<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
Two World Trade Center, New York, New York 10048
LETTER TO THE SHAREHOLDERS April 30, 1996
DEAR SHAREHOLDER:
During the six-month period ended April 30, 1996, the Federal Reserve Board
cut the federal-funds rate by 0.25 percent in December, and again in January,
as concerns increased over the prospect of the U.S. economy slipping into a
recession. Almost immediately thereafter, U.S. bond yields made an abrupt
about-face and rose sharply in response to statistical releases indicating
that the economy was rebounding strongly and inflationary pressures were
mounting. From the low point in January, the yield on the three-year U.S.
Treasury note increased by 1.47 percent to 6.33 percent at the end of April,
making the first four months of 1996 one of the worst periods in U.S. bond
market history.
Meanwhile, short-term interest rates in Europe continued lower, in reaction
to their central banks' cuts of official short rates, as well as ongoing weak
growth of their economies. However, at the longer end of the yield curve,
rates went up slightly in the core countries, such as Germany and France, in
sympathy with the higher-rate pressures in the United States. On the other
hand, three-year rates in Italy, Spain and Sweden declined as bond market
participants took note of the ongoing progress that these countries have made
in reducing public spending and deficits, as well as lower inflationary
expectations. Thus, three-year yields in Italy declined by about 1.6 percent
since the beginning of the year, while yields on three-year Spanish and
Swedish bonds declined by approximately 1.1 percent.
In the foreign exchange markets, the U.S. dollar, in reaction to improving
interest rate differentials and a stronger U.S. economic growth outlook,
appreciated against most of the major currencies, with the dollar gaining
approximately 8.7 percent against the Deutschemark and 3.0 percent against
the Japanese yen. Overall, the trade weighted dollar gained about 5.1 percent
during the six-month period.
PERFORMANCE AND INVESTMENT STRATEGY
Against this backdrop, Dean Witter Global Short-Term Income Fund produced a
total return of 5.25 percent for the six-month period ended
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
LETTER TO THE SHAREHOLDERS April 30, 1996, continued
April 30, 1996, compared to a total return of 3.87 percent for the average
short world multi-market fund, as reported by Lipper Analytical Services,
Inc. and an increase of 1.17 percent for the unhedged and unmanaged Lehman
Brothers Mutual Fund Short World Multimarket Index.
The Fund reduced its weightings in the U.S. market to 41 percent by
mid-February, while increasing its holdings in Italy, Spain and Sweden. This
enabled the Fund to take advantage of the higher yields and rising bond
prices in these markets. Weightings in New Zealand and Australian short-term
investments were maintained at 14 percent in order to benefit from higher but
stable yields and exchange rates. The Fund's average maturity at the end of
April was 2.0 years. At this time, 33 percent of the Fund's assets were in
North America, 52 percent in Europe and 15 percent in the Pacific Basin. Most
of the currency risks of the European investments were hedged back into the
dollar as the U.S. dollar appreciated in value.
LOOKING AHEAD
The Fund's management believes that the current global bond market decline
was a temporary correction and the Fund has been positioned appropriately to
preserve its capital. However, inflation in the global economy remains low,
and though there is some ongoing concern, mostly due to rises of commodity
prices and wage pressure, inflationary expectations should be well contained
as the global economy continues to experience fiscal contraction and moderate
growth. In this context, we anticipate that the Fund will maintain its
current strategy of diversifying into different global markets with an
emphasis on those that exhibit non-inflationary growth, continuing progress
toward fiscal balance and reduced public spending. This strategy seeks to
protect shareholder value while allowing the Fund to achieve attractive
current income.
We appreciate your continued support of Dean Witter Global Short-Term Income
Fund Inc. and look forward to serving your investment needs.
Very truly yours,
/s/ Charles A. Fiumefreddo
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -------------- ---------------------------------------------------------------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
GOVERNMENT & CORPORATE BONDS (85.7%)
AUSTRALIA (4.0%)
Government Obligation
Au$ 4,530 Queensland Treasury Corp. ...................................... 8.00 % 07/14/99 $ 3,529,993
------------
GERMANY (5.9%)
Banking - International
$ 5,000 Bayerische Vereinsbank ......................................... 8.125 01/27/00 5,235,945
------------
ITALY (19.1%)
Finance (0.4%)
ITL 560,000 Credit Suisse Finance Gibraltar ................................ 11.625 05/27/97 368,882
------------
Government Obligations (18.7%)
7,930 M Italy Treasury Bond+ ........................................... 10.50 04/15/98 5,242,467
11,410 M Italy Treasury Bond+ ........................................... 9.50 12/01/99 7,412,224
6,000 M Italy Treasury Bond+ ........................................... 10.50 04/01/00 4,022,679
------------
16,677,370
------------
TOTAL ITALY ......................................................................... 17,046,252
------------
NEW ZEALAND (7.0%)
Government Obligations
NZ$ 765 New Zealand Treasury Bond+ ..................................... 10.00 07/15/97 529,632
8,509 New Zealand Treasury Bond+ ..................................... 8.00 07/15/98 5,719,162
------------
TOTAL NEW ZEALAND ................................................................... 6,248,794
------------
PORTUGAL (4.5%)
Government Obligation
PTE 616 M Portugal Treasury Bond ......................................... 8.375 01/23/99 3,997,246
------------
SPAIN (13.4%)
Government Obligation
ESP 1,486 M Spain Treasury Bond+ ........................................... 11.60 01/15/97 11,990,355
------------
SWEDEN (5.5%)
Government Obligation
SEK 30,200 Sweden Treasury Bond+ .......................................... 10.25 05/05/00 4,886,699
------------
UNITED STATES (26.3%)
Banking (23.7%)
$ 5,000 Bank One ....................................................... 7.80 12/30/96 5,063,050
5,000 Morgan (J.P.) & Co., Inc ....................................... 7.625 11/15/98 5,126,200
5,000 National Bank of Detroit ....................................... 6.85 05/11/98 5,019,550
6,000 Norwest Corp ................................................... 5.75 03/15/98 5,941,080
------------
21,149,880
------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited) continued
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -------------- ---------------------------------------------------------------- --------- ---------- ------------
U.S. Government Obligation (2.6%)
$ 2,250 U.S. Treasury Note ............................................. 7.50% 10/31/99 $ 2,331,563
------------
TOTAL UNITED STATES ................................................................. 23,481,443
------------
TOTAL GOVERNMENT & CORPORATE BONDS
(Identified Cost $75,793,709) ....................................................... 76,416,727
------------
SHORT-TERM INVESTMENTS (14.8%)
TIME DEPOSITS (a) (7.8%)
NEW ZEALAND (4.4%)
Banking - International
NZ$ 5,736 Bankers Trust .................................................. 8.9375 05/09/96 3,935,313
------------
SPAIN (3.4%)
Banking - International
ESP 387,556 Bank of New York ............................................... 7.65 05/13/96 3,047,303
------------
TOTAL TIME DEPOSITS
(Identified Cost $6,989,181) ........................................................ 6,982,616
------------
U.S. GOVERNMENT AGENCY (b) (7.0%)
UNITED STATES
$ 6,200 Federal Home Loan Mortgage Corp. (Amortized Cost $6,200,000) ... 5.30 05/01/96 6,200,000
------------
TOTAL SHORT-TERM INVESTMENTS
(Identified Cost $13,189,181) ....................................................... 13,182,616
------------
TOTAL INVESTMENTS
(Identified Cost $88,982,890) (c) ....................................... 100.5% 89,599,343
LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS ........................... (0.5) (443,938)
------ ----------
NET ASSETS ............................................................... 100.0% $89,155,405
====== ==========
</TABLE>
- ------------
M In millions.
+ Some or all of these securities are segregated in connection with open
forward foreign currency contracts.
(a) Subject to withdrawal restrictions until maturity.
(b) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(c) The aggregate cost for federal income tax purposes is $88,982,890; the
aggregate gross unrealized appreciation is $1,297,158 and the aggregate
gross unrealized depreciation is $680,705, resulting in net unrealized
appreciation of $616,453.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
PORTFOLIO OF INVESTMENTS April 30, 1996 (unaudited) continued
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT APRIL 30, 1996:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS DELIVERY APPRECIATION
TO DELIVER IN EXCHANGE FOR DATE (DEPRECIATION)
- -------------- --------------- ---------- --------------
<S> <C> <C> <C>
$ 1,137,203 PTE 177,060,163 05/02/96 $ (8,568)
$ 2,040,626 PTE 317,737,715 05/03/96 (15,271)
$ 950,923 PTE 148,089,083 05/06/96 (6,959)
DEM 7,092,960 $ 4,812,702 05/29/96 215,147
yen 1,250,000,000 $ 11,680,060 11/05/96 (93,581)
yen 700,000,000 $ 6,554,307 03/26/97 (79,307)
CHF 15,000,000 $ 12,189,176 04/29/97 131,870
--------------
Net unrealized appreciation ............ $143,331
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $88,982,890) ...................................... $ 89,599,343
Cash (including $27,182 in foreign currency) ........................ 109,601
Unrealized appreciation on open forward foreign currency contracts . 347,017
Receivable for:
Investments sold .................................................. 9,000,201
Interest .......................................................... 2,150,584
Compensated forward foreign currency contracts .................... 1,111,272
Capital stock sold ................................................ 17,990
Prepaid expenses and other assets ................................... 51,112
-------------
TOTAL ASSETS ...................................................... 102,387,120
-------------
LIABILITIES:
Unrealized depreciation on open forward foreign currency contracts . 203,686
Payable for:
Investments purchased ............................................. 11,076,242
Compensated forward foreign currency contracts .................... 1,441,466
Capital stock repurchased ......................................... 197,807
Plan of distribution fee .......................................... 59,437
Dividends to shareholders ......................................... 59,050
Investment management fee ......................................... 43,587
Accrued expenses and other payables ................................. 150,440
-------------
TOTAL LIABILITIES ................................................. 13,231,715
-------------
NET ASSETS:
Paid-in-capital ..................................................... 93,691,066
Net unrealized appreciation ......................................... 800,437
Accumulated undistributed net investment income ..................... 103,414
Accumulated net realized loss ....................................... (5,439,512)
-------------
NET ASSETS ........................................................ $ 89,155,405
=============
NET ASSET VALUE PER SHARE,
9,820,907 shares outstanding (unlimited shares authorized of $.01
par value) ......................................................... $ 9.08
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
FINANCIAL STATEMENTS, continued
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME (net of $74,761 foreign withholding tax) ........... $ 3,956,108
-------------
EXPENSES
Plan of distribution fee ............................................ 365,056
Investment management fee ........................................... 267,708
Transfer agent fees and expenses .................................... 53,376
Professional fees ................................................... 38,442
Custodian fees ...................................................... 27,310
Shareholder reports and notices ..................................... 19,635
Directors' fees and expenses ........................................ 10,134
Registration fees ................................................... 8,372
-------------
TOTAL EXPENSES .................................................... 790,033
-------------
NET INVESTMENT INCOME ............................................. 3,166,075
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on:
Investments ....................................................... 2,146,577
Foreign exchange transactions ..................................... 378,250
-------------
TOTAL GAIN ........................................................ 2,524,827
-------------
Net change in unrealized depreciation on:
Investments ....................................................... (1,030,770)
Translation of forward foreign currency contracts, other assets
and liabilities denominated in foreign currencies ............... 363,373
-------------
TOTAL DEPRECIATION ................................................ (667,397)
-------------
NET GAIN .......................................................... 1,857,430
-------------
NET INCREASE ........................................................ $ 5,023,505
=============
</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 SIX FOR THE YEAR
MONTHS ENDED ENDED OCTOBER
APRIL 30, 1996 31, 1995
- --------------------------------------------------- -------------- ----------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income .............................. $ 3,166,075 $ 8,040,438
Net realized gain (loss) ........................... 2,524,827 (2,375,703)
Net change in unrealized appreciation/depreciation (667,397) 4,237,361
-------------- ----------------
NET INCREASE ..................................... 5,023,505 9,902,096
-------------- ----------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income .............................. (2,941,584) (6,576,785)
Paid-in-capital .................................... -- (1,427,490)
-------------- ----------------
TOTAL ............................................ (2,941,584) (8,004,275)
-------------- ----------------
Net decrease from capital stock transactions ...... (19,865,352) (65,075,624)
-------------- ----------------
TOTAL DECREASE ................................... (17,783,431) (63,177,803)
NET ASSETS:
Beginning of period ................................ 106,938,836 170,116,639
-------------- ----------------
END OF PERIOD
(Including undistributed net investment income of
$103,414 and distributions in excess of net
investment income of $121,077) ................... $ 89,155,405 $106,938,836
============== ================
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter Global Short-Term 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) 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) 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)
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 it will be valued at fair
value as determined by the Directors; (4) when market quotations are not
readily available, including circumstances under which it is determined by
the Investment Manager that sale or bid prices are not reflective of a
security's market value, portfolio securities are valued at their fair value
as determined in good faith under procedures established by and under the
general supervision of the 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 (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. 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
knows as
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited) continued
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.
D. FOREIGN CURRENCY TRANSLATION -- The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value
of investment securities, other assets and liabilities and forward contracts
are translated at the exchange rates prevailing at the end of the period; and
(2) purchases, sales, income and expenses are translated at the exchange
rates prevailing on the respective dates of such transactions. The resultant
exchange gains and losses are included in the Statement of Operations as
realized and unrealized gain/loss on foreign exchange transactions. Pursuant
to U.S. Federal income tax regulations, certain foreign exchange gains/losses
included in realized and unrealized gain/loss are included in or are a
reduction of ordinary income for federal income tax purposes. The Fund does
not isolate that portion of the results of operations arising as a result of
changes in the foreign exchange rates from the changes in the market prices
of the securities.
E. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward
foreign currency contracts 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.
F. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
G. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends
and distributions to its shareholders on the 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
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited) continued
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 Dean Witter InterCapital
Inc. ("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: 0.55% 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 dividend or capital gains
distributions) less the average daily aggregate net asset value of the Fund's
shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or upon which such charge has been waived; or
(b) the Fund's average daily net assets. Amounts paid under the Plan are paid
to the Distributor to compensate it for the services provided and the
expenses borne by it and others in the distribution of the Fund's shares,
including the payment of commissions for sales of the Fund's shares and
incentive compensation to, and expenses of, account executives of Dean Witter
Reynolds Inc., an affiliate of the Investment Manager and Distributor, and
other employees and selected broker-dealers, who engage in or support
distribution of the Fund's shares or who service shareholder accounts,
including overhead and telephone expenses, printing and distribution of
prospectuses and reports used in connection with the offering of the Fund's
shares to other than current shareholders and preparation, printing and
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited) continued
distribution of sales literature and advertising materials. In addition, the
Distributor may be compensated under the Plan for its opportunity costs in
advancing such amounts, which compensation would be in the form of a carrying
charge on any unreimbursed expenses incurred by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred
but not yet recovered may be recovered through future distribution fees from
the Fund and contingent deferred sales charges from the Fund's shareholders.
The Distributor has informed the Fund that for the six months ended April 30,
1996, it received approximately $22,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the six months ended April 30, 1996
were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
--------------- -------------
<S> <C> <C>
Corporate Bonds .......................... $ -- $ 4,572,094
Foreign Government Bonds ................. 55,998,427 51,359,768
U.S. Government and Agencies Obligations 2,075,000 23,532,233
</TABLE>
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At April 30, 1996, the Fund had
transfer agent fees and expenses payable of approximately $17,000.
The Fund has an unfunded noncontributory defined benefit pension plan
covering all independent Directors of the Fund who will have served as
independent Directors/Trustees for at least five years at the time of
retirement. Benefits under this plan are based on years of service and
compensation during the last five years of service. Aggregate pension costs
for the six months ended April 30, 1996 included in Directors' fees and
expenses in the Statement of Operations amounted to $2,218. At April 30,
1996, the Fund had an accrued pension liability of $47,483 which is included
in accrued expenses in the Statement of Assets and Liabilities.
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited) continued
5. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
APRIL 30, 1996 OCTOBER 31, 1995
------------------------------ -----------------------------
(UNAUDITED)
SHARES AMOUNT SHARES AMOUNT
------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
Sold ........................................ 878,859 $ 7,938,564 332,379 $ 2,925,344
Reinvestment of dividends and distributions 192,403 1,734,831 535,338 4,696,544
------------- --------------- ------------- --------------
1,071,262 9,673,395 867,717 7,621,888
Repurchased ................................. (3,276,622) (29,538,747) (8,316,754) (72,697,512)
------------- --------------- ------------- --------------
Net decrease ................................ (2,205,360) $(19,865,352) (7,449,037) $(65,075,624)
============= =============== ============= ==============
</TABLE>
6. FEDERAL INCOME TAX STATUS
At October 31, 1995, the Fund had a net capital loss carryover of
approximately $8,335,000 to offset future capital gains to the extent
provided by regulations available through October 31 of the following years:
<TABLE>
<CAPTION>
AMOUNTS IN THOUSANDS
- -----------------------------------------------------------------
1999 2000 2001 2002 2003 TOTAL
- ------ ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
$85 $1,231 $1,004 $4,853 $1,162 $8,335
====== ========== ========== ========== ========== =========
</TABLE>
As of October 31, 1995, the Fund had temporary book/tax differences primarily
attributable to the mark-to-market of open forward foreign currency exchange
contracts and compensated forward forward foreign currency exchange contracts
and permanent book/tax differences primarily attributable to foreign currency
losses.
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.
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (unaudited) continued
To hedge against adverse interest rate, foreign currency and market risks,
the Fund may enter into forward written options on interest rate futures and
interest rate future contracts ("derivative investments").
At April 30, 1996, there were no outstanding forward contracts other than
those used to to facilitate settlement of foreign currency denominated
portfolio transactions and to manage foreign currency exposure.
These derivative instruments involve elements of market risk in excess of the
amount reflected in the Statement of Assets and Liabilities. The Fund bears
the risk of an unfavorable change in the foreign exchange rates underlying
the forward contracts. Risks may also arise upon entering into these
contracts from the potential inability of the counterparties to meet the
terms of their contracts.
<PAGE>
DEAN WITTER 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 SIX FOR THE YEAR ENDED OCTOBER 31
MONTHS ENDED ----------------------------------------------------------------
APRIL 30, 1996 1995 1994 1993 1992 1991
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(unaudited)
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .. $8.89 $8.73 $9.23 $9.41 $9.77 $10.00
-------------- ------------- ------------- ------------- ------------- ------------
Net investment income .................. 0.29 0.54 0.72 0.70 0.82 0.95
Net realized and unrealized gain (loss) 0.17 0.16 (0.66) (0.27) (0.46) (0.23)
-------------- ------------- ------------- ------------- ------------- ------------
Total from investment operations ...... 0.46 0.70 0.06 0.43 0.36 0.72
-------------- ------------- ------------- ------------- ------------- ------------
Less dividends and distributions from:
Net investment income ................. (0.27) (0.44) (0.13) (0.61) (0.72) (0.95)
Paid-in-capital ....................... -- (0.10) (0.43) -- -- --
-------------- ------------- ------------- ------------- ------------- ------------
Total dividends and distributions ..... (0.27) (0.54) (0.56) (0.61) (0.72) (0.95)
-------------- ------------- ------------- ------------- ------------- ------------
Net asset value, end of period ......... $9.08 $8.89 $8.73 $9.23 $9.41 $9.77
============== ============= ============= ============= ============= ============
TOTAL INVESTMENT RETURN+ ............... 5.25%(1) 8.27% 0.65% 4.72% 3.76% 7.49%
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................... 1.62%(2) 1.68% 1.63% 1.55% 1.55% 1.61%
Net investment income .................. 6.49%(2) 6.17% 6.35% 6.97% 8.43% 9.49%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $89,155 $106,939 $170,117 $305,278 $441,191 $462,263
Portfolio turnover rate ................ 62%(1) 188% 123% 221% 149% 8%
</TABLE>
- ------------
+ 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>
DIRECTORS
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Vinh Q. Tran
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
The financial statements included herein have been taken from the records of
the Fund without examination by the independent accountants and accordingly
they do not express an opinion thereon.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and
directors, fees, expenses and other pertinent information, please see
the prospectus of the Fund.
This report is not authorized for distribution to prospective investors
in the Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER
GLOBAL SHORT-TERM
INCOME FUND
SEMIANNUAL REPORT
APRIL 30, 1996
