<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC. TWO WORLD TRADE CENTER, NEW
YORK, NEW YORK 10048
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1995
DEAR SHAREHOLDER:
Led by the U.S. bond market, global bond yields declined substantially during
the fiscal year ended October 31, 1995. In the United States, the additional
increases of the federal-funds rate by the Federal Reserve Board in November
1994 and February 1995 set the stage for a substantial slowing of economic
growth and a significant reduction of inflation in 1995. These developments
allowed yields on three-year U.S. Treasuries to decline by 2.12 percent from the
highs reached in January 1995. In July, the Federal Reserve sanctioned the
improvements in inflationary expectations by cutting the federal-funds rate by
0.25 percent.
Outside of the U.S., European bonds turned in a mixed performance in the first
half of the fiscal year, supported on the one hand by the U.S. bond rally, but
undermined, on the other hand, by political and budget issues. During the second
half of the fiscal year, however, European bond markets rallied as many of these
issues were addressed in a more decisive fashion by the affected countries and
by the community of European countries as a whole. Also aiding this rally was
the lowering of interest rates in Germany in response to slowing economic growth
and improving inflation reports. As a result, yields on three-year German and
Italian bonds declined by 2.30 percent and 2.20 percent, respectively, from the
highs seen earlier in the year.
In the foreign exchange markets, the U.S. dollar plummeted to new historical
lows against the Japanese yen and the German mark during the first half of the
fiscal year, mainly due to the ongoing trade dispute between the U.S. and Japan.
However in the second half of the year, the U.S. currency regained some of its
composure thanks to aggressive and concerted intervention by the U.S., Germany
and Japan. Further aiding the dollar were the U.S.-Japan agreement on auto parts
and the unveiling of the Japanese deregulatory package combined with two
reductions of the Japanese Official Discount Rate. For the twelve-month
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1995, CONTINUED
period, the dollar depreciated by 6.50 percent against the German mark, while
appreciating by 5.30 percent against the Japanese yen. Overall, the U.S.
currency lost 2.30 percent on a trade-weighted basis.
PERFORMANCE AND PORTFOLIO
Against this backdrop, Dean Witter Global Short-Term Income Fund Inc. has shown
a strong performance during the fiscal year. For the twelve-month period ended
October 31, 1995, the Fund's total return was 8.27 percent, compared to a total
return of 3.18 percent for the average short world income fund, as reported by
Lipper Analytical Services, Inc. and an increase of 12.09 percent for the
unhedged and unmanaged Lehman Brothers Mutual Fund Short World Multimarket
Index. The accompanying chart illustrates the growth of a $10,000 investment in
the Fund since inception
(November 1, 1990) through the fiscal
year ended October 31, 1995, versus a
similar investment in the issues that
comprise the Lehman Brothers Mutual
Fund Short World Multimarket Index.
During the fiscal year, the Fund's
dividends totaled $0.54 per share. As
of October 31, 1995, the Fund's net
assets were approximately $107 million
with investments in government
securities (65 percent of net assets)
and debt instruments issued by
top-rated banks (33 percent of net
assets).
The Fund's investment strategy in this
market environment was to overweight
the U.S. market, then to increase its
allocation to the Italian, Spanish and
Swedish markets in the second half of
the year, taking advantage of higher
yields and rising bond prices in these
markets. As of October 31, 1995, 48
percent of the Fund's investments were
in North America, 38 percent were in
Europe and 14 percent in the Pacific
Basin countries. These investment
positions had an average maturity of
2.50 years as of October 31, 1995,
with the
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1995, CONTINUED
average maturity of the Fund ranging from 2 to 3 years during the fiscal year.
Some of the currency risks of these investments were not hedged back into the
dollar as the U.S. currency declined in value.
LOOKING AHEAD
Going forward, further easing of interest rates in the U.S. and accommodating
monetary policies in the other major countries should bode well for global bond
investments. In addition, the substantial progress in budgetary discipline that
has been seen in Europe, especially in Italy, Spain and Sweden should lead to
excellent performance by these international bond markets. Reflecting these
circumstances, we anticipate that the Fund will maintain its current strategy of
diversifying into different global markets with an emphasis on the markets that
exhibit steady non-inflationary growth, continuing progress toward fiscal
balance and accommodating monetary policies. We believe this strategy would
allow the Fund to achieve high current income while maintaining NAV stability.
We appreciate your ongoing support of Dean Witter Global Short-Term Income Fund
Inc. and look forward to continuing to serve your investment needs.
Very truly yours,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
GOVERNMENT & CORPORATE BONDS (93.5%)
AUSTRALIA (3.2%)
GOVERNMENT OBLIGATION
Au$ 4,650 Australia Treasury Bill.................. 0.00 % 02/14/96 $ 3,458,372
---------------
GERMANY (5.0%)
BANKING - INTERNATIONAL
$ 5,000 Bayerische Vereinsbank................... 8.125 01/27/00 5,348,445
---------------
ITALY (11.8%)
GOVERNMENT OBLIGATIONS
ITL 7,930,000 Italy Treasury Bond+..................... 10.50 04/15/98 4,939,043
12,500,000 Italy Treasury Bond+..................... 10.50 04/01/00 7,672,170
---------------
TOTAL ITALY..................................................... 12,611,213
---------------
NEW ZEALAND (10.3%)
GOVERNMENT OBLIGATIONS
NZ$ 8,000 New Zealand Treasury Bond+............... 9.00 11/15/96 5,333,211
8,265 New Zealand Treasury Bond+............... 10.00 07/15/97 5,658,918
---------------
TOTAL NEW ZEALAND............................................... 10,992,129
---------------
SPAIN (13.2%)
GOVERNMENT OBLIGATIONS
ESP 390,000 Spain Treasury Bond+..................... 11.45 08/30/98 3,289,815
1,325,000 Spain Treasury Bond+..................... 10.25 11/30/98 10,865,109
---------------
TOTAL SPAIN..................................................... 14,154,924
---------------
SWEDEN (3.6%)
GOVERNMENT OBLIGATION
SEK 24,700 Sweden Treasury Bond..................... 10.75 01/23/97 3,806,480
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
UNITED STATES (46.4%)
BANKING (24.2%)
$ 5,000 Bank One................................. 7.80 % 12/30/96 $ 5,100,850
5,000 Morgan (J.P.) & Co., Inc................. 7.625 11/15/98 5,208,400
7,000 National Bank of Detroit................. 6.85 05/11/98 7,107,940
6,000 Norwest Corp............................. 5.75 03/15/98 5,954,880
2,500 Society Bank - Cleveland................. 7.125 04/15/97 2,534,600
---------------
25,906,670
---------------
U.S GOVERNMENT OBLIGATIONS (22.2%)
U.S. Treasury Notes
13,000 ......................................... 6.125 05/15/98 13,130,000
10,000 ......................................... 7.50 10/31/99 10,595,313
---------------
23,725,313
---------------
TOTAL UNITED STATES............................................. 49,631,983
---------------
TOTAL GOVERNMENT & CORPORATE BONDS
(IDENTIFIED COST $98,398,091)................................... 100,003,546
---------------
SHORT-TERM INVESTMENTS (4.7%)
TIME DEPOSITS (a)
ITALY (2.7%)
BANKING - INTERNATIONAL
ITL 4,648,740 Bank of New York......................... 10.375 11/03/95 2,923,736
---------------
SPAIN (1.4%)
BANKING - INTERNATIONAL
ESP 184,652 Bankers Trust............................ 9.125 11/03/95 1,514,161
---------------
TOTAL TIME DEPOSITS............................................. 4,437,897
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1995, CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
UNITED STATES (b) (0.6%)
U.S. GOVERNMENT AGENCY
$ 615 Student Loan Marketing Assoc............. 5.69 % 11/01/95 $ 615,000
---------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $5,011,129).................................... 5,052,897
---------------
TOTAL INVESTMENTS
(IDENTIFIED COST $103,409,220) (C)........ 98.2% 105,056,443
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES............................... 1.8 1,882,393
----- ------------
NET ASSETS................................ 100.0% $106,938,836
----- ------------
----- ------------
<FN>
- ---------------------
+ 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 $103,409,220; the
aggregate gross unrealized appreciation is $1,873,213 and the aggregate
gross unrealized depreciation is $225,990, resulting in net unrealized
appreciation of $1,647,223.
</TABLE>
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCTOBER 31, 1995:
<TABLE>
<CAPTION>
CONTRACTS IN EXCHANGE DELIVERY UNREALIZED
TO DELIVER FOR DATE DEPRECIATION
- -------------------------------------------------------------------
<S> <C> <C> <C>
DEM 7,092,960 $4,812,702 05/29/96 $ (216,459)
--------------
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $103,409,220)............................ $105,056,443
Cash (including $73,950 in foreign currency)................ 76,159
Receivable for:
Interest................................................ 3,421,790
Compensated forward foreign currency contracts.......... 1,335,275
Capital stock sold...................................... 300
Prepaid expenses............................................ 3,588
------------
TOTAL ASSETS........................................... 109,893,555
------------
LIABILITIES:
Unrealized depreciation on forward foreign currency
contracts................................................. 216,459
Payable for:
Compensated forward foreign currency contracts.......... 2,280,120
Capital stock repurchased............................... 77,339
Plan of distribution fee................................ 71,309
Dividends to shareholders............................... 67,874
Investment management fee............................... 52,293
Accrued expenses............................................ 189,325
------------
TOTAL LIABILITIES...................................... 2,954,719
------------
NET ASSETS:
Paid-in-capital............................................. 113,556,418
Net unrealized appreciation................................. 1,467,834
Distributions in excess of net investment income............ (121,077)
Accumulated net realized loss............................... (7,964,339)
------------
NET ASSETS............................................. $106,938,836
------------
------------
NET ASSET VALUE PER SHARE,
12,026,267 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$8.89
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME (net of $56,922 foreign withholding tax).... $10,228,024
-----------
EXPENSES
Plan of distribution fee.................................... 977,657
Investment management fee................................... 716,948
Transfer agent fees and expenses............................ 165,681
Custodian fees.............................................. 89,621
Professional fees........................................... 82,155
Shareholder reports and notices............................. 57,211
Registration fees........................................... 30,813
Organizational expenses..................................... 29,982
Directors' fees and expenses................................ 26,521
Other....................................................... 10,997
-----------
TOTAL EXPENSES......................................... 2,187,586
-----------
NET INVESTMENT INCOME.................................. 8,040,438
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments............................................. (2,373,102)
Futures contracts....................................... 618,175
Foreign exchange transactions........................... (620,776)
-----------
TOTAL LOSS............................................. (2,375,703)
-----------
Net change in unrealized appreciation/depreciation on:
Investments............................................. 4,078,752
Translation of forward foreign currency contracts, other
assets and liabilities denominated in foreign
currencies............................................ 158,609
-----------
TOTAL APPRECIATION..................................... 4,237,361
-----------
NET GAIN............................................... 1,861,658
-----------
NET INCREASE................................................ $ 9,902,096
-----------
-----------
</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 FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 8,040,438 $ 14,896,746
Net realized loss........................................... (2,375,703) (21,073,488)
Net change in unrealized appreciation/depreciation.......... 4,237,361 6,758,980
---------------- ----------------
NET INCREASE........................................... 9,902,096 582,238
---------------- ----------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income....................................... (6,576,785) (3,245,847)
Paid-in-capital............................................. (1,427,490) (11,239,060)
---------------- ----------------
TOTAL.................................................. (8,004,275) (14,484,907)
---------------- ----------------
Net decrease from capital stock transactions................ (65,075,624) (121,258,984)
---------------- ----------------
TOTAL DECREASE......................................... (63,177,803) (135,161,653)
NET ASSETS:
Beginning of period......................................... 170,116,639 305,278,292
---------------- ----------------
END OF PERIOD
(INCLUDING DISTRIBUTIONS IN EXCESS OF NET INVESTMENT
INCOME OF $121,077 AND $915, RESPECTIVELY).............. $106,938,836 $ 170,116,639
---------------- ----------------
---------------- ----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1995
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
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1995, CONTINUED
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 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
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1995, CONTINUED
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.
H. ORGANIZATION EXPENSES -- Dean Witter InterCapital Inc. (the "Investment
Manager") paid the organizational expenses of the Fund in the amount of
approximately $150,000 which were reimbursed for the full amount thereof. Such
expenses were fully amortized as of October 31, 1995.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement, 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 average daily net assets not exceeding $500 million and 0.50%
to the portion of the average 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 gain 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
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1995, CONTINUED
payment of commissions for sales of the Fund's shares and incentive compensation
to, and expenses of, account executives of Dean Witter Reynolds Inc., an
affiliate of the Investment Manager and Distributor, and other employees and
selected broker-dealers who engage in or support distribution of the Fund's
shares or who service shareholder accounts, including overhead and telephone
expenses, printing and distribution of prospectuses and reports used in
connection with the offering of the Fund's shares to other than current
shareholders and preparation, printing and distribution of sales literature and
advertising materials. In addition, the Distributor may be compensated under the
Plan for its opportunity costs in advancing such amounts, which compensation
would be in the form of a carrying charge on any unreimbursed expenses incurred
by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred but
not yet recovered may be recovered through future distribution fees from the
Fund and contingent deferred sales charges from the Fund's shareholders.
The Distributor has informed the Fund that for the year ended October 31, 1995,
it received approximately $107,000 in contingent deferred sales charges from
certain redemptions of the Fund's shares. The Fund's shareholders pay such
charges which are not an expense of the Fund.
4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended October 31, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
-------------- --------------
<S> <C> <C>
Corporate Bonds......................... $ 30,101,685 $ 43,081,050
Foreign Government Bonds................ 108,775,878 165,258,997
U.S. Government and Agencies
Obligations............................ 74,403,684 52,589,688
</TABLE>
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At October 31, 1995, the Fund had
transfer agent fees and expenses payable of approximately $27,000.
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 year ended October 31,
1995 included in Directors' fees and expenses in the Statement of Operations
amounted to $8,444. At October 31, 1995, the Fund had an accrued pension
liability of $53,191 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 OCTOBER 31, 1995, CONTINUED
5. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE YEAR ENDED
OCTOBER 31, 1995 OCTOBER 31, 1994
------------------------------- -------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Sold................................................... 332,379 $ 2,925,344 8,350,784 $ 74,163,360
Reinvestment of dividends and distributions............ 535,338 4,696,544 941,697 8,409,346
-------------- -------------- -------------- --------------
867,717 7,621,888 9,292,481 82,572,706
Repurchased............................................ (8,316,754) (72,697,512) (22,894,129) (203,831,690)
-------------- -------------- -------------- --------------
Net decrease........................................... (7,449,037) $ (65,075,624) (13,601,648) $ (121,258,984)
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</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 foreign currency exchange contracts and
permanent book/tax differences primarily attributable to foreign currency
losses. To reflect reclassifications arising from permanent book/tax differences
for the year ended October 31, 1995, paid-in-capital was charged $125,
distributions in excess of net investment income was charged $1,583,815 and
accumulated net realized loss was credited $1,583,940.
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
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1995, CONTINUED
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
future contracts ("derivative investments").
At October 31, 1995, there were no outstanding forward contracts other than
those used to manage foreign currency exposure associated with anticipated
portfolio transactions of foreign currency denominated securities.
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 YEAR ENDED OCTOBER 31
-----------------------------------------------------
1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of period............... $ 8.73 $ 9.23 $ 9.41 $ 9.77 $ 10.00
--------- --------- --------- --------- ---------
Net investment income.............. 0.54 0.72 0.70 0.82 0.95
Net realized and unrealized gain
(loss)............................ 0.16 (0.66) (0.27) (0.46) (0.23)
--------- --------- --------- --------- ---------
Total from investment operations... 0.70 0.06 0.43 0.36 0.72
--------- --------- --------- --------- ---------
Less dividends and distributions
from:
Net investment income........... (0.44) (0.13) (0.61) (0.72) (0.95)
Paid-in-capital................. (0.10) (0.43) -- -- --
--------- --------- --------- --------- ---------
Total dividends and
distributions..................... (0.54) (0.56) (0.61) (0.72) (0.95)
--------- --------- --------- --------- ---------
Net asset value, end of period..... $ 8.89 $ 8.73 $ 9.23 $ 9.41 $ 9.77
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN+........... 8.27% 0.65% 4.72% 3.76% 7.49%
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... 1.68% 1.63% 1.55% 1.55% 1.61%
Net investment income.............. 6.17% 6.35% 6.97% 8.43% 9.49%
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $106,939 $170,117 $305,278 $441,191 $462,263
Portfolio turnover rate............ 188% 123% 221% 149% 8%
<FN>
- ---------------------
+ Does not reflect the deduction of sales charge.
</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, 1995, 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 five 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 at October 31, 1995 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 11, 1995
<PAGE>
DIRECTORS
Jack F. Bennett
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
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
[Graphic]
ANNUAL REPORT
OCTOBER 31, 1995
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND
GROWTH OF $10,000
LEHMAN BROTHERS
MUTUAL FUND SHORT
DATE TOTAL WORLD MULTIMARKET IX
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 $13,449
October 31, 1995 $12,728 (3) $15,074
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR LIFE OF FUND
8.27 (1) 4.95 (1)
5.27 (2) 4.95 (2)
____Fund ____ Lehman (4)
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-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, 1995.
(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. Unlike the Fund, the index does not include any expenses, fees or
charges. The Index is unmanaged and should not be considered an investment.
