<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------
During the fiscal year ended October 31, 1994, global bond yields rose
substantially reaching their highest levels in two years. In the United States,
the Federal Reserve Board, anticipating concerns over higher inflation and
strong economic growth, aggressively tightened monetary policy by raising short-
term interest rates. Since February, the Federal Reserve Board has raised the
federal-funds rate, the interest rate banks charge one another for overnight
loans, four times, from 3.00 percent to 4.75 percent. Additionally, the Federal
Reserve Board raised the discount rate, the interest rate the Federal Reserve
charges member banks for loans, from 3.00 percent to 4.00 percent. (Following
the end of the reporting period, the Federal Reserve Board raised the
federal-funds rate and discount rate to 5.50 percent and 4.50 percent,
respectively.) As a result of the Federal Reserve's monetary policy, the yield
on the three-year U.S. Treasury bond rose by more then 280 basis points (2.80
percent) during the reporting period.
Interest rates in the global bond markets also rose during the reporting
period, partly in sympathy with the U.S., as well as due to improving economic
fundamentals in many countries. In Germany, yields
on three-year bonds rose by approximately
205 basis points (2.05 percent); while in
Australia, yields on three-year bonds
rose by approximately 415 basis points
(4.15 percent). Concurrently, the U.S.
dollar broadly declined against most
major currencies, depreciating by about
11.75 percent against the Deutschemark,
11 percent against the Japanese yen, and
11.7 percent against the Australian
dollar.
Under these adverse market
conditions, Dean Witter Global Short-term
Income Fund provided a total return of
0.65 percent (not reflecting the
applicable sales charge) for the 12-month
period ended October 31, 1994, compared
to a decline of 0.66 percent for the
average short-term world multimarket
fund, as reported by Lipper Analytical
Services, Inc. and an increase of 5.37
percent for the unhedged and unmanaged
Lehman Brothers Mutual Fund Short World
Multimarket Index. The accompanying chart
illustrates the performance of a $10,000
investment in the Fund since inception
(November 1, 1990) through October 31,
1994, versus the performance of the
Lehman Brothers Mutual Fund Short World
Multimarket Index.
During the fiscal year, the Fund's
distributions totaled $0.56 per share. As
of October 31, 1994, the Fund's net
assets exceeded $170 million with
investments in government securities (79
percent of net assets) and debt
instruments issued by top-rated banks (33
percent of net assets).
<PAGE>
INVESTMENT STRATEGY
The Fund's strategy in this market environment has been to reduce the
average maturity to approximately 1.76 years from 2.5 years in order to minimize
the negative effect of further interest rate increases both in the U.S. and
abroad. During the reporting period, the Fund reduced its investments in
European bonds from 53.1 percent of net assets to 35.4 percent and increased its
investments in short-term debt instruments in the U.S. and dollar-bloc countries
of Canada, Australia and New Zealand in order to take advantage of the higher
yields available in those markets, and thus enhance the total return potential
of the Fund. As of October 31, 1994, the Fund's portfolio was spread primarily
among three regions -- Europe (31.5 percent), U.S. (36.4 percent) and the
dollar-bloc countries (Canada, 13.8 percent; Australia, 9.1 percent; New
Zealand, 9.2 percent). The dollar-block currencies and some of the European
securities were left unhedged, reducing hedging costs and allowing the Fund to
participate in currency gains as the U.S. dollar declined. This strategy was
designed to minimize the negative effects of rising interest rates while
simultaneously allowing the portfolio to benefit from the rising values of
foreign currencies.
LOOKING AHEAD
Looking ahead, further increases in interest rates in the near term remain a
possibility as many of the global economies exhibit signs of strength. With this
in mind, the Fund will continue its investment strategy of diversification in
different major global markets to achieve high current income, as well as its
selective currency risk hedging to minimize the impact of currency fluctuations
on the Fund.
We appreciate your support of Dean Witter Global Short-Term Income Fund,
Inc. and look forward to continuing to serve your investment needs and
objectives.
Very truly yours,
Charles A. Fiumefreddo
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- --------------- -------- -------- ------------
<C> <S> <C> <C> <C>
GOVERNMENT & CORPORATE BONDS (83.5%)
AUSTRALIA (10.3%)
GOVERNMENT OBLIGATIONS (10.3%)
Au$ 23,800 Queensland Treasury Corp. +....................... 8.00 % 5/14/97 $ 17,109,693
500 Treasury Corp. of Victoria +...................... 6.50 12/15/98 327,770
------------
TOTAL AUSTRALIA........................................................ 17,437,463
------------
CANADA (15.5%)
BANKING - INTERNATIONAL (2.8%)
Ca$ 1,500 Royal Bank Mortgage +............................. 11.875 8/ 3/95 1,142,366
5,000 Vancouver City Savings +.......................... 10.75 11/21/94 3,705,430
------------
4,847,796
------------
GOVERNMENT OBLIGATIONS (12.7%)
20,000 Government of Canada Treasury Bond +.............. 7.75 9/15/96 14,817,281
8,900 Government of Ontario Province.................... 10.00 9/30/96 6,784,621
------------
21,601,901
------------
TOTAL CANADA........................................................... 26,449,697
------------
FINLAND (8.0%)
GOVERNMENT OBLIGATION (8.0%)
FMk 65,000 Government of Finland Treasury Bond............... 6.50 9/15/96 13,652,359
------------
IRELAND (2.7%)
GOVERNMENT OBLIGATION (2.7%)
IEP 2,850 Irish Treasury Gilt +............................. 9.00 7/30/96 4,634,153
------------
NEW ZEALAND (10.3%)
GOVERNMENT OBLIGATIONS (10.3%)
NZ$ 12,000 Government of New Zealand Treasury Bond........... 8.00 11/15/95 7,336,213
16,500 Government of New Zealand Treasury Bond +......... 9.00 11/15/96 10,177,443
------------
TOTAL NEW ZEALAND...................................................... 17,513,656
------------
SPAIN (7.1%)
GOVERNMENT OBLIGATIONS (7.1%)
ESP 750,000 Government of Spain Treasury Bond................. 11.85 8/30/96 6,121,170
750,000 Government of Spain Treasury Bond................. 10.55 11/30/96 5,992,837
------------
TOTAL SPAIN............................................................ 12,114,007
------------
UNITED KINGDOM (3.9%)
GOVERNMENT OBLIGATIONS (3.9%)
L 2,700 United Kingdom Treasury Gilt +.................... 12.75 11/15/95 4,637,557
1,088 United Kingdom Treasury Gilt +.................... 13.25 5/15/96 1,911,509
------------
TOTAL UNITED KINGDOM................................................... 6,549,066
------------
<PAGE>
</TABLE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- --------------- -------- -------- ------------
UNITED STATES (25.7%)
<C> <S> <C> <C> <C>
BANKING - DOMESTIC (25.7%)
US$ 6,000 Barnett Banking, Inc.............................. 9.75 % 1/ 8/96 $ 6,197,100
5,000 Barnett Banking, Inc.............................. 10.00 1/ 8/96 5,178,100
8,000 First National Bank of Chicago.................... 7.95 3/ 6/97 8,070,320
8,500 First Union Corp.................................. 5.95 7/ 1/95 8,483,340
10,000 Norwest Corp...................................... 5.75 3/15/98 9,454,000
6,200 U.S. Bancorp...................................... 8.55 8/ 7/95 6,293,434
------------
TOTAL UNITED STATES.................................................... 43,676,294
------------
TOTAL GOVERNMENT & CORPORATE BONDS
(IDENTIFIED COST $144,977,487)....................................... 142,026,695
------------
SHORT-TERM INVESTMENTS (28.9%)
IRELAND (A) (8.4%)
GOVERNMENT OBLIGATIONS (8.4%)
IEP 3,153 Irish Government Exchequer Note +................. 7.24 9/ 7/95 4,772,176
6,335 Irish Government Exchequer Note................... 7.38 10/ 6/95 9,568,842
------------
TOTAL IRELAND.......................................................... 14,341,018
------------
PORTUGAL (5.3%)
BANKING - INTERNATIONAL (5.3%)
PTE 1,384,704 Chase Manhattan Time Deposit (c).................. 9.375 11/21/94 8,968,290
------------
UNITED STATES (A) (15.2%)
GOVERNMENT AGENCIES & OBLIGATIONS (15.2%)
US$ 1,230 Student Loan Marketing Association................ 4.60 11/ 1/94 1,230,000
25,000 United States Treasury Bill....................... 5.188 2/ 2/95 24,675,791
------------
TOTAL UNITED STATES.................................................... 25,905,791
------------
TOTAL SHORT-TERM INVESTMENTS (IDENTIFIED COST $48,695,836)............. 49,215,099
------------
TOTAL INVESTMENTS (IDENTIFIED COST $193,673,323)(B)......... 112.4% 191,241,794
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS.............. (12.4 ) (21,125,155)
-------- ------------
NET ASSETS.................................................. 100.0 % $170,116,639
-------- ------------
-------- ------------
<FN>
- ----------------
+ SOME OR ALL OF THESE SECURITIES ARE SEGREGATED IN CONNECTION WITH OPEN
FORWARD FOREIGN CURRENCY CONTRACTS.
(A) SECURITIES WERE PURCHASED ON A DISCOUNT BASIS. THE INTEREST RATE SHOWN HAS
BEEN ADJUSTED TO REFLECT A BOND EQUIVALENT YIELD. THE BOND EQUIVALENT YIELD
FOR THE IRISH GOVERNMENT OBLIGATIONS DOES NOT REFLECT THE EFFECT OF
EXCHANGE RATES.
(B) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $193,673,323; THE
AGGREGATE GROSS UNREALIZED APPRECIATION IS $1,940,594 AND THE AGGREGATE
GROSS UNREALIZED DEPRECIATION IS $4,372,123, RESULTING IN NET UNREALIZED
DEPRECIATION OF $2,431,529.
(C) SUBJECT TO WITHDRAWAL RESTRICTIONS UNTIL MATURITY.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1994 (CONTINUED)
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCTOBER 31, 1994:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS IN EXCHANGE DELIVERY APPRECIATION/
TO DELIVER FOR DATE (DEPRECIATION)
- ----------------- --------------- --------- --------------
<S> <C> <C> <C>
DEM 3,100,000 US$ 1,881,639 2/27/95 (171,844)
DEM 14,058,000 US$ 9,023,686 9/ 6/95 (358,698)
DEM 1,276,600 US$ 855,515 10/19/95 4,521
DEM 9,627,000 US$ 6,459,773 10/20/95 44,962
DEM 13,000,000 US$ 8,636,152 11/ 1/95 93,773
FMk 18,809,569 US$ 4,068,253 1/23/95 (1,239)
NKr 42,377,000 US$ 6,457,404 5/ 2/95 27
SKr 70,000,000 US$ 9,688,582 1/23/95 (166)
US$ 4,932,021 Au$ 6,729,000 9/21/95 (11,777)
--------------
Net unrealized depreciation ................ $ (400,441)
--------------
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1994
- ---------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, at value
(identified cost $193,673,323) (Note 1).... $191,241,794
Unrealized appreciation on open forward
foreign currency contracts (Note 1)........ 143,283
Cash (including $552,440 in foreign
currency).................................. 569,947
Receivable for:
Interest................................... 4,402,638
Compensated forward foreign currency
contracts (Note 1)....................... 615,297
Capital stock sold......................... 3,445
Deferred organizational expenses (Note 1).... 29,982
Prepaid expenses and other assets............ 6,623
------------
TOTAL ASSETS........................... 197,013,009
------------
LIABILITIES:
Unrealized depreciation on open forward
foreign currency contracts (Note 1)........ 543,724
Payable for:
Investments purchased...................... 24,672,885
Compensated forward foreign currency
contracts (Note 1)....................... 618,660
Capital stock repurchased.................. 506,974
Plan of distribution fee (Note 3).......... 111,371
Dividends to shareholders.................. 110,043
Investment management fee (Note 2)......... 81,672
Accrued expenses and other payables (Note
4)......................................... 251,041
------------
TOTAL LIABILITIES...................... 26,896,370
------------
NET ASSETS:
Paid-in-capital.............................. 180,059,657
Accumulated net realized loss................ (7,172,576)
Net unrealized depreciation.................. (2,769,527)
Distributions in excess of net investment
income..................................... (915)
------------
NET ASSETS............................. $170,116,639
------------
------------
NET ASSET VALUE PER SHARE, 19,475,304 shares
outstanding (500,000,000 authorized shares
of $.01 par value)......................... $8.73
------------
------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1994
- ---------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INTEREST INCOME (net of $166,630 in foreign
withholding tax)......................... $ 18,713,089
------------
EXPENSES
Plan of distribution fee (Note 3)........ 1,748,966
Investment management fee (Note 2)....... 1,282,418
Transfer agent fees and expenses (Note
4)..................................... 246,089
Custodian fees........................... 198,039
Interest expense......................... 100,568
Professional fees........................ 88,909
Shareholder reports and notices.......... 43,749
Registration fees........................ 38,924
Directors' fees and expenses (Note 4).... 32,565
Organizational expenses (Note 1)......... 29,981
Other.................................... 6,135
------------
TOTAL EXPENSES......................... 3,816,343
------------
NET INVESTMENT INCOME................ 14,896,746
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) (Note 1):
Net realized loss on:
Investments.............................. (8,951,283)
Foreign exchange transactions............ (11,064,677)
Futures contracts........................ (1,057,528)
------------
(21,073,488)
------------
Net change in unrealized depreciation on:
Investments.............................. 5,817,451
Translation of forward foreign currency
contracts and other assets and
liabilities denominated in foreign
currencies............................. 941,529
------------
6,758,980
------------
NET LOSS............................... (14,314,508)
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS.................... $ 582,238
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
-------------------------------
1994 1993
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income............... $ 14,896,746 $ 24,992,950
Net realized loss................... (21,073,488) (3,242,126)
Net change in unrealized
depreciation....................... 6,758,980 (5,996,751)
-------------- --------------
Net increase in net assets
resulting from operations........ 582,238 15,754,073
-------------- --------------
Dividends and distributions to
shareholders from:
Net investment income............... (3,245,847) (23,594,682)
Paid-in-capital..................... (11,239,060) --
-------------- --------------
(14,484,907) (23,594,682)
-------------- --------------
Net decrease from capital stock
transactions (Note 5)............... (121,258,984) (128,072,055)
-------------- --------------
Total decrease.................... (135,161,653) (135,912,664)
NET ASSETS:
Beginning of period................... 305,278,292 441,190,956
-------------- --------------
END OF PERIOD (including distributions
in excess of net investment income
of $915 and undistributed net
investment income of $4,568,658,
respectively)....................... $ 170,116,639 $ 305,278,292
-------------- --------------
-------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES--Dean Witter Global Short-Term Income
Fund Inc. (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 was incorporated in Maryland on August 2, 1990 and commenced
operations on November 1, 1990.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS--(1) an equity security listed or traded on the
New York or American Stock Exchange or other domestic or foreign stock
exchange is valued at its latest sale price on that exchange prior to the
time when assets are valued (if there were no sales that day, the security
is valued at the latest bid price). In cases where securities are traded on
more than one exchange, the securities are valued on the exchange designated
as the primary market by the Directors; (2) listed options are valued at the
latest sale price on the exchange on which they are listed unless no sales
of such options have taken place that day, in which case they will be valued
at the mean between their latest bid and asked price; (3) 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; (4) futures contracts are valued at the latest sale price on the
commodities exchange on which they trade unless the Directors determine that
such price does not reflect their market value, in which case they will be
valued at fair value as determined in good faith under procedures
established by and under the general supervision of the Directors; (5) 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 Directors (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 (6) short-term debt securities having a maturity date of more
than sixty days at the 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 on the identified cost
method. Discounts on securities purchased are amortized over the life of the
respective securities. The Fund does not amortize premiums on securities.
Interest income is accrued daily.
C. OPTION ACCOUNTING PRINCIPLES--When the Fund writes a call option, an
amount equal to the premium received is included in the Statement of Assets
and Liabilities as a liability which is subsequently marked-to-market to
reflect the current market value of the option written. If a written option
either expires or the Fund enters into a closing purchase transaction, the
Fund realizes a gain or loss without regard to any unrealized gain or loss
on the underlying security or currency and the liability related to such
option is extinguished.
When the Fund purchases a call or put option, the premium paid is
recorded as an investment and is subsequently marked-to-market to reflect
the current market value. If a purchased option expires, the Fund will
realize a loss to the extent of the premium paid. If the Fund enters into a
closing sale
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
transaction, a gain or loss is realized for the difference between the
proceeds from the sale and the cost of the option. If a put option is
exercised, the cost of the security or currency sold upon exercise will be
increased by the premium orginally paid. If a call option is exercised, the
cost of the security purchased upon exercise will be increased by the
premium originally paid.
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 or U.S. Government 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 contracts
are translated at the exchange rates prevailing at the end of the period;
and (2) purchases, sales, income and expenses are translated at the exchange
rates prevailing on the respective dates of such transactions. The resultant
exchange gains and losses are included in the Statement of Operations as
realized and unrealized gain/loss on foreign exchange transactions. Pursuant
to U.S. Federal income tax regulations, certain foreign exchange
gains/losses included in realized and unrealized gain/loss are included in
or are a reduction of ordinary income for federal income tax purposes. The
Fund does not isolate that portion of the results of operations arising as a
result of changes in the foreign exchange rates from the changes in the
market prices of the securities.
F. FORWARD FOREIGN CURRENCY CONTRACTS--The Fund may enter into forward
foreign currency contracts as a hedge against fluctuations in foreign
exchange rates. Forward contracts are valued daily at the appropriate
exchange rates. The resultant exchange gains and losses are included in the
Statement of Operations as unrealized gain/loss on foreign exchange
transactions. The Fund records realized gains or losses on delivery of the
currency or at the time the forward contract is extinguished (compensated)
by entering into a closing transaction prior to delivery.
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.
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
I. ORGANIZATIONAL EXPENSES--Dean Witter InterCapital Inc. (the "Investment
Manager") paid the organizational expenses of the Fund in the amount of
approximately $150,000 which have been reimbursed for the full amount
thereof. Such expenses have been deferred and are being amortized on the
straight-line method over a period not to exceed five years from the
commencement of operations.
2. INVESTMENT MANAGEMENT AGREEMENT--Pursuant to an Investment Management
Agreement, the Fund pays its Investment Manager 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; 0.55% to the portion
of the daily net assets not exceeding $500 million and 0.50% to the portion of
the daily net assets exceeding $500 million.
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 0.75% of the lesser of:
(a) the average daily aggregate gross sales of the Fund's shares since the
Fund's inception (not including reinvestment of dividends or capital gains
distributions) less the average daily aggregate net asset value of the Fund's
shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or upon which such charge has been waived; or (b)
the Fund's average daily net assets. Amounts paid under the Plan are paid to the
Distributor to compensate it for the services provided and the expenses borne by
it and others in the distribution of the Fund's shares, including the payment of
commissions for sales of the Fund's shares and incentive compensation to and
expenses of the account executives of Dean Witter Reynolds Inc., an affiliate of
the Investment Manager and Distributor, and other employees and selected
broker-dealers who engage in or support distribution of the Fund's shares or who
service shareholder accounts, including overhead and telephone expenses,
printing and distribution of prospectuses and reports used in connection with
the offering of the Fund's shares to other than current shareholders and
preparation, printing and distribution of sales literature and advertising
materials. In addition, the Distributor may be compensated under the Plan for
its opportunity costs in advancing such amounts, which compensation would be in
the form of a carrying charge on any unreimbursed expenses by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred
but not yet recovered may be recovered through future distribution fees from the
Fund and contingent deferred sales charges from the Fund's shareholders.
The Distributor has informed the Fund that for the year ended October 31,
1994, it received approximately $575,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares. The Fund's shareholders pay such
charges which are not an expense of the Fund.
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES--The cost of
purchases and the proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended October 31, 1994, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Corporate Bonds................................................................ $ 6,610,936 $ 52,091,375
Foreign Government Obligations................................................. 198,180,887 268,697,793
U.S. Government Agencies and Obligations....................................... 62,537,189 141,231,570
</TABLE>
<TABLE>
<CAPTION>
Transactions in written options were as follows:
CURRENCY
AMOUNT PREMIUMS
------------ ------------
Options written: outstanding at beginning of period.......... -- --
<S> <C> <C>
Options written.............................................. DEM 15,000,000 $ 17,452
Options expired.............................................. (15,000,000) (17,452)
------------ ------------
Options written: outstanding at end of period................ DEM -- $ --
------------ ------------
------------ ------------
</TABLE>
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At October 31, 1994, the Fund had
transfer agent fees and expenses payable of approximately $36,000.
On April 1, 1991, the Fund established an unfunded noncontributory defined
benefit pension plan covering all independent Directors of the Fund who will
have served as independent Directors for at least five years at the time of
retirement. Benefits under this plan are based on years of service and
compensation during the last five years of service. Aggregate pension costs for
the year ended October 31, 1994, included in Directors' fees and expenses in the
Statement of Operations, amounted to $9,453. At October 31, 1994, the Fund had
an accrued pension liability of $46,102 which is included in accrued expenses
and other payables in the Statement of Assets and Liabilities.
5. CAPITAL STOCK--Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
------------------------------------------------------
1994 1993
-------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold.............................................. 8,350,784 $ 74,163,360 1,712,023 $ 16,009,337
Reinvestment of dividends......................... 941,697 8,409,346 1,490,031 13,840,182
----------- ------------- ----------- -------------
9,292,481 82,572,706 3,202,054 29,849,519
Repurchased....................................... (22,894,129) (203,831,690) (17,006,913) (157,921,574)
----------- ------------- ----------- -------------
Net decrease...................................... (13,601,648) $(121,258,984) (13,804,859) $(128,072,055)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>
6. FEDERAL INCOME TAX STATUS--At October 31, 1994, the Fund had net capital
loss carryovers of approximately $7,173,000 of which $85,000 will be available
through October 31, 1999, $1,231,000 will be available through October 31, 2000,
$1,004,000 will be available through October 31, 2001 and $4,853,000 will be
available through October 31, 2002 to offset future capital gains to the extent
provided by regulations. To the extent that these carryover losses are used to
offset future capital gains, it is probable that the gains so offset will not be
distributed to shareholders.
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
As of October 31, 1994, the Fund had permanent book/tax differences
primarily attributable to foreign currency losses and dividend redesignations.
To reflect cumulative reclassifications arising from permanent book/tax
differences as of October 31, 1993, paid-in-capital was charged $24,885,529,
distributions in excess of net investment income was charged $2,086,341 and
accumulated net realized loss was credited $26,971,870. To reflect
reclassifications arising from permanent book/tax differences for the year ended
October 31, 1994, distributions in excess of net investment income was charged
and accumulated net realized loss was credited $16,220,472.
7. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK--At October 31, 1994, the
Fund had outstanding forward foreign currency contracts ("forward contracts") as
a hedge against changes in foreign exchange rates. Forward contracts involve
elements of market risk in excess of the amount reflected in the Statement of
Assets and Liabilities. The Fund bears the risk of an unfavorable change in the
foreign exchange rates underlying the forward contracts. Risks may also arise
upon entering into these contracts from the potential inability of the
counterparties to meet the terms of their contracts. The Fund may be considered
to have a concentration of credit risk in the banking industry amounting to
$57,492,380 as of October 31, 1994.
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected ratios and per share data for a share of capital stock outstanding
throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31,
---------------------------------------------
1994 1993 1992 1991
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................. $ 9.23 $ 9.41 $ 9.77 $ 10.00
--------- --------- --------- ---------
Net investment income................................. 0.72 0.70 0.82 0.95
Net realized and unrealized loss...................... (0.66) (0.27) (0.46) (0.23)
--------- --------- --------- ---------
Total from investment operations...................... 0.06 0.43 0.36 0.72
--------- --------- --------- ---------
Less dividends and distributions from:
Net investment income............................... (0.13) (0.61) (0.72) (0.95)
Paid-in-capital..................................... (0.43) -- -- --
--------- --------- --------- ---------
(0.56) (0.61) (0.72) (0.95)
--------- --------- --------- ---------
Net asset value, end of period........................ $ 8.73 $ 9.23 $ 9.41 $ 9.77
--------- --------- --------- ---------
--------- --------- --------- ---------
TOTAL INVESTMENT RETURN+.............................. 0.65% 4.72% 3.76% 7.49%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands).............. $170,117 $305,278 $441,191 $462,263
Ratios to average net assets:
Expenses............................................ 1.63% 1.55% 1.55% 1.61%
Net investment income............................... 6.35% 6.97% 8.43% 9.49%
Portfolio turnover rate............................... 123% 221% 149% 8%
<FN>
- ----------------
+ DOES NOT REFLECT THE DEDUCTION OF SALES LOAD.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of Dean Witter Global Short-Term
Income Fund Inc.
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 Global Short-Term
Income Fund Inc. (the "Fund") at October 31, 1994, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the four years
in the period then ended, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities owned at October 31, 1994 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
New York, New York
December 9, 1994
<PAGE>
DIRECTORS
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. John E. Jeuck DEAN WITTER
Dr. Manuel H. Johnson GLOBAL SHORT-TERM
Paul Kolton INCOME FUND
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
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 [PHOTO]
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.
ANNUAL REPORT
OCTOBER 31, 1994
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND
GROWTH OF $10,000
($ IN THOUSANDS)
<TABLE>
<CAPTION>
LEHMAN BROTHERS
DATE TOTAL MUTUAL FUND SHORT
WORLD MULTIMARKET IX
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<S> <C> <C>
November 1, 1990 $10,000 $10,000
- ----------------------------------------------------------------------------
October 31, 1991 $10,749 $10,780
- ----------------------------------------------------------------------------
October 31, 1992 $11,154 $11,971
- ----------------------------------------------------------------------------
October 31, 1993 $11,680 $12,762
- ----------------------------------------------------------------------------
October 31, 1994 $11,756 (3) $13,449
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR LIFE OF FUND
----------------------------
----------------------------
<S> <C>
0.65 (1) 4.13 (1)
----------------------------
-2.19 (2) 4.13 (2)
----------------------------
----------------------------
----------------------------
----------------------------
____ Fund ____ Lehman (4)
----------------------------
----------------------------
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS.
<FN>
_______________________________________
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes the deduction of the maximum applicable contingent
deferred sales charges (CDSC) (1 year - 3%, 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, 1994.
(4) The Lehman Brothers Mutual Fund Short World Multimarket Index measures the
performance of all debt instruments of the United States and 12 Lehman
major countries denominated in dollars with maturities of one to five
years.
</TABLE>
