<PAGE>
DEAN WITTER BALANCED INCOME FUND
LETTER TO THE SHAREHOLDERS January 31, 1996
Two World Trade Center, New York, New York 10048
DEAR SHAREHOLDER:
This is the first annual report to shareholders of Dean Witter Balanced
Income Fund for the fiscal year ended January 31, 1996. The recently
completed fiscal year was a favorable period for both fixed-income and equity
investors.
Throughout the life of the Fund, interest rates moved sharply downward as
economic growth slowed to a more sustainable level and inflationary fears all
but disappeared. As a result, the Federal Reserve Board eased monetary policy
by lowering the federal-funds rate by 25 basis points three times, first in
early July, again in mid-December and again in late January. Overall, the
fixed-income markets in general, and the U.S. Treasury market in particular,
reacted favorably. The yield on 30-year U.S. Treasury bonds declined from
7.43 percent in late March, 1995, to 6.03 percent on January 31, 1996.
Similarly, two-year U.S. Treasury note yields declined from 6.78 percent to
4.93 percent during the period.
Robust corporate earnings, benign inflation and a steadily advancing bond
market combined to propel stocks higher and higher throughout 1995 and into
1996, as evidenced by the Dow Jones Industrial Average's (DJIA) vault first
over 4000 and then 5000. The Standard & Poor's 500 Composite Stock Price
Index (S&P 500 Index) and NASDAQ Index were also strong during the year, each
reaching new heights. Despite a brief 100-point detour in mid-December
(brought about by anxiety over budget wrangling in Washington, an economy
perceived to be weakening and a belief that the Federal Reserve Board would
not cut interest rates, which it subsequently did), equities continued to
advance along through the new year.
PERFORMANCE AND PORTFOLIO
Against this backdrop, Dean Witter Balanced Income Fund produced a total
return of 16.93 percent for the period since inception (March 28, 1995)
through January 31, 1996, compared to a return of 14.29 percent for the
Lehman Brothers Government Corporate Bond Index and a return of 29.15 percent
for the S&P 500 Index. The accompanying chart illustrates the
<PAGE>
DEAN WITTER BALANCED INCOME FUND
LETTER TO THE SHAREHOLDERS January 31, 1996, continued
growth of a $10,000 investment in the Fund from inception (March 28, 1995)
through January 31, 1996, versus a similar investment in the issues that
comprise the Lehman Brothers Government/Corporate Bond Index and S&P 500
Index.
On January 31, 1996, the Fund's net assets exceeded $31 million. Since
inception, we have sought to maintain an asset mix of 65 percent in
fixed-income securities and 35 percent in equities. The Fund's fixed-income
component, representing 70 percent of the Fund's net assets on January 31,
1996, was invested as follows: 45 percent in mortgage-backed securities, 27
percent in U.S. Treasury securities, 14 percent in U.S. agency obligations
and 14 percent in money market instruments. The average maturity and average
duration (a measure of a fixed income portfolio's sensitivity to changes in
interest rates) of the fixed-income component on January 31, 1996 were 6.62
years and 5.22 years, respectively.
In selecting equities for its portfolio, the Fund emphasizes those companies
which have a history of paying dividends, and in the opinion of the Fund's
manager, have the potential for increasing those dividends. At the end of the
period under review, the Fund's equity component consisted of 19 stocks,
representing 19 different industry groups. Among the Fund's largest equity
holdings on January 31, 1996 were CSX Corp., Tenneco Inc., Weyerhaeuser Co.,
Atlantic Richfield Co. and Bristol-Myers Squibb Co.
LOOKING AHEAD
Of course, the stock market cannot be expected to rise unabated forever.
Following further advancement in 1996 leading up to the presidential
election, it is reasonable to expect some turbulence. A post election
surprise could be a resurgence of inflationary pressure that would inspire
another round of Federal Reserve Board tightening in 1997. As we learned from
1994, such a correction -- if it were to occur -- could actually be a buying
opportunity for stocks.
We expect the economy to experience a protracted economic slowdown extending
into the latter part of 1996. Falling interest rates, expanding
price/earnings ratios and modest
<TABLE>
<CAPTION>
DEAN WITTER BALANCED INCOME FUND
GROWTH OF $10,000
DATE TOTAL S&P 500 LEHMAN IX
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
March 28, 1995 $10,000 $10,000 $10,000
January 31, 1996 $11,693 $12,915 $11,429
- ----------------------------------------------------------------------------------------
<FN>
CUMULATIVE TOTAL RETURN
LIFE OF FUND
16.93 (1)
_____Fund _____S&P 500 (3) _____Lehman (4)
Past performance is not predictive of future returns.
______________________________________________________
(1) Figure shown assumes reinvestment of all distributions. There is no sales charge.
(2) Closing value, assuming a complete redemption on January 31, 1996.
(3) The Standard & Poor's 500 Composite Stock Price Index (S&P 500) is a broad-
based index, the performance of which is based on the average performance of
500 widely held common stocks. The performance of the index does not include any
expenses, fees or charges. The Index is unmanaged and should not be considered
an investment.
(4) The Lehman Brothers Government/Corporate Bond Index tracks the performance of
government and corporate obligations, including U.S. government agency and U.S. treasury
securities and corporate and yankee bonds, with maturities of one to ten years. The
performance of the index does not include any expenses, fees or charges. The Index
is unmanaged and should not be considered an investment.
</TABLE>
<PAGE>
DEAN WITTER BALANCED INCOME FUND
LETTER TO THE SHAREHOLDERS January 31, 1996, continued
earnings growth on the order of 5 percent should continue to drive the
broader markets higher. However, we expect the market to narrow, as fewer
companies will be able to sustain their recent growth rates. At some point
later in the year we expect the market to begin to look out over the earnings
valley as further Federal Reserve Board rate cuts enable investors to extend
their investment horizons.
We appreciate your support of Dean Witter Balanced Income Fund and we look
forward to continuing to serve your investment needs and objectives.
Very truly yours,
/s/ Charles A. Fiumefreddo
- ----------------------------
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE>
DEAN WITTER BALANCED INCOME FUND
PORTFOLIO OF INVESTMENTS January 31, 1996
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (34.9%)
Aerospace & Defense (1.9%)
11,900 Raytheon Co. ................................................... $ 584,587
-----------
Aluminum (1.9%)
10,500 Aluminum Co. of America ........................................ 582,750
-----------
Automotive (1.9%)
19,500 Ford Motor Co. ................................................. 577,687
-----------
Banking (1.9%)
9,000 BankAmerica Corp. .............................................. 606,375
-----------
Beverages-Soft Drinks (1.7%)
9,100 PepsiCo Inc. ................................................... 542,588
-----------
Chemicals (1.9%)
7,600 Du Pont (E.I.) de Nemours & Co., Inc. .......................... 584,250
-----------
Computer Equipment (1.8%)
5,200 International Business Machines Corp. .......................... 565,500
-----------
Conglomerates (1.9%)
11,500 Tenneco Inc. ................................................... 593,688
-----------
Drugs & Healthcare (1.8%)
6,500 Bristol-Myers Squibb Co. ....................................... 575,250
-----------
Electric - Major (1.8%)
7,300 General Electric Co. ........................................... 560,275
-----------
Foods (1.8%)
12,500 ConAgra, Inc. .................................................. 573,437
-----------
Machinery - Agricultural (1.9%)
15,700 Deere & Co. .................................................... 588,750
-----------
Natural Gas (1.8%)
15,100 Enron Corp. .................................................... 558,700
-----------
Oil - Domestic (1.8%)
4,800 Atlantic Richfield Co. ......................................... 545,400
-----------
Paper & Forest Products (1.9%)
12,900 Weyerhaeuser Co. ............................................... 595,013
-----------
Railroads (1.8%)
12,200 CSX Corp. ...................................................... 565,775
-----------
Retail (1.8%)
7,600 Dayton-Hudson Corp. ............................................ 568,100
-----------
Telecommunications (1.8%)
13,000 Sprint Corp. ................................................... 560,625
-----------
Utilities - Electric (1.8%)
20,400 Pacific Gas & Electric Co. ..................................... 566,100
-----------
TOTAL COMMON STOCKS (Identified Cost $9,544,590) ............... 10,894,850
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -------------------------------------------------------------------------------------------
<C> <S> <C>
U.S. GOVERNMENT & AGENCIES
OBLIGATIONS (60.0%)
Federal National Mortgage Assoc.
$1,956 7.00% due 08/01/25 - 11/01/25 .................................. $ 1,974,888
2,855 7.50% due 08/01/23 - 09/01/25 .................................. 2,928,224
927 8.00% due 05/01/24 - 05/01/25 .................................. 960,444
Government National Mortgage Assoc.
1,987 7.00% due 09/15/23 - 08/15/25 .................................. 2,013,290
2,000 7.00%* ......................................................... 2,015,625
5,500 Resolution Funding Corp. (Coupon Strips)
0.00% due 04/15/04 - 01/15/08 .................................. 3,030,651
3,500 U.S. Treasury Bonds (Coupon Strips)
0.00% due 11/15/04 - 11/15/97 .................................. 2,440,349
U.S. Treasury Notes
1,500 5.875% due 06/30/00 ............................................ 1,538,203
500 6.50% due 04/30/97 ............................................. 509,297
600 6.625% due 03/31/97 ............................................ 611,062
500 6.875% due 03/31/00 ............................................ 530,547
200 7.125% due 02/29/00 ............................................ 213,875
------------
TOTAL U.S. GOVERNMENT & AGENCIES OBLIGATIONS (Identified Cost
$18,268,643) ................................................... 18,766,455
------------
SHORT-TERM INVESTMENTS (a) (9.9%)
U.S. GOVERNMENT AGENCIES
Federal Home Loan Mortgage Corp.
3,100 5.35%-5.80% due 02/01/96-02/26/96 (Amortized Cost $3,094,427) .. 3,094,427
------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $30,907,660) (b) 104.8% 32,755,732
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS ..................... (4.8) (1,503,388)
-------- -------------
NET ASSETS ....................... 100.0% $31,252,344
======== =============
</TABLE>
- ---------------
* 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.
(a) Securities were purchased on a discount basis. The interest rates shown
have been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $30,907,660; the
aggregate gross unrealized appreciation is $1,858,977 and the aggregate
gross unrealized depreciation is $10,905, resulting in net unrealized
appreciation of $1,848,072.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER BALANCED INCOME FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1996
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $30,907,660) ....................................... $32,755,732
Cash ................................................................. 67,533
Receivable for:
Shares of beneficial interest sold ................................. 382,033
Interest ........................................................... 101,216
Dividends .......................................................... 24,406
Deferred organizational expenses ..................................... 153,192
Receivable from affiliate ............................................ 49,758
Prepaid expenses and other assets .................................... 28,112
-------------
TOTAL ASSETS ....................................................... 33,561,982
-------------
LIABILITIES:
Payable for:
Investments purchased .............................................. 2,009,188
Shares of beneficial interest repurchased .......................... 86,725
Organizational expenses .............................................. 153,192
Accrued expenses and other payables .................................. 60,533
-------------
TOTAL LIABILITIES .................................................. 2,309,638
-------------
NET ASSETS:
Paid-in-capital ...................................................... 29,230,998
Net unrealized appreciation .......................................... 1,848,072
Undistributed net investment income .................................. 141,734
Undistributed net realized gain ...................................... 31,540
-------------
NET ASSETS ......................................................... $31,252,344
=============
NET ASSET VALUE PER SHARE,
2,756,580 shares outstanding (unlimited shares authorized of $.01
par value) .......................................................... $11.34
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER BALANCED INCOME FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
FOR THE PERIOD MARCH 28, 1995* THROUGH JANUARY 31, 1996
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Interest ........................................ $ 571,195
Dividends ....................................... 138,949
-----------
TOTAL INCOME .................................. 710,144
-----------
EXPENSES
Plan of distribution fee ........................ 134,798
Investment management fee ....................... 80,879
Professional fees ............................... 56,238
Organizational expenses ......................... 31,308
Shareholder reports and notices ................. 19,253
Custodian fees .................................. 17,888
Registration fees ............................... 11,904
Transfer agent fees and expenses ................ 8,288
Other ........................................... 1,360
-----------
TOTAL EXPENSES BEFORE AMOUNTS
WAIVED/REIMBURSED ............................ 361,916
LESS: AMOUNTS WAIVED/REIMBURSED ............... (361,916)
-----------
TOTAL EXPENSES AFTER AMOUNTS WAIVED/REIMBURSED --
-----------
NET INVESTMENT INCOME ......................... 710,144
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain ............................... 42,559
Net unrealized appreciation ..................... 1,848,072
-----------
NET GAIN ...................................... 1,890,631
-----------
NET INCREASE .................................... $2,600,775
===========
</TABLE>
- ---------------
* Commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER BALANCED INCOME FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
MARCH 28, 1995*
THROUGH
JANUARY 31, 1996
- -------------------------------------------------------------- ----------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ......................................... $ 710,144
Net realized gain ............................................. 42,559
Net unrealized appreciation ................................... 1,848,072
----------------
NET INCREASE ................................................ 2,600,775
----------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income ......................................... (568,410)
Net realized gain ............................................. (11,019)
----------------
TOTAL ....................................................... (579,429)
----------------
Net increase from transactions in shares of beneficial
interest ..................................................... 29,130,998
----------------
TOTAL INCREASE .............................................. 31,152,344
NET ASSETS:
Beginning of period ........................................... 100,000
----------------
END OF PERIOD
(Including undistributed net investment income of $141,734) $31,252,344
================
</TABLE>
- ---------------
* Commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER BALANCED INCOME FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1996
1. Organization and Accounting Policies
Dean Witter Balanced Income Fund (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's investment objective is to
provide current income and moderate capital growth. The Fund seeks to achieve
its objective by investing in investment grade fixed income securities and,
to a lesser extent, common stock of companies which have a record of paying
dividends and, in the opinion of Dean Witter InterCapital Inc. (the
"Investment Manager"), have the potential for increasing dividends and
securities convertible into common stock. The Fund was organized as a
Massachusetts business trust on November 23, 1994 and had no operations other
than those relating to organizational matters and the issuance of 10,000
shares of beneficial interest for $100,000 to Dean Witter InterCapital Inc.
to effect the Fund's initial capitalization. The Fund commenced operations on
March 28, 1995.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures. Actual results could differ
from those estimates. The following is a summary of significant accounting
policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic 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) all other portfolio securities for which over-the-counter
market quotations are readily available are valued at the latest available
bid price prior to the time of valuation; (3) when market quotations are not
readily available, 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); 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.
<PAGE>
DEAN WITTER BALANCED INCOME FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1996, continued
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.
Dividend income and other distributions are recorded on the ex-dividend date.
Interest income is accrued daily.
C. 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.
D. 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.
E. ORGANIZATIONAL EXPENSES -- The Investment Manager paid the organizational
expenses of the Fund in the amount of approximately $184,500 which will be
reimbursed, exclusive of amounts reimbursed of $31,308 which has been
absorbed 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 a management
fee, accrued daily and payable monthly, by applying the annual rate of 0.60%
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
<PAGE>
DEAN WITTER BALANCED INCOME FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1996, continued
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.
The Investment Manager has undertaken to reimburse all operating expenses
(except brokerage fees) and waive the compensation provided for in its
Investment Management Agreement until such time as the Fund has $50 million
of net assets or until March 31, 1996, whichever occurs first. At January 31,
1996, included in the statement of assets and liabilities, was a receivable
from an affiliate which represents expense reimbursements due the Fund.
3. PLAN OF DISTRIBUTION
Dean Witter Distributors Inc. (the "Distributor"), an affiliate of the
Investment Manager, is the distributor of the Fund's shares and, in
accordance with a Plan of Distribution (the "Plan") pursuant to Rule 12b-1
under the Act, finances certain expenses in connection therewith.
Under the Plan, the Distributor bears the expense of all promotional and
distribution related activities on behalf of the Fund, except for expenses
that the Trustees determine to reimburse, as described below. The following
activities and services may be provided by the Distributor, Dean Witter
Reynolds Inc. ("DWR"), an affiliate of the Distributor and Investment
Manager, its affiliates and other selected broker-dealers under the Plan: (1)
compensation to, and expenses of, account executives of DWR and other
selected broker-dealers and other employees, including overhead and telephone
expenses; (2) sales incentives and bonuses to sales representatives and to
marketing personnel in connection with promoting sales of the Fund's shares;
(3) expenses incurred in connection with promoting sales of the Fund's
shares; (4) preparing and distributing sales literature; and (5) providing
advertising and promotional activities, including direct mail solicitation
and television, radio, newspaper, magazine and other media advertisements.
The Fund is authorized to reimburse the Distributor for specific expenses the
Distributor incurs or plans to incur in promoting the distribution of the
Fund's shares. The amount of each monthly reimbursement payment may in no
event exceed an amount equal to a payment at the annual rate of 1.0% of the
Fund's average daily net assets during the month. Expenses incurred by the
Distributor pursuant to the Plan in any fiscal year in excess of 1.0% will
not be reimbursed by the Fund through payments accrued in any subsequent
fiscal year. For the year ended January 31, 1996, the distribution fee was
accrued at the annual rate of 1.0%.
<PAGE>
DEAN WITTER BALANCED INCOME FUND
NOTES TO FINANCIAL STATEMENTS January 31, 1996, 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 period ended January 31, 1996
aggregated $28,117,319 and $445,331, respectively. Included in the
aforementioned are purchases and sales of U.S. Government securities of
$18,325,703 and $155,745, respectively.
For the period ended January 31, 1996, the Fund incurred brokerage
commissions of $9,895 with DWR for portfolio transactions executed on behalf
of the Fund.
Dean Witter Trust Company, an affiliate of the Manager and Distributor, is
the Fund's transfer agent. At January 31, 1996, the Fund had transfer agent
fees and expenses payable of approximately $1,100.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
MARCH 28, 1995*
THROUGH
JANUARY 31, 1996
--------------------------
SHARES AMOUNT
----------- -------------
<S> <C> <C>
Sold ........................................ 3,181,539 $33,881,688
Reinvestment of dividends and distributions 42,146 454,527
----------- -------------
3,223,685 34,336,215
Repurchased ................................. (477,105) (5,205,217)
----------- -------------
Net increase ................................ 2,746,580 $29,130,998
=========== =============
</TABLE>
- ------------
* Commencement of operations.
<PAGE>
DEAN WITTER BALANCED INCOME FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout the period:
<TABLE>
<CAPTION>
FOR THE PERIOD
MARCH 28, 1995*
THROUGH JANUARY
31, 1996
- ---------------------------------------- ----------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ... $ 10.00
----------------
Net investment income ................... 0.38
Net realized and unrealized gain ....... 1.30
----------------
Total from investment operations ....... 1.68
----------------
Less dividends and distributions from:
Net investment income ................... (0.33)
Net realized gain ....................... (0.01)
----------------
Total dividends and distributions ...... (0.34)
----------------
Net asset value, end of period .......... $ 11.34
================
TOTAL INVESTMENT RETURN ................. 16.93%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ................................ -- %(2)(3)
Net investment income ................... 5.27%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $31,252
Portfolio turnover rate ................. 3%(1)
</TABLE>
- ------------
* Commencement of operations.
(1) Not annualized.
(2) Annualized.
(3) If the Investment Manager had not reimbursed all expenses and waived
the management fee, the above annualized expense and net investment
income ratios would have been 2.69% and 2.58%, respectively.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER BALANCED INCOME FUND
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF DEAN WITTER BALANCED INCOME FUND
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
Balanced Income Fund (the "Fund") at January 31, 1996, the results of its
operations, the changes in its net assets
and the financial highlights for the period March 28, 1995 (commencement of
operations) through January 31, 1996, 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 audit. We conducted our audit 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 audit, which included confirmation of securities at January 31, 1996 by
correspondence with the custodian, provides a reasonable basis for the
opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
March 8, 1996
1996 FEDERAL TAX NOTICE (unaudited)
During the period ended January 31, 1996, 18.46% of the ordinary
dividend qualified for the dividends received deduction available to
corporations.
<PAGE>
BOARD OF DIRECTORS
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
Paul D. Vance
Vice President
Rajesh Gupta
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
directors, 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
BALANCED
INCOME FUND
ANNUAL REPORT
JANUARY 31, 1996
