<PAGE>
DEAN WITTER WORLD WIDE INCOME TRUST TWO WORLD TRADE CENTER, NEW YORK, NEW YORK
10048
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1997
DEAR SHAREHOLDER:
The fiscal year ended October 31, 1997, was marked by mixed performance of the
global fixed-income markets. During the first half of the year, interest rates
rose in most of the major developed markets, while rates stabilized and then
declined during the second half of the period.
MIXED PERFORMANCE IN THE GLOBAL BOND MARKETS
In the United States, fears that the economy might be overheated and warnings by
the Federal Reserve Board of higher inflation pushed interest rates up during
the first half of the year. In actuality the rate of inflation continued to
decline, which, combined with a tapering off of economic growth, caused a sharp
reversal in market sentiment. U.S. bonds also benefited from a currency crisis
in Asia as investors moved toward safer investments. These developments allowed
yields on 10-year Treasuries to decrease by 0.5 percent (50 basis points),
closing the fiscal year at 5.83 percent after rising as much as 7.01 percent
during the year.
Meanwhile, European bond markets fluctuated within a wide range, partly in
sympathy with the U.S. market. These markets were further buffeted by
interest-rate increases in the United Kingdom and calls from the Bundesbank for
rate increases in Germany. In the end, the prospect of a timely launch of the
European Monetary Union in January 1999, and continued fiscal restraint, helped
European bond yields drift lower during the second half of the year. German
bonds registered a net decline of 45 basis points (0.45 percent), while Italian
bond yields fell by 188 basis points (1.88 percent).
A STRONG U.S. DOLLAR
Throughout the fiscal year, developments in the global bond markets were
overshadowed by a substantial strengthening of the U.S. dollar. From its low in
November 1996 the dollar gained 27 percent against the German mark by August.
While the U.S. dollar has since pulled back from these high levels, the U.S.
currency still recorded a gain of
<PAGE>
DEAN WITTER WORLD WIDE INCOME TRUST
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1997, CONTINUED
13.7 percent against the mark for the fiscal year. The dollar also made
significant gains against the Japanese yen during this period, gaining 5.25
percent for the total year after registering a rise of 10.23 percent by April.
Overall, the U.S. dollar rose by a substantial 9.3 percent against the world's
major currencies.
PERFORMANCE
On July 28, 1997, Dean Witter World Wide Income Trust began offering four
classes of shares -- A, B, C and D -- each with its own sales charge and
distribution fee structure. A revised prospectus, which includes complete
details regarding the Fund's conversion to multiple classes of shares, was
mailed to shareholders in mid-summer.
For the twelve-month period ended
October 31, 1997, the Fund's Class B
shares posted a total return of 7.05
percent, compared to returns of 5.51
percent for the Lipper Global Income
Funds Index (Lipper Index), which
includes many funds invested in high-
yield, high-risk emerging markets' debt
that, unlike the Fund, have
below-investment-grade credit ratings,
and 1.39 percent for the Lehman
Brothers Global Intermediate Bond Index
(Lehman Index). The accompanying chart
illustrates the growth of a $10,000
investment in the Fund from inception
(March 30, 1989) through the fiscal
year ended October 31, 1997, versus the
performance of a similar investment in
the issues that comprise the Lehman
Index and the Lipper Index.
PORTFOLIO STRATEGY
Anticipating an extended period of
potentially rising U.S. interest rates
and uncertainty over the European
Monetary Union process, the Fund
switched in early 1997 to a strategy
focused on minimizing risk. This shift
was made just prior to the global bond
markets' sell-off. The Fund's duration
(a measure of sensitivity to
interest-rate changes) was cut back
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
Growth of $10,000 - Class B Shares
<S> <C> <C> <C>
($ in Thousands)
Average Annual Total Returns
1 Year 5 Years Life of Fund
7.05 (1) 7.38 (1) 7.07 (1)
2.21 (2) 7.08 (2) 7.07 (2)
Fund Lehman(4) Lipper(5)
March-1989 $10,000 $10,000 $10,000
October-1989 $10,040 $10,504 $10,441
October-1990 $11,969 $12,032 $11,882
October-1991 $11,759 $13,172 $13,129
October-1992 $12,598 $14,845 $14,089
October-1993 $13,822 $16,187 $16,024
October-1994 $13,271 $16,973 $15,375
October-1995 $14,923 $19,429 $17,129
October-1996 $16,802 $20,740 $19,140
October-1997 $17,987 (3) $21,027 $20,195
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS.
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction of
the maximum applicable contingent deferred sales charge (CDSC) (1 year-5%, 5
years-2%, since inception-0%). See the Fund's current prospectus for
complete details on fees and sales charges.
(3) Closing value assuming a complete redemption on October 31, 1997.
(4) The Lehman Brothers Global Intermediate Bond Index, includes local
currency-denominated sovereign debt of 19 countries with maturities of 1 to
10 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.
(5) The Lipper Global Income Funds Index is an equally-weighted performance
index of the largest-qualifying funds (based on net assets) in the Lipper
Global Income Funds objective. The Index, which is adjusted for capital
gains distributions and income dividends, is unmanaged and should not be
considered an investment. There are currently 30 funds represented in this
Index.
<PAGE>
DEAN WITTER WORLD WIDE INCOME TRUST
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1997, CONTINUED
significantly, to approximately two years, in February. Also, the Fund's
substantial overweighting in Italy, Spain and Portugal was reduced to
approximately index levels. Additionally, the currency risks of the European
positions were effectively hedged away, safeguarding these investments from the
impact of the rising dollar. In May the Fund decreased its investments in
Australia and New Zealand, as the yields in those markets were deemed no longer
attractive, and increased its weightings in the U.S. market. Still maintaining
its hedging and asset allocation strategies, the Fund also lengthened its
portfolio duration in May, after which it ranged between four and six years for
the remainder of the year. In addition, most of the Fund's currency hedges were
removed in August.
These timely moves helped the Fund protect its net asset value during the
adverse global market environment of the first part of the year. It also allowed
the Fund to participate in the global bond market's rally over the second half
of the fiscal year. As of October 31, 1997, approximately 65 percent of the
Fund's investments were in North America and 35 percent in Europe.
LOOKING AHEAD
Going forward, the Fund will continue its strategy of global diversification
while favoring those markets that exhibit improving inflation outlooks and
fiscal discipline. In addition, we will place an emphasis on securities and
markets that we believe offer compelling values and low relative risk. We
believe this strategy should allow the Fund to achieve its objectives.
We appreciate your support of Dean Witter World Wide Income Trust and look
forward to continuing to serve your investment needs.
Very truly yours,
[/S/ CHARLES A. FIUMEFREDDO]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER WORLD WIDE INCOME TRUST
RESULTS OF SPECIAL MEETING (UNAUDITED)
On May 21, 1997, a special meeting of the Fund's shareholders was held for the
purpose of voting on four separate matters, the results of which are as follows:
1) APPROVAL OF A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN THE FUND AND DEAN
WITTER INTERCAPITAL INC. IN CONNECTION WITH THE MERGER OF MORGAN STANLEY
GROUP INC. WITH DEAN WITTER, DISCOVER & CO.:
<TABLE>
<CAPTION>
VOTE NO. OF SHARES
- ------------------------------------------------------------------------------------------------------------------- ---------------
<S> <C>
For................................................................................................................ 6,253,760
Against............................................................................................................ 144,050
Abstain............................................................................................................ 488,143
</TABLE>
2) ELECTION OF TRUSTEES:
<TABLE>
<S> <C>
Michael Bozic
For.................. 6,591,982
Withheld............. 293,971
Charles A. Fiumefreddo
For.................. 6,594,523
Withheld............. 291,430
Edwin J. Garn
For.................. 6,587,880
Withheld............. 298,073
John R. Haire
For.................. 6,579,803
Withheld............. 306,150
Wayne E. Hedien
For.................. 6,599,803
Withheld............. 286,150
Dr. Manuel H. Johnson
For.................. 6,589,411
Withheld............. 296,542
Michael E. Nugent
For.................. 6,596,326
Withheld............. 289,627
Philip J. Purcell
For.................. 6,600,302
Withheld............. 285,651
John L. Schroeder
For.................. 6,594,702
Withheld............. 291,251
</TABLE>
3) APPROVAL OF A NEW INVESTMENT POLICY WITH RESPECT TO INVESTMENTS IN CERTAIN
OTHER INVESTMENT COMPANIES:
<TABLE>
<CAPTION>
VOTE NO. OF SHARES
- ------------------------------------------------------------------------------------------------------------------ ----------------
<S> <C>
For............................................................................................................... 6,032,447
Against........................................................................................................... 221,520
Abstain........................................................................................................... 631,986
</TABLE>
(4) RATIFICATION OF THE SELECTION OF PRICE WATERHOUSE LLP AS THE FUND'S
INDEPENDENT ACCOUNTANTS:
<TABLE>
<CAPTION>
VOTE NO. OF SHARES
- ------------------------------------------------------------------------------------------------------------------ ----------------
<S> <C>
For............................................................................................................... 6,372,426
Against........................................................................................................... 95,289
Abstain........................................................................................................... 418,238
</TABLE>
<PAGE>
DEAN WITTER WORLD WIDE INCOME TRUST
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
GOVERNMENT & CORPORATE BONDS (78.0%)
GREECE (2.3%)
GOVERNMENT OBLIGATION
GRD 613,000 Republic of Greece+....................................................... 11.00% 11/26/99 $ 2,150,019
------------
SPAIN (6.5%)
GOVERNMENT OBLIGATION
ESP 865,000 Spain Treasury Bond+...................................................... 11.45 08/30/98 6,231,657
------------
UNITED STATES (69.2%)
U. S. GOVERNMENT & AGENCY OBLIGATIONS
$ 1,029 Federal National Mortgage Assoc........................................... 7.00 05/01/12 1,042,609
10/15/22-
23,873 Government National Mortgage Assoc........................................ 7.00 09/15/27 23,992,124
14,000 Government National Mortgage Assoc........................................ 7.00 * 14,070,000
9,750 U.S. Treasury Bond+....................................................... 13.125 05/15/01 12,029,745
13,000 U.S. Treasury Bond+....................................................... 6.375 08/15/27 13,397,540
1,500 U.S. Treasury Note+....................................................... 6.125 08/15/07 1,533,045
------------
TOTAL UNITED STATES............................................................................ 66,065,063
------------
TOTAL GOVERNMENT & CORPORATE BONDS
(IDENTIFIED COST $76,293,615).................................................................. 74,446,739
------------
SHORT-TERM INVESTMENTS (31.9%)
TIME DEPOSITS (a) (22.6%)
CANADA (2.0%)
BANKING - INTERNATIONAL
Ca$ 2,665 Chase Manhattan Bank...................................................... 3.438 11/06/97 1,892,218
------------
DENMARK (4.0%)
BANKING - INTERNATIONAL
DKr 24,756 Unibank................................................................... 3.70 11/07/97 3,771,194
------------
GREECE (5.9%)
BANKING - INTERNATIONAL
GRD 1,528,466 Bankers Trust............................................................. 13.20 11/28/97 5,606,168
------------
ITALY (6.8%)
BANKING - INTERNATIONAL
ITL 11,028,927 Morgan Guaranty Trust Co.................................................. 6.65 11/05/97 6,515,813
------------
SWEDEN (3.9%)
BANKING - INTERNATIONAL
SEK 18,093 Chase Manhattan Bank...................................................... 4.063 11/07/97 2,411,275
10,000 Unibank................................................................... 4.15 11/07/97 1,332,711
------------
TOTAL SWEDEN................................................................................... 3,743,986
------------
TOTAL TIME DEPOSITS
(IDENTIFIED COST $21,160,403).................................................................. 21,529,379
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER WORLD WIDE INCOME TRUST
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1997, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
GOVERNMENT & AGENCY OBLIGATIONS (b) (9.3%)
GERMANY (9.0%)
DEM 4,000 German Treasury Bill...................................................... 3.23% 01/16/98 $ 2,303,796
11,000 German Treasury Bill+..................................................... 3.55 04/17/98 6,276,315
------------
TOTAL GERMANY.................................................................................. 8,580,111
------------
UNITED STATES (0.3%)
$ 300 Federal Home Loan Mortgage Corp........................................... 5.65 11/03/97 299,906
------------
TOTAL GOVERNMENT & AGENCY OBLIGATIONS
(AMORTIZED COST $8,627,041).................................................................... 8,880,017
------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $29,787,444).................................................................. 30,409,396
------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $106,081,059) (C).................................................................... 109.9 % 104,856,135
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS........................................................ (9.9) (9,468,177)
------ -------------
NET ASSETS............................................................................................ 100.0 % $ 95,387,958
------ -------------
------ -------------
</TABLE>
- ---------------------
+ Some or all of these securities are segregated in connection with open
forward foreign currency contracts.
* 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) Subject to withdrawal restrictions until maturity.
(b) Securities were purchased on a discount basis. The interest rates shown
have been adjusted to reflect a money market equivalent yield.
(c) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $1,387,963 and the
aggregate gross unrealized depreciation is $2,612,887, resulting in net
unrealized depreciation of $1,224,924.
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCTOBER 31, 1997:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS IN EXCHANGE DELIVERY APPRECIATION
TO DELIVER FOR DATE (DEPRECIATION)
- ----------------------------------------------------------------
<S> <C> <C> <C>
DKr 24,773,811 $3,796,148 11/07/97 $ 22,241
DEM 10,950,000 $6,378,889 01/30/98 (86,798)
-------------
Net unrealized depreciation................ $ (64,557)
-------------
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER WORLD WIDE INCOME TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $106,081,059).............................................................. $104,856,135
Unrealized appreciation on open forward foreign currency contracts............................ 22,241
Cash.......................................................................................... 245,403
Receivable for:
Investments sold.......................................................................... 2,291,514
Compensated forward foreign currency contracts............................................ 2,109,981
Interest.................................................................................. 1,339,920
Capital stock sold........................................................................ 36,442
Prepaid expenses and other assets............................................................. 92,769
------------
TOTAL ASSETS............................................................................. 110,994,405
------------
LIABILITIES:
Unrealized depreciation on open forward foreign currency contracts............................ 86,798
Payable for:
Investments purchased..................................................................... 14,158,375
Compensated forward foreign currency contracts............................................ 985,842
Capital stock repurchased................................................................. 100,896
Plan of distribution fee.................................................................. 68,835
Investment management fee................................................................. 60,958
Accrued expenses and other payables........................................................... 144,743
------------
TOTAL LIABILITIES........................................................................ 15,606,447
------------
NET ASSETS............................................................................... $ 95,387,958
------------
------------
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................... $100,436,492
Net unrealized depreciation................................................................... (1,296,360)
Accumulated undistributed net investment income............................................... 450,900
Accumulated net realized loss................................................................. (4,203,074)
------------
NET ASSETS............................................................................... $ 95,387,958
------------
------------
CLASS A SHARES:
Net Assets.................................................................................... $682,253
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 75,651
NET ASSET VALUE PER SHARE................................................................ $9.02
------------
------------
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 4.44% OF NET ASSET VALUE).......................................... $9.42
------------
------------
CLASS B SHARES:
Net Assets.................................................................................... $94,555,831
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 10,474,852
NET ASSET VALUE PER SHARE................................................................ $9.03
------------
------------
CLASS C SHARES:
Net Assets.................................................................................... $110,971
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 12,302
NET ASSET VALUE PER SHARE................................................................ $9.02
------------
------------
CLASS D SHARES:
Net Assets.................................................................................... $38,903
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 4,310
NET ASSET VALUE PER SHARE................................................................ $9.03
------------
------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997*
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME (net of $51,246 foreign withholding tax)....................................... $ 8,390,219
-----------
EXPENSES
Plan of distribution fee (Class A shares)...................................................... 169
Plan of distribution fee (Class B shares)...................................................... 881,250
Plan of distribution fee (Class C shares)...................................................... 165
Investment management fee...................................................................... 778,248
Transfer agent fees and expenses............................................................... 133,901
Custodian fees................................................................................. 97,154
Professional fees.............................................................................. 78,655
Shareholder reports and notices................................................................ 66,818
Registration fees.............................................................................. 33,144
Directors' fees and expenses................................................................... 17,422
Other.......................................................................................... 7,530
-----------
TOTAL EXPENSES............................................................................ 2,094,456
-----------
NET INVESTMENT INCOME..................................................................... 6,295,763
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments................................................................................ (4,239,848)
Futures contracts.......................................................................... 601,882
Foreign exchange transactions.............................................................. 6,060,428
-----------
NET GAIN.................................................................................. 2,422,462
-----------
Net change in unrealized appreciation/ depreciation on:
Investments................................................................................ (1,286,181)
Translation of forward foreign currency contracts, other assets and liabilities denominated
in foreign currencies.................................................................... (371,054)
-----------
NET DEPRECIATION.......................................................................... (1,657,235)
-----------
NET GAIN.................................................................................. 765,227
-----------
NET INCREASE................................................................................... $ 7,060,990
-----------
-----------
</TABLE>
- ---------------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER WORLD WIDE INCOME TRUST
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1997* OCTOBER 31, 1996
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income...................................................... $ 6,295,763 $ 7,960,163
Net realized gain.......................................................... 2,422,462 6,519,431
Net change in unrealized appreciation/depreciation......................... (1,657,235) 169,336
-------------------- ----------------
NET INCREASE.......................................................... 7,060,990 14,648,930
-------------------- ----------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income
Class A shares......................................................... (6,031) --
Class B shares......................................................... (10,673,831) (11,619,991)
Class C shares......................................................... (1,171) --
Class D shares......................................................... (283) --
-------------------- ----------------
TOTAL DIVIDENDS....................................................... (10,681,316) (11,619,991)
-------------------- ----------------
Net decrease from transactions in shares of beneficial interest............ (15,013,234) (27,172,888)
-------------------- ----------------
NET DECREASE.......................................................... (18,633,560) (24,143,949)
NET ASSETS:
Beginning of period........................................................ 114,021,518 138,165,467
-------------------- ----------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $450,900 AND
$3,202,026, RESPECTIVELY).............................................. $ 95,387,958 $114,021,518
-------------------- ----------------
-------------------- ----------------
</TABLE>
- ---------------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER WORLD WIDE INCOME TRUST
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1997
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter World Wide Income Trust (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a non-diversified,
open-end management investment company. The Fund's primary investment objective
is to provide a high level of current income and, as a secondary objective,
seeks appreciation in the value of its assets. The Fund was organized as a
Massachusetts business trust on October 14, 1988 and commenced operations on
March 30, 1989. On July 28, 1997, the Fund commenced offering three classes of
shares, with the then current shares designated as Class B shares.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase, some Class
A shares, and most Class B shares and Class C shares are subject to a contingent
deferred sales charge imposed on shares redeemed within one year, six years and
one year, respectively. Class D shares are not subject to a sales charge.
Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
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
these estimates.
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) futures contracts
are valued at the latest sale price on the commodities exchange on which they
trade unless the Trustees determine that such price does not reflect their
market value, in which case it will be valued at fair value as determined by the
Trustees; (3) when market quotations are not readily available, including
circumstances under which it is determined by Dean Witter InterCapital Inc. (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); (4) certain portfolio securities may be valued by an
outside pricing service approved by the Trustees. The pricing service may
utilize a matrix system incorporating security quality, maturity and coupon as
the evaluation model parameters, and/or research and evaluations by
<PAGE>
DEAN WITTER WORLD WIDE INCOME TRUST
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1997, CONTINUED
its staff, including review of broker-dealer market price quotations, if
available, in determining what it believes is the fair valuation of the
securities valued by such pricing service; and (5) 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. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.
D. FUTURES CONTRACTS -- A futures contract is an agreement between two parties
to buy and sell financial instruments at a set price on a future date. Upon
entering into such a contract, the Fund is required to pledge to the broker
cash, U.S. Government securities or other liquid portfolio securities equal to
the minimum initial margin requirements of the applicable futures exchange.
Pursuant to the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in the value of the contract
which is known as variation margin. Such receipts or payments are recorded by
the Fund as unrealized gains or losses. Upon closing of the contract, the Fund
realizes a gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
E. 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 foreign currency
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
<PAGE>
DEAN WITTER WORLD WIDE INCOME TRUST
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1997, CONTINUED
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.
F. 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 currency 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.
G. 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.
H. 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.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with the Investment Manager the
Fund pays a management fee, accrued daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined as of the close
of each business day: 0.75% to the portion of daily net assets not exceeding
$250 million; 0.60% to the portion of daily net assets exceeding $250 million
but not exceeding $500 million; 0.50% to the portion of daily net assets
exceeding $500 million but not exceeding $750 million; 0.40% to the portion of
daily net assets exceeding $750 million but not exceeding $1 billion; and 0.30%
to the portion of daily net assets exceeding $1 billion.
<PAGE>
DEAN WITTER WORLD WIDE INCOME TRUST
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1997, CONTINUED
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. The Plan
provides that the Fund will pay the Distributor a fee which is accrued daily and
paid monthly at the following annual rates: (i) Class A - up to 0.25% of the
average daily net assets of Class A; (ii) Class B - 0.85% of the lesser of: (a)
the average daily aggregate gross sales of the Class B shares since inception of
the Fund (not including reinvestment of dividend or capital gain distributions)
less the average net asset value of the Class B shares redeemed since the Fund's
inception upon which a contingent deferred sales charge has been imposed or
waived; or (b) the average daily net assets of Class B; and (iii) Class C - up
to 0.85% of the average daily net assets of Class C. In the case of Class A
shares, amounts paid under the Plan are paid to the Distributor for services
provided. In the case of Class B and Class C shares, amounts paid under the Plan
are paid to the Distributor for services provided and the expenses borne by it
and others in the distribution of the shares of these Classes, including the
payment of commissions for sales of these Classes and incentive compensation to,
and expenses of, the account executives of Dean Witter Reynolds Inc. ("DWR"), an
affiliate of the Investment Manager and Distributor, and others who engage in or
support distribution of the 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 these shares to
other than current shareholders; and preparation, printing and distribution of
sales literature and advertising materials. In addition, the Distributor may
utilize fees paid pursuant to the Plan, in the case of Class B shares, to
compensate DWR and other selected broker-dealers for their opportunity costs in
advancing such amounts, which compensation would be in the form of a carrying
charge on any unreimbursed expenses.
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to
<PAGE>
DEAN WITTER WORLD WIDE INCOME TRUST
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1997, CONTINUED
pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Trustees will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts, including
carrying charges, totaled $8,370,199 at October 31, 1997.
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 0.85% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to account executives may be reimbursed in the subsequent
calendar year. For the period ended October 31, 1997, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.25% and
0.85%, respectively.
The Distributor has informed the Fund that for the year ended October 31, 1997,
it received contingent deferred sales charges from certain redemptions of the
Fund's Class B shares $67,575. The respective 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 year ended October 31, 1997 aggregated
$306,368,737 and $321,049,399, respectively. Included in the aforementioned are
purchases and sales of U.S. Government securities of $184,895,045 and
$143,030,418, respectively.
Dean Witter Trust FSB, an affiliate of the Investment Manager and Distributor,
is the Fund's transfer agent. At October 31, 1997, the Fund had transfer agent
fees and expenses payable of approximately $1,000.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Trustees of the Fund who will have served as independent
Trustees for at least five years at the time of retirement. Benefits under this
plan are based on years of service and compensation during the last five years
of service. Aggregate pension costs for the year ended October 31, 1997 included
in Trustees' fees and expenses in the Statement of Operations amounted to
$2,434. At October 31, 1997, the Fund had an accrued pension liability of
$48,664 which is included in accrued expenses in the Statement of Assets and
Liabilities.
<PAGE>
DEAN WITTER WORLD WIDE INCOME TRUST
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1997, CONTINUED
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
CLASS A SHARES*
Sold.............................................. 80,739 $ 714,181 -- --
Reinvestment of dividends......................... 237 2,107 -- --
Redeemed.......................................... (5,325) (47,905) -- --
---------- ------------ ---------- ------------
Net increase--Class A............................. 75,651 668,383 -- --
---------- ------------ ---------- ------------
CLASS B SHARES
Sold.............................................. 3,523,435 31,673,600 2,050,224 $ 18,600,786
Reinvestment of dividends......................... 689,236 6,224,070 718,178 6,456,463
Redeemed.......................................... (5,959,324) (53,726,739) (5,765,210) (52,230,137)
---------- ------------ ---------- ------------
Net decrease--Class B............................. (1,746,653) (15,829,069) (2,996,808) (27,172,888)
---------- ------------ ---------- ------------
CLASS C SHARES*
Sold.............................................. 12,172 107,627 -- --
Reinvestment of dividends......................... 130 1,156 -- --
---------- ------------ ---------- ------------
Net increase--Class C............................. 12,302 108,783 -- --
---------- ------------ ---------- ------------
CLASS D SHARES*
Sold.............................................. 4,286 38,458 -- --
Reinvestment of dividends......................... 24 211 -- --
---------- ------------ ---------- ------------
Net increase--Class D............................. 4,310 38,669 -- --
---------- ------------ ---------- ------------
Net decrease in Fund.............................. (1,654,390) $(15,013,234) (2,996,808) $(27,172,888)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
- ---------------------
* For the period July 28, 1997 (issue date) through October 31, 1997.
6. FEDERAL INCOME TAX STATUS
During the year ended October 31, 1997, the Fund utilized approximately $873,000
of its net capital loss carryover. At October 31, 1997, the Fund had a net
capital loss carryover of approximately $5,327,000 which will be available
through October 31, 2002 to offset future capital gains to the extent provided
by regulations.
As of October 31, 1997, 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
<PAGE>
DEAN WITTER WORLD WIDE INCOME TRUST
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1997, CONTINUED
foreign currency gains. To reflect reclassifications arising from the permanent
differences, accumulated net realized loss was charged $1,590,042,
paid-in-capital was credited $44,385 and accumulated undistributed net
investment income was credited $1,634,427.
7. PURPOSES 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").
Forward contracts and 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.
At October 31, 1997, there were outstanding forward contracts used to facilitate
settlement of foreign currency denominated portfolio transactions and to manage
foreign currency exposure.
<PAGE>
DEAN WITTER WORLD WIDE 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
MARCH 30,
1989*
FOR THE YEAR ENDED OCTOBER 31 THROUGH
----------------------------------------------------------------------------------------- OCTOBER
1997**++ 1996 1995 1994 1993 1992 1991 1990 31, 1989
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of period... $ 9.33 $ 9.08 $ 8.55 $ 9.39 $ 9.11 $ 9.11 $ 10.38 $ 9.55 $ 10.00
---------- --------- --------- ---------- --------- --------- ---------- --------- ----------
Net investment
income................ 0.55 0.60 0.55 0.55 0.59 0.62 0.82 0.95 0.49
Net realized and
unrealized gain
(loss)................ 0.07 0.48 0.48 (0.92) 0.27 0.01 (0.99) 0.78 (0.45)
---------- --------- --------- ---------- --------- --------- ---------- --------- ----------
Total from investment
operations............ 0.62 1.08 1.03 (0.37) 0.86 0.63 (0.17) 1.73 0.04
---------- --------- --------- ---------- --------- --------- ---------- --------- ----------
Less dividends and
distributions from:
Net investment
income.............. (0.92) (0.83) (0.50) (0.22) (0.58) (0.63) (0.86) (0.90) (0.49)
Net realized gain... -- -- -- -- -- -- (0.24) -- --
Paid-in-capital..... -- -- -- (0.25) -- -- -- -- --
---------- --------- --------- ---------- --------- --------- ---------- --------- ----------
Total dividends and
distributions......... (0.92) (0.83) (0.50) (0.47) (0.58) (0.63) (1.10) (0.90) (0.49)
---------- --------- --------- ---------- --------- --------- ---------- --------- ----------
Net asset value, end of
period................ $ 9.03 $ 9.33 $ 9.08 $ 8.55 $ 9.39 $ 9.11 $ 9.11 $ 10.38 $ 9.55
---------- --------- --------- ---------- --------- --------- ---------- --------- ----------
---------- --------- --------- ---------- --------- --------- ---------- --------- ----------
TOTAL INVESTMENT
RETURN+................ 7.05% 12.60% 12.45% (3.99)% 9.72% 7.13% (1.75)% 19.22% 0.40%(1)
RATIOS TO AVERAGE NET
ASSETS:
Expenses............... 2.02% 1.96% 1.93% 1.91% 1.87% 1.87% 1.76% 1.81% 1.90%(2)
Net investment
income................ 6.07% 6.39% 6.21% 5.87% 6.39% 6.78% 8.45% 9.76% 9.10%(2)
SUPPLEMENTAL DATA:
Net assets, end of
period, in thousands.. $94,556 $114,022 $138,165 $179,563 $275,319 $324,185 $421,051 $462,709 $388,578
Portfolio turnover
rate.................. 345% 263% 254% 229% 229% 214% 245% 109% 113%(1)
</TABLE>
- ---------------------
* Commencement of operations.
** Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date have been designated as Class B shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ 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.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER WORLD WIDE INCOME TRUST
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
OCTOBER 31,
1997++
- ----------------------------------------------------------------------------------------
<S> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................. $ 8.97
------
Net investment income................................................. 0.15
Net realized and unrealized gain...................................... 0.05
------
Total from investment operations...................................... 0.20
------
Less dividends from net investment income............................. (0.15)
------
Net asset value, end of period........................................ $ 9.02
------
------
TOTAL INVESTMENT RETURN+.............................................. 2.27%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 1.46%(2)
Net investment income................................................. 6.69%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $682
Portfolio turnover rate............................................... 345%
</TABLE>
<TABLE>
<S> <C>
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................. $ 8.97
------
Net investment income................................................. 0.14
Net realized and unrealized gain...................................... 0.05
------
Total from investment operations...................................... 0.19
------
Less dividends from net investment income............................. (0.14)
------
Net asset value, end of period........................................ $ 9.02
------
------
TOTAL INVESTMENT RETURN+.............................................. 2.12%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 2.00%(2)
Net investment income................................................. 5.89%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $111
Portfolio turnover rate............................................... 345%
</TABLE>
- ---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ 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.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER WORLD WIDE INCOME TRUST
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
OCTOBER 31,
1997++
- ----------------------------------------------------------------------------------------
<S> <C>
CLASS D SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................. $ 8.97
------
Net investment income................................................. 0.16
Net realized and unrealized gain...................................... 0.05
------
Total from investment operations...................................... 0.21
------
Less dividends from net investment income............................. (0.15)
------
Net asset value, end of period........................................ $ 9.03
------
------
TOTAL INVESTMENT RETURN+.............................................. 2.44%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 1.16%(2)
Net investment income................................................. 6.83%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $39
Portfolio turnover rate............................................... 345%
</TABLE>
- ---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER WORLD WIDE INCOME TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF DEAN WITTER WORLD WIDE 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 World Wide Income Trust
(the "Fund") at October 31, 1997, 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 periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at October
31, 1997 by correspondence with the custodian and brokers, provide a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
DECEMBER 17, 1997
<PAGE>
TRUSTEES
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
Vinh Q. Tran
Vice President
Peter J. Seeley
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust FSB
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 WORLD WIDE INCOME TRUST
[GRAPHIC]
ANNUAL REPORT
OCTOBER 31, 1997
