is still positioned for further upside in the high-yield market, it continues
to maintain a sizable position in various defensive securities, in order to
provide the flexibility needed to take advantage of any interim opportunities
that may arise.
LOOKING AHEAD
We believe the U.S. economy will continue to grow at a slow-to-moderate pace
during the remainder of 1996, while inflation should continue to remain
subdued albeit at a slightly higher level. Over the near term, we expect
continued volatility in the financial markets as investors assess the
economy's strength, possible Federal Reserve Board actions and ongoing budget
negotiations in Washington.
In the global economy, inflation remains low and, although there is some
ongoing concern, mostly due to rises of commodity prices and wage pressure,
inflationary expectations should be well contained as the global economy
continues to experience fiscal contraction and moderate growth.
We appreciate your continued support of Dean Witter Diversified Income Trust
and look forward to serving your investment needs and objectives.
Very truly yours,
/s/ Charles A. Fiumefreddo
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------- ---------------------------------------------------------------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C>
GOVERNMENT & CORPORATE BONDS (97.5%)
AUSTRALIA (2.0%)
Government Obligations
Au$ 8,650 Queensland Treasury Corp. (a) .................................. 8.00 % 05/14/97 $ 6,820,144
7,300 Queensland Treasury Corp. (a) .................................. 12.00 05/15/97 5,932,230
--------------
TOTAL AUSTRALIA ....................................................................... 12,752,374
--------------
CANADA (3.4%)
Government Obligations
Ca$ 5,100 Canada Treasury Bond (a) ....................................... 9.25 05/01/96 3,746,144
14,930 Canada Treasury Bond (a) ....................................... 9.25 10/01/96 11,156,375
1,300 Canada Treasury Bond ........................................... 8.00 11/01/98 989,754
6,200 Canada Treasury Bond ........................................... 5.75 03/01/99 4,469,884
2,100 Ontario Province (a) ........................................... 10.00 09/30/96 1,569,833
--------------
TOTAL CANADA .......................................................................... 21,931,990
--------------
DENMARK (4.2%)
Government Obligation
DKr 141,700 Denmark Treasury Note (a) ...................................... 9.00 11/15/98 26,336,308
--------------
GERMANY (4.1%)
Finance (0.6%)
DEM 6,000 Deutsche Finance BV (a) ........................................ 6.25 04/08/97 4,021,306
--------------
Government Obligations (3.5%)
25,800 Bundes Obligation (a) .......................................... 8.375 01/20/97 17,466,977
6,450 Bundes Obligation (a) .......................................... 6.875 02/24/99 4,504,588
--------------
21,971,565
--------------
TOTAL GERMANY ......................................................................... 25,992,871
--------------
IRELAND (1.0%)
Government Obligation
IEP 3,850 Ireland Treasury Bond .......................................... 9.75 06/01/98 6,460,384
--------------
ITALY (4.2%)
Finance (0.1%)
ITL 230 M Abbey National Treasury Bond ................................... 11.00 04/21/97 150,370
900 M Credit Suisse Finance Gibraltar ................................ 11.625 05/27/97 592,845
--------------
743,215
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited) continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------- ---------------------------------------------------------------- ---------- ----------- --------------
Government Obligations (4.1%)
ITL 6,800 M Italy Treasury Bond ............................................ 9.50 % 12/01/97 $ 4,391,312
27,785 M Italy Treasury Bond (a) ........................................ 10.50 04/15/98 18,368,468
4,850 M Italy Treasury Bond ............................................ 9.50 02/01/99 3,162,178
--------------
25,921,958
--------------
TOTAL ITALY .......................................................................... 26,665,173
--------------
NEW ZEALAND (4.1%)
Government Obligations
NZ$ 10,200 New Zealand Treasury Bond (a) .................................. 9.00 11/15/96 6,982,121
9,500 New Zealand Treasury Bond (a) .................................. 10.00 07/15/97 6,577,132
18,259 New Zealand Treasury Bond (a) .................................. 8.00 07/15/98 12,272,438
--------------
TOTAL NEW ZEALAND ..................................................................... 25,831,691
--------------
SPAIN (3.9%)
Government Obligations
ESP 1,060 M Spain Treasury Bond (a) ........................................ 7.30 07/30/97 8,326,309
1,016 M Spain Treasury Bond (a) ........................................ 11.45 08/30/98 8,583,834
941 M Spain Treasury Bond (a) ........................................ 9.90 10/31/98 7,717,117
--------------
TOTAL SPAIN ........................................................................... 24,627,260
--------------
SWEDEN (5.1%)
Finance (0.4%)
SEK 18,000 Deutsche Bank Finance NV ....................................... 10.25 02/24/97 2,723,637
--------------
Government Obligation (4.7%)
180,800 Sweden Treasury Bond ........................................... 11.00 01/21/99 29,188,965
--------------
TOTAL SWEDEN .......................................................................... 31,912,602
--------------
UNITED STATES (65.5%)
Aerospace (0.9%)
$ 5,750 Sabreliner Corp. (Series B) .................................... 12.50 04/15/03 5,390,625
--------------
Automotive (1.0%)
2,000 Am General Corp. (Series B) .................................... 12.875 05/01/02 2,060,000
3,000 Envirotest Systems, Inc. ....................................... 9.125 03/15/01 2,640,000
2,326 Envirotest Systems, Inc. ....................................... 9.625 04/01/03 1,814,280
--------------
6,514,280
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited) continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------- ---------------------------------------------------------------- ---------- ----------- --------------
Broadcast Media (1.3%)
$ 4,000 Paxson Communications Corp. .................................... 11.625% 10/01/02 $ 4,240,000
4,000 Spanish Broadcasting System, Inc. .............................. 7.50 06/15/02 3,910,000
--------------
8,150,000
--------------
Cable & Telecommunications (3.5%)
3,143 Adelphia Communications Corp. (Series B) ....................... 9.50 + 02/15/04 2,796,825
5,400 AT&T Capital Corp. ............................................. 15.00 05/05/97 5,860,459
7,100 Hyperion Communications (Units)+- - 144A* ...................... 0.00 04/15/03 3,780,750
19,500 In-Flight Phone Corp. (Series B) ............................... 14.00 ++ 05/15/02 6,045,000
4,000 Peoples Telephone Co., Inc. .................................... 12.25 07/15/02 3,730,000
--------------
22,213,034
--------------
Computer Equipment (1.1%)
3,300 Unisys Corp. ................................................... 15.00 07/01/97 3,522,750
3,275 Unisys Corp. (Conv.) ........................................... 8.25 03/15/06 3,641,800
--------------
7,164,550
--------------
Consumer Products (0.4%)
2,500 J.B. Williams Holdings, Inc. ................................... 12.00 03/01/04 2,487,500
--------------
Containers (1.3%)
2,000 Anchor Glass Containers Corp. .................................. 10.25 06/30/02 1,640,000
2,000 Anchor Glass Containers Corp. .................................. 9.875 12/15/08 1,300,000
8,000 Ivex Holdings Corp. (Series B) ................................. 13.25 ++ 03/15/05 4,960,000
--------------
7,900,000
--------------
Electrical & Alarm Systems (0.8%)
6,250 Mosler, Inc. ................................................... 11.00 04/15/03 4,812,500
--------------
Electronics - Semiconductors (0.7%)
5,000 Integrated Device Technology (Conv.) ........................... 5.50 06/01/02 4,310,400
--------------
Entertainment/Gaming & Lodging (3.8%)
4,500 Coast Hotels & Casino Corp. - 144A* ............................ 13.00 12/15/02 4,747,500
2,900 Fitzgeralds Gaming Corp. (Units)+- ............................. 13.00 12/31/02 2,726,000
3,500 Lady Luck Gaming Finance Corp. ................................. 11.875 03/01/01 3,482,500
3,500 Motels of America, Inc. (Series B) ............................. 12.00 04/15/04 3,447,500
4,000 Players International, Inc. .................................... 10.875 04/15/05 4,095,000
1,500 Plitt Theaters, Inc. ........................................... 10.875 06/15/04 1,530,000
4,000 Trump Atlantic City ............................................ 11.25 05/01/06 4,090,000
--------------
24,118,500
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited) continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------- ---------------------------------------------------------------- ---------- ----------- --------------
Foods & Beverages (4.3%)
$ 9,100 Envirodyne Industries, Inc. .................................... 10.25 % 12/01/01 $ 7,462,000
3,000 PepsiCo Inc. ................................................... 15.00 06/14/96 3,031,140
3,000 SC International Services, Inc. ................................ 13.00 10/01/05 3,240,000
8,255 Seven Up/RC Bottling Co. Southern California, Inc. (b) ......... 11.50 08/01/99 4,736,934
18,750 Specialty Foods Acquisition Corp. (Series B) ................... 13.00 ++ 08/15/05 8,343,750
--------------
26,813,824
--------------
Manufacturing (2.7%)
4,000 Alpine Group, Inc. (Series B) .................................. 12.25 07/15/03 3,920,000
4,000 Exide Electronics Group (Units)+- - 144A* ...................... 11.50 03/15/06 4,200,000
4,000 Specialty Equipment Co. ........................................ 11.375 12/01/03 4,135,000
5,000 Uniroyal Technology Corp. ...................................... 11.75 06/01/03 4,687,500
--------------
16,942,500
--------------
Manufacturing - Diversified (2.9%)
5,000 Foamex L.P. .................................................... 11.875 10/01/04 4,950,000
4,000 Interlake Corp. ................................................ 12.125 03/01/02 3,860,000
2,500 J.B. Poindexter & Co., Inc. .................................... 12.50 05/15/04 2,100,000
7,815 Jordan Industries, Inc. ........................................ 10.375 08/01/03 7,267,950
--------------
18,177,950
--------------
Oil & Gas (0.6%)
2,500 Empire Gas Corp. ............................................... 7.00 07/15/04 2,250,000
1,750 Kelley Oil & Gas Partners Ltd. (Conv.) ......................... 8.50 04/01/00 1,452,500
--------------
3,702,500
--------------
Publishing (1.3%)
7,000 Affiliated Newspapers Investments, Inc. ........................ 13.25 ++ 07/01/06 4,742,500
5,000 United States Banknote Corp. (Series B) ........................ 11.625 08/01/02 3,500,000
--------------
8,242,500
--------------
Restaurants (1.6%)
6,000 American Restaurant Group Holdings, Inc. ....................... 14.00 ++ 12/15/05 2,550,000
10,350 Flagstar Corp. ................................................. 11.25 11/01/04 7,245,000
--------------
9,795,000
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited) continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------- ---------------------------------------------------------------- ---------- ----------- --------------
Retail (1.3%)
$ 1,959 Cort Furniture Rental Corp. .................................... 12.00 % 09/01/00 $ 2,037,360
1,500 County Seat Stores Co. ......................................... 12.00 10/01/02 1,305,000
6,575 Finlay Enterprises ............................................. 0.00 05/01/05 4,766,875
--------------
8,109,235
--------------
Retail - Food Chains (0.8%)
4,800 Ralphs Grocery Co. ............................................. 10.45 06/15/04 4,716,000
--------------
Textiles - Apparel Manufacturers (0.8%)
6,083 JPS Textile Group, Inc. ........................................ 10.85 06/01/99 3,497,506
2,000 U.S. Leather, Inc. ............................................. 10.25 07/31/03 1,750,000
--------------
5,247,506
--------------
Waste Management (0.8%)
4,900 Norcal Waste Systems - 144A* ................................... 12.50 11/15/05 5,126,625
--------------
U.S. Government & Agencies Obligations (33.6%)
3,909 Federal Home Loan Mortgage 10/01/24-
Corp. (0.6%) .................................................. 8.00 06/01/25 3,946,978
--------------
Federal National Mortgage Assoc. (20.4%)
11,000 12/20/01-
Principal Strip ................................................ 0.00 02/01/05 8,075,206
4,062 ................................................................. 6.00 02/01/11-
03/01/11 3,846,602
24,050 ................................................................. 6.50 10/01/08-
02/01/24 23,039,818
32,942 ................................................................. 7.00 08/01/08-
12/01/25 31,816,917
86 ................................................................. 7.00 ** 82,549
21,486 ................................................................. 7.50 02/01/22-
11/01/25 21,223,680
8,535 ................................................................. 8.00 09/01/01-
06/01/22 8,704,585
6,500 ................................................................. 8.00 ** 6,542,656
23,951 ................................................................. 8.50 07/01/17-
05/01/25 24,594,646
--------------
127,926,659
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited) continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------- ---------------------------------------------------------------- ---------- ----------- --------------
Government National Mortgage Assoc. (9.6%)
$ 4,721 ................................................................. 6.50 % 11/20/23-
02/20/24 $ 4,383,395
8,763 ................................................................. 7.00 12/15/22-
02/20/26 8,405,081
15,265 ................................................................. 7.50 04/15/22-
07/20/25 15,045,406
20,000 ................................................................. 7.50 ** 19,731,250
8,541 ................................................................. 8.00 01/15/22-
10/15/24 8,644,893
3,994 ................................................................. 8.50 08/15/22-
12/15/24 4,122,792
--------------
60,332,817
--------------
Resolution Funding Corp. (0.9%)
10,000 ................................................................. 0.00 10/15/04 5,624,434
--------------
U.S. Treasury Notes (a) (1.5%)
3,000 ................................................................. 4.75 09/30/98-
10/31/98 2,905,938
2,600 ................................................................. 5.50 11/15/98 2,559,375
2,000 ................................................................. 5.75 10/31/00 1,948,750
2,000 ................................................................. 6.25 08/31/00 1,987,813
--------------
9,401,876
--------------
U.S. Treasury Strip (a) (0.6%)
4,000 ................................................................. 0.00 05/15/97 3,775,316
--------------
TOTAL U.S. GOVERNMENT & AGENCIES OBLIGATIONS .......................................... 211,008,080
--------------
TOTAL UNITED STATES ................................................................... 410,943,109
--------------
TOTAL GOVERNMENT & CORPORATE BONDS
(Identified Cost $626,394,510) ........................................................ 613,453,762
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ---------------------------------------------------------------- ----------- ----------- --------------
<S> <C> <C>
COMMON STOCKS (c) (1.2%)
Electrical & Alarm Systems (0.1%)
50,000 Protection One, Inc. ................................................................... $ 781,250
--------------
Entertainment/Gaming & Lodging (0.0%)
2,000 Motels of America, Inc. - 144A* ........................................................ 150,000
--------------
Foods & Beverages (0.1%)
198,750 Specialty Foods Acquisition Corp. - 144A* .............................................. 385,178
--------------
Manufacturing - Diversified (0.7%)
100,000 Interlake Corp. ........................................................................ 262,500
167,500 Thermadyne Holdings Corp. (d) .......................................................... 4,020,000
--------------
4,282,500
--------------
Oil & Gas (0.1%)
100,000 HarCor Energy, Inc. .................................................................... 487,500
--------------
Publishing (0.0%)
6,000 Affiliated Newspapers Investments, Inc. (Class B) ...................................... 180,000
--------------
Restaurants (0.0%)
6,000 American Restaurant Group Holdings, Inc. - 144A* ....................................... 60,000
--------------
Retail (0.2%)
82,050 Thrifty Payless Holdings, Inc. (Class B) ............................................... 1,107,675
--------------
TOTAL COMMON STOCKS
(Identified Cost $6,108,354) ........................................................... 7,434,103
--------------
PREFERRED STOCKS (c) (0.4%)
Entertainment/Gaming & Lodging (0.3%)
80,000 Fitzgeralds Gaming Corp. (Units)+- $3.75 ............................................... 2,080,000
--------------
Oil & Gas (0.1%)
43,000 Kelley Oil & Gas Corp. (Units)+- $2.625 (Conv.) ........................................ 688,000
--------------
TOTAL PREFERRED STOCKS
(Identified Cost $2,731,000) ........................................................... 2,768,000
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION
WARRANTS DATE VALUE
- -------------------------------------------------------------------------- --------- ------------ --------------
<S> <C> <C>
WARRANTS (c) (0.1%)
Aerospace (0.0%)
1,000 Sabreliner Corp. (Restricted) - 144A* .................................... 04/15/03 $ 10,000
--------------
Cable & Telecommunications (0.0%)
11,500 In-Flight Phone Corp. - 144A* ............................................ 08/31/02 115,000
--------------
Containers (0.0%)
2,000 Crown Packaging Holdings, Ltd. (Canada) - 144A* .......................... 11/01/03 50,000
--------------
Manufacturing (0.0%)
3,500 BPC Holdings Corp. ....................................................... 04/15/04 43,750
49,000 Uniroyal Technology Corp. ................................................ 06/01/03 73,500
--------------
117,250
--------------
Oil & Gas (0.0%)
3,450 Empire Gas Corp. ......................................................... 07/15/04 34,500
--------------
Retail (0.1%)
109,890 Cort Business Services Corp. ............................................. 09/07/98 302,686
1,500 County Seat Holdings Co. ................................................. 10/15/98 15,000
--------------
317,686
--------------
Retail - Food Chains (0.0%)
16,278 Grand Union Co. (Series 1) (d) ........................................... 06/16/00 --
32,558 Grand Union Co. (Series 2) (d) ........................................... 06/16/00 --
--------------
--
--------------
TOTAL WARRANTS
(Identified Cost $977,333) ............................................................ 644,436
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------ ---------------------------------------------------------------- --------- ---------- --------------
<S> <C> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS (3.5%)
AUSTRALIA (0.5%)
GOVERNMENT OBLIGATION (e)
Au$ 4,215 Australia Treasury Bill ........................................ 7.30 % 07/18/96 3,265,456
--------------
UNITED STATES (3.0%)
U.S. GOVERNMENT AGENCY (e) (2.9%)
$ 17,945 Federal Home Loan Mortgage Corp. ............................... 5.30 05/01/96 17,945,000
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited) continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ------------ ---------------------------------------------------------------- --------- ---------- --------------
REPURCHASE AGREEMENT (0.1%)
$ 729 The Bank of New York (dated 04/30/96; proceeds $728,678;
collateralized by $792,349 Federal National Mortgage Assoc.
6.309% due 04/01/35 valued at $743,141) (Identified Cost
$728,570) ...................................................... 5.3125% 05/01/96 $ 728,570
--------------
TOTAL UNITED STATES ............................................................... 18,673,570
--------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $21,720,976) ..................................................... 21,939,026
--------------
TOTAL INVESTMENTS
(Identified Cost $657,932,173) (f) ....................................... 102.7% 646,239,327
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS ................................................................... (2.7) (16,701,194)
---------- --------------
NET ASSETS ............................................................... 100.0% $629,538,133
========== ==============
</TABLE>
- ------------
M In millions.
* Resale is restricted to qualified institutional investors.
** Security 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.
+- Consists of one or more class of securities traded together as a unit;
generally bonds with attached stocks/warrants.
+ Payment-in-kind security.
++ Currently a zero coupon bond and will pay interest at the rate shown at
a future specified date.
(a) Some or all of these securities are segregated in connection with open
forward foreign currency contracts and securities purchased on a
forward committment basis.
(b) Non-income producing security, issuer in default.
(c) Non-income producing securities.
(d) Acquired through exchange offer.
(e) Securities were purchased on a discount basis. The interest rates shown
have been adjusted to reflect a money market equivalent yield.
(f) The aggregate cost for federal income tax purposes is 658,230,278; the
aggregate gross unrealized appreciation is $11,711,161 and the
aggregate gross unrealized depreciation is $23,702,112, resulting in
net unrealized depreciation of $11,990,951.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited) continued
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT APRIL 30, 1996:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS DELIVERY APPRECIATION
TO DELIVER IN EXCHANGE FOR DATE (DEPRECIATION)
-------------- --------------- ---------- --------------
<S> <C> <C> <C>
$ 2,244,850 DKK12,782,154 08/09/96 $ (66,903)
yen 1,613,250,000 $ 14,993,030 10/07/96 (314,304)
yen 730,000,000 $ 6,821,155 11/05/96 (54,651)
yen 900,000,000 $ 8,409,643 11/05/96 (65,897)
DEM 17,950,000 $ 12,203,413 11/12/96 505,531
NLG 22,343,500 $ 13,350,562 01/13/97 325,956
NLG 16,750,000 $ 10,008,365 03/25/97 244,476
CHF 4,975,000 $ 4,020,202 05/02/97 19,398
--------------
Net unrealized appreciation ............ $ 593,606
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $657,932,173) ...................................... $646,239,327
Cash (including $860,351 in foreign currency) ........................ 1,415,358
Unrealized appreciation on open forward foreign currency contracts .. 1,095,361
Receivable for:
Interest ........................................................... 12,746,997
Compensated forward foreign currency contracts ..................... 1,880,317
Investments sold ................................................... 1,809,745
Shares of beneficial interest sold ................................. 1,761,507
Foreign withholding taxes reclaimed ................................ 167,996
Deferred organizational expenses ..................................... 28,370
Prepaid expenses ..................................................... 92,205
--------------
Total Assets ....................................................... 667,237,183
--------------
Liabilities:
Unrealized depreciation on open forward foreign currency contracts .. 501,755
Payable for:
Investments purchased .............................................. 32,278,250
Compensated forward foreign currency contracts ..................... 3,026,047
Dividends to shareholders .......................................... 688,799
Plan of distribution fee ........................................... 462,835
Shares of beneficial interest repurchased .......................... 334,234
Investment management fee .......................................... 217,805
Accrued expenses ..................................................... 189,325
--------------
Total Liabilities .................................................. 37,699,050
--------------
Net Assets:
Paid-in-capital ...................................................... 639,604,470
Net unrealized depreciation .......................................... (11,195,365)
Accumulated undistributed net investment income ...................... 6,878,679
Accumulated net realized loss ........................................ (5,749,651)
--------------
Net Assets ......................................................... $629,538,133
==============
Net Asset Value Per Share,
65,130,505 shares outstanding (unlimited shares authorized of $.01
par value) .......................................................... $ 9.67
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DAN WITTER DIVERSIFIED INCOME TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME (net of $140,527 foreign withholding tax) .......... $29,132,059
-------------
Expenses
Plan of distribution fee ............................................ 2,482,551
Investment management fee ........................................... 1,168,259
Transfer agent fees and expenses .................................... 173,182
Custodian fees ...................................................... 161,765
Registration fees ................................................... 56,559
Professional fees ................................................... 33,413
Shareholder reports and notices ..................................... 27,002
Trustees' fees and expenses ......................................... 16,036
Organizational expenses ............................................. 15,051
Other ............................................................... 11,510
-------------
Total Expenses .................................................... 4,145,328
-------------
Net Investment Income ............................................. 24,986,731
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on:
Investments ....................................................... 1,277,015
Foreign exchange transactions ..................................... 2,240,210
-------------
Total Gain ........................................................ 3,517,225
-------------
Net change in unrealized depreciation on:
Investments ....................................................... (6,517,266)
Translation of forward foreign currency contracts, other assets
and liabilities denominated in foreign currencies ................. 2,323,771
-------------
Total Depreciation ................................................ (4,193,495)
-------------
Net Loss .......................................................... (676,270)
-------------
Net Increase ........................................................ $24,310,461
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED OCTOBER
APRIL 30, 1996 31, 1995
- ------------------------------------------------------ -------------- ----------------
<S> <C> <C>
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ................................. $ 24,986,731 $ 38,917,441
Net realized gain (loss) .............................. 3,517,225 (6,654,035)
Net change in unrealized depreciation ................. (4,193,495) 15,624,921
-------------- ----------------
Net Increase ........................................ 24,310,461 47,888,327
Dividends from net investment income .................. (21,924,481) (35,658,766)
Net increase from transactions in shares of beneficial
interest ............................................. 84,608,460 123,275,734
-------------- ----------------
Total Increase ...................................... 86,994,440 135,505,295
Net Assets:
Beginning of period ................................... 542,543,693 407,038,398
-------------- ----------------
End of Period
(Including undistributed net investment income of
$6,878,679 and $3,816,429, respectively) ............ $629,538,133 $542,543,693
============== ================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited)
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) all 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. Discounts are accreted over the life of the respective securities.
Interest income is accrued daily.
C. 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
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited) continued
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.
D. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward
foreign currency contracts which are valued daily at the appropriate exchange
rates. The resultant unrealized exchange gains and losses are included in the
Statement of Operations as unrealized foreign currencies gain or loss. 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.
E. 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.
F. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends
and distributions to its shareholders on the record 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.
G. ORGANIZATIONAL EXPENSES -- Dean Witter InterCapital Inc. (the "Investment
Manager") paid the organizational expenses of the Fund in the amount of
approximately $151,000 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.
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited) continued
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, the Fund pays 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 inception
of the Fund (not including reinvestment of dividend 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 incurred 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.
<PAGE>
DEAN WITTER DIVERSIFIED 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 $581,000 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.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the six months ended April 30, 1996
were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
--------------- --------------
<S> <C> <C>
Corporate Bonds .......................... $143,464,454 $125,938,376
Foreign Government Bonds ................. 104,092,275 64,812,874
U.S. Government and Agencies Obligations 55,256,856 14,214,799
</TABLE>
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 $19,000.
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 six
months ended April 30, 1996 included in Trustees' fees and expenses in the
Statement of Operations amounted to $7,665. At April 30, 1996, the Fund had
an accrued pension liability of $26,518 which is included in accrued expenses
in the Statement of Assets and Liabilities.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
APRIL 30, 1996 OCTOBER 31, 1995
----------------------------- -----------------------------
(UNAUDITED)
SHARES AMOUNT SHARES AMOUNT
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Sold 14,667,020 $142,280,158 21,219,776 $201,648,052
Reinvestment of dividends 945,714 9,150,873 1,592,451 15,089,111
------------- -------------- ------------- --------------
15,612,734 151,431,031 22,812,227 216,737,163
Repurchased (6,885,321) (66,822,571) (9,852,773) (93,461,429)
------------- -------------- ------------- --------------
Net increase 8,727,413 $ 84,608,460 12,959,454 $123,275,734
============= ============== ============= ==============
</TABLE>
<PAGE>
DEAN WITTER DIVERSIFIED INCOME TRUST
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited) continued
6. FEDERAL INCOME TAX STATUS
At October 31, 1995, the Fund had a net capital loss carryover of
approximately $6,701,000 of which $3,024,000 will be available through
October 31, 2002 and $3,677,000 will be available through
October 31, 2003 to offset future capital gains to the extent provided by
regulations.
As of October 31, 1995, the Fund had temporary book/tax differences primarily
attributable to the mark-to-market of open forward foreign currency exchange
contracts and compensated forward foreign currency exchange contracts and
permanent book/tax differences primarily attributable to foreign currency
losses.
7. PURPOSE OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS
The Fund may enter into forward foreign currency contracts ("forward
contracts") to facilitate settlement of foreign currency denominated
portfolio transactions or to manage its foreign currency exposure or to sell,
for a fixed amount of U.S. dollars or other currency, the amount of foreign
currency approximating the value of some or all of its holdings denominated
in such foreign currency or an amount of foreign currency other than the
currency in which the securities to be hedged are denominated approximating
the value of some or all of its holdings to be hedged. Additionally, when the
Investment Manager anticipates purchasing securities at some time in the
future, the Fund may enter into a forward contract to purchase an amount of
currency equal to some or all the value of the anticipated purchase for a
fixed amount of U.S. dollars or other currency.
To hedge against adverse interest rate, foreign currency and market risks,
the Fund may enter into written options on interest rate futures and interest
rate futures contracts ("derivative investments").
At April 30, 1996, there were outstanding forward contracts used to
facilitate settlement of foreign currency denominated portfolio transactions
and manage foreign currency exposure.
These derivative instruments 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>
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
FOR THE SIX FOR THE YEAR ENDED OCTOBER 31 APRIL 9, 1992*
MONTHS ENDED ------------------------------------ THROUGH
APRIL 30, 1996 1995 1994 1993 OCTOBER 31,1993
- ---------------------------------------------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .. $ 9.62 $ 9.37 $10.20 $10.01 $10.00
---------- ----------- ---------- ---------- ----------
Net investment income .................. 0.40 0.77 0.74 0.77 0.37
Net realized and unrealized gain (loss) 0.01 0.20 (0.80) 0.20 --
---------- ----------- ---------- ---------- ----------
Total from investment operations ...... 0.41 0.97 (0.06) 0.97 0.37
---------- ----------- ---------- ---------- ----------
Less dividends and distributions from:
Net investment income ................. (0.36) (0.72) (0.64) (0.73) (0.36)
Net realized gain ..................... -- -- (0.01) (0.05) --
Paid-in-capital ....................... -- -- (0.12) -- --
---------- ----------- ---------- ---------- ----------
Net asset value, end of period ......... $ 9.67 $ 9.62 $ 9.37 $10.20 $10.01
========== =========== ========== ==========
TOTAL INVESTMENT RETURN+ ............... 4.32%(1) 10.76% (0.69)% 10.00% 3.73%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................... 1.42%(2) 1.44% 1.51% 1.58%(4) 0.85%(2)(3)
Net investment income .................. 8.53%(2) 8.30% 7.91% 7.92%(4) 7.86%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $629,538 $542,544 $407,038 $167,137 $55,297
Portfolio turnover rate ................ 36%(1) 87% 60% 117% 37%(1)
</TABLE>
- ------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge. 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
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>
TRUSTEES
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
The financial statements included herein have been taken from the records of
the Fund without examination by the independent accountants and accordingly
they do not express an opinion thereon.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and
trustees, fees, expenses and other pertinent information, please see the
prospectus of the Fund.
This report is not authorized for distribution to prospective investors in
the Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER
DIVERSIFIED
INCOME TRUST
SEMIANNUAL REPORT
APRIL 30, 1996
