<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC. TWO WORLD TRADE CENTER, NEW
YORK, NEW YORK 10048
LETTER TO THE SHAREHOLDERS APRIL 30, 1997
DEAR SHAREHOLDER:
The global fixed-income markets had a mixed performance during the six-month
period ended April 30, 1997, with European bond yields stable or slightly lower
and U.S. interest rates edging higher. In the foreign exchange markets, the U.S.
dollar appreciated substantially against the Japanese yen and key European
currencies, most notably the Deutsche mark.
RISING INTEREST RATES IN THE UNITED STATES
In the United States, higher than expected economic growth gave rise to concerns
of inflation pressure and possible interest-rate increases by the Federal
Reserve Board. However, as economic statistics were released, it became clear
that actual inflation had remained low and any monetary tightening by the Fed
would be preemptive. In this context, rates on three-year U.S. Treasury notes
fluctuated sharply during this period, ultimately rising 0.54 percent.
MIXED PERFORMANCE ABROAD
In Europe, the major bond markets, such as Germany and France, fluctuated in a
wide range in sympathy with those of the U.S. markets. However, as those
countries continued to report declining inflation, sluggish economic growth and
high unemployment, their interest rates declined. In the southern European
countries of Italy, Spain and Portugal, substantially higher volatility
dominated trading in their foreign exchange and bond markets as a result of
mounting doubts about the prospects for the European Monetary Union (EMU)
starting on time in January 1999 and the chances of having Italy become a
founding member. As these concerns increased, Italian bonds and Italy's currency
were sold off in the international marketplace. In the dollar-bloc countries of
Australia and New Zealand, the bond markets traded in line with those in the
United States, with yields on three-year government securities ending the period
slightly higher.
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
LETTER TO THE SHAREHOLDERS APRIL 30, 1997, CONTINUED
A STRONG U.S. DOLLAR DOMINATES THE FOREIGN EXCHANGE MARKETS
In the foreign exchange markets, the U.S. dollar rose sharply against the
Deutsche mark and the Japanese yen, exhibiting strength unseen since the early
1980s. The persistent weakness of the yen reflected not only expectations of
higher U.S. interest rates but also severe weakness in Japan's economy and its
low interest rates. In regard to the Deutsche mark, Germany's fiscal and
monetary policy mix associated with qualifying for EMU kept interest rates low,
acting as a big negative on its currency. This combined with higher U.S.
interest rates drove the mark down to levels not seen since early 1994.
Elsewhere, the U.S. dollar was mostly stable against the Australian dollar and
the New Zealand dollar but fluctuated in a 2 percent range against the Canadian
dollar.
PERFORMANCE AND PORTFOLIO STRATEGY
Under these volatile market conditions, Dean Witter Global Short-Term Income
Fund Inc. posted a total return of 0.90 percent for the six months ended April
30, 1997. This figure compares to returns of -3.19 percent and 1.65 percent for
the Lehman Brothers Mutual Fund Short World Multi-Market Index and the Lipper
Short World Multi-Market Income Funds Average, respectively. During the six-
month period, the Fund paid income dividends totaling $0.786 per share,
including an extra income dividend of $0.516 per share paid on December 31,
1996.
Throughout this six-month fiscal period, the Fund continued its strategy of
investing in markets with compelling values. As the global bond markets
exhibited increased volatility in early 1997, the Fund took several actions that
sought to preserve shareholders' value and reduced the risk to the Fund.
Accordingly, the Fund's average maturity was reduced from 2.45 years as of
October 31, 1996, to 1.28 years by the end of April. Its overweightings in the
southern European countries were also significantly reduced, from 60 percent at
the end of the last fiscal year to 9 percent by April 30, 1997. Throughout the
period, the currency risks associated with the European bond investments were
hedged back into the U.S. dollar, thereby effectively protecting the Fund from
the decline in the values of those currencies. These actions helped the Fund
avoid 1997's fluctuations in U.S. and European interest rates as well as the
substantial currency volatility during the fiscal period.
LOOKING AHEAD
Going forward, we anticipate a continuation of the Fund's strategy of
diversification in global markets with an emphasis on markets that exhibit
improving inflation outlooks and fiscal discipline. In this regard, we believe
there are outstanding values in sectors of the bond markets in the United States
and Europe, given the central banks' credible anti-inflation monetary policies
and prospects of fiscal
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
LETTER TO THE SHAREHOLDERS APRIL 30, 1997, CONTINUED
restraint and improving inflation both here and abroad. We believe our
investment strategy and positive outlook on global markets should allow the Fund
to achieve its primary objective of high current income and secondary goal of
capital appreciation.
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 APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
GOVERNMENT & CORPORATE BONDS (74.6%)
CANADA (3.6%)
GOVERNMENT OBLIGATION
Ca$ 3,235 Canada Government Bond+...................... 10.75 % 03/15/98 $ 2,444,711
-------------
NETHERLANDS (0.8%)
BANKS
ITL 500,000 Bank Nederlandse Gemeenten................... 12.00 06/18/97 293,888
460,000 Rabobank Nederland+.......................... 11.00 02/01/98 276,080
-------------
TOTAL NETHERLANDS................................................... 569,968
-------------
NEW ZEALAND (7.8%)
GOVERNMENT OBLIGATION
NZ$ 7,635 New Zealand Treasury Bond+................... 10.00 07/15/97 5,319,490
-------------
PORTUGAL (3.7%)
BANKS
PTE 161,000 European Investment Bank+.................... 10.80 09/27/00 1,054,939
-------------
GOVERNMENT OBLIGATION
241,000 Portuguese Government Bond+.................. 11.625 02/23/98 1,449,193
-------------
TOTAL PORTUGAL...................................................... 2,504,132
-------------
SPAIN (4.8%)
GOVERNMENT OBLIGATIONS
ESP 432,000 Spain Treasury Bond+......................... 11.00 06/15/97 2,977,019
35,800 Spain Treasury Bond+......................... 7.30 07/30/97 246,277
-------------
TOTAL SPAIN......................................................... 3,223,296
-------------
UNITED STATES (53.9%)
BANKING
$ 5,000 National Bank of Detroit+.................... 6.85 05/11/98 5,034,200
3,000 Norwest Corp.+............................... 5.75 03/15/98 2,993,850
-------------
8,028,050
-------------
BANKS
3,000 Bank One Columbus+........................... 7.375 12/01/02 3,051,720
2,000 Chase Manhattan Corp......................... 7.50 12/01/97 2,018,460
1,300 Chase Manhattan Corp......................... 6.625 01/15/98 1,305,603
1,020 First Interstate............................. 11.00 03/05/98 1,059,770
1,910 Nationsbank Corp............................. 6.625 01/15/98 1,919,263
2,000 Wachovia Corp.+.............................. 7.00 12/15/99 2,013,080
-------------
11,367,896
-------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS
5,050 Federal National Mortgage Assoc.............. 7.00 04/01/12 5,002,656
6,640 U.S. Treasury Bond+.......................... 13.125 05/15/01 8,177,957
4,000 U.S. Treasury Note........................... 8.875 11/15/97 4,063,640
-------------
17,244,253
-------------
TOTAL UNITED STATES................................................. 36,640,199
-------------
TOTAL GOVERNMENT & CORPORATE BONDS
(IDENTIFIED COST $51,447,570)....................................... 50,701,796
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
PORTFOLIO OF INVESTMENTS APRIL 30, 1997 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENTS (16.5%)
TIME DEPOSITS (a) (12.8%)
AUSTRALIA (5.5%)
BANKS - COMMERCIAL
Au$ 4,751 Bankers Trust................................ 5.75 % 05/06/97 $ 3,709,972
-------------
UNITED STATES (7.3%)
$ 5,000 First National Bank of Chicago............... 5.40 05/06/97 5,000,000
-------------
TOTAL TIME DEPOSITS
(IDENTIFIED COST $8,726,959)........................................ 8,709,972
-------------
COMMERCIAL PAPER (b) (3.7%)
UNITED STATES
BANK HOLDING COMPANY
$ 2,500 J.P. Morgan & Co.
(Amortized Cost $2,498,115)................ 5.43 05/06/97 2,498,115
-------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $11,225,074)....................................... 11,208,087
-------------
TOTAL INVESTMENTS
(IDENTIFIED COST $62,672,644) (C).......................... 91.1% 61,909,883
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............. 8.9 6,048,851
------- -------------
NET ASSETS................................................. 100.0% $67,958,734
------- -------------
------- -------------
<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 approximates identified
cost. The aggregate gross unrealized appreciation is $2,638 and the
aggregate gross unrealized depreciation is $765,399, resulting in net
unrealized depreciation of $762,761.
</TABLE>
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT APRIL 30, 1997:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS IN EXCHANGE DELIVERY APPRECIATION
TO DELIVER FOR DATE (DEPRECIATION)
- -------------------------------------------------------------------
<S> <C> <C> <C>
Ca$ 3,096,453 $ 2,217,677 05/01/97 $ 1,968
ESP 102,000,000 $ 699,588 07/30/97 (232)
PTE 443,000,000 $ 2,564,548 01/29/98 (1,417)
ESP 369,000,000 $ 2,543,950 02/05/98 (811)
-------
Net unrealized depreciation........................ $ (492)
-------
-------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $62,672,644)............................. $ 61,909,883
Unrealized appreciation on open forward foreign currency
contracts................................................. 1,968
Cash (including $9,732 in foreign currency)................. 79,736
Receivable for:
Compensated forward foreign currency contracts.......... 2,609,220
Investments sold........................................ 2,215,709
Interest................................................ 1,620,564
Capital stock sold...................................... 122,700
Prepaid expenses and other assets........................... 56,933
-------------
TOTAL ASSETS........................................... 68,616,713
-------------
LIABILITIES:
Unrealized depreciation on open forward foreign currency
contracts................................................. 2,460
Payable for:
Compensated forward foreign currency contracts.......... 383,748
Capital stock repurchased............................... 51,588
Plan of distribution fee................................ 45,234
Investment management fee............................... 33,172
Dividends to shareholders............................... 24,049
Accrued expenses and other payables......................... 117,728
-------------
TOTAL LIABILITIES...................................... 657,979
-------------
NET ASSETS:
Paid-in-capital............................................. 74,965,771
Net unrealized depreciation................................. (769,407)
Accumulated net investment loss............................. (973,833)
Accumulated net realized loss............................... (5,263,797)
-------------
NET ASSETS............................................. $ 67,958,734
-------------
-------------
NET ASSET VALUE PER SHARE,
7,767,364 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................ $8.75
-------------
-------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME (net of $43,215 foreign withholding tax).... $ 2,885,012
-------------
EXPENSES
Plan of distribution fee.................................... 284,181
Investment management fee................................... 208,399
Professional fees........................................... 44,756
Transfer agent fees and expenses............................ 43,253
Custodian fees.............................................. 43,071
Shareholder reports and notices............................. 27,953
Registration fees........................................... 16,645
Directors' fees and expenses................................ 7,159
Other....................................................... 3,043
-------------
TOTAL EXPENSES......................................... 678,460
-------------
NET INVESTMENT INCOME.................................. 2,206,552
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments............................................. (2,790,209)
Futures contracts....................................... 27,390
Foreign exchange transactions........................... 3,378,353
-------------
NET GAIN............................................... 615,534
-------------
Net change in unrealized appreciation/depreciation on:
Investments............................................. (1,901,397)
Net translation of forward foreign currency contracts,
other assets and liabilities denominated in foreign
currencies............................................ (178,255)
-------------
NET DEPRECIATION....................................... (2,079,652)
-------------
NET LOSS............................................... (1,464,118)
-------------
NET INCREASE................................................ $ 742,434
-------------
-------------
</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
MONTHS ENDED FOR THE YEAR
APRIL 30, 1997 ENDED
(UNAUDITED) OCTOBER 31, 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 2,206,552 $ 6,030,423
Net realized gain........................................... 615,534 4,923,619
Net change in unrealized appreciation/depreciation.......... (2,079,652) (157,589)
-------------- ----------------
NET INCREASE........................................... 742,434 10,796,453
Dividends from net investment income........................ (6,510,121) (5,418,221)
Net decrease from capital stock transactions................ (6,899,060) (31,691,587)
-------------- ----------------
NET DECREASE........................................... (12,666,747) (26,313,355)
NET ASSETS:
Beginning of period......................................... 80,625,481 106,938,836
-------------- ----------------
END OF PERIOD
(INCLUDING A NET INVESTMENT LOSS OF $973,833 AND
UNDISTRIBUTED NET INVESTMENT INCOME OF $3,329,736,
RESPECTIVELY)........................................... $ 67,958,734 $ 80,625,481
-------------- ----------------
-------------- ----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (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's investment objective is to
achieve as high a level of current income as is consistent with prudent
investment risk. The Fund was incorporated in Maryland on August 2, 1990 and
commenced operations on November 1, 1990.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts and disclosures. Actual results could differ from those
estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) all portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (2) futures contracts
are valued at the latest sale price on the commodities exchange on which they
trade unless the 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; (3) when market quotations are not readily available, including
circumstances under which it is determined by Dean Witter InterCapital Inc. (the
"Investment Manager") that sale or bid prices are not reflective of a security's
market value, portfolio securities are valued at their fair value as determined
in good faith under procedures established by and under the general supervision
of the 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); (4) certain portfolio securities may be valued by an
outside pricing service approved by the Directors. The pricing service may
utilize a matrix system incorporating security quality, maturity and coupon as
the evaluation model parameters, and/or research and evaluations by its staff,
including review of broker-dealer market price quotations, if available, in
determining what it believes is the fair valuation of the securities valued by
such pricing service; and (5) short-term debt securities having a maturity date
of more than sixty days at time of purchase are valued on a mark-to-market basis
until sixty days prior to maturity and thereafter at amortized cost based on
their value on the 61st day. Short-term debt securities having a maturity date
of sixty days or less at the time of purchase are valued at amortized cost.
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) CONTINUED
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Discounts are accreted over the life of the respective securities. 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, U.S. Government securities or other liquid portfolio securities equal to
the minimum initial margin requirements of the applicable futures exchange.
Pursuant to the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in the value of the contract
which is known as variation margin. Such receipts or payments are recorded by
the Fund as unrealized gains or losses. Upon closing of the contract, the Fund
realizes a gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
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 foreign currency
contracts are translated at the exchange rates prevailing at the end of the
period; and (2) purchases, sales, income and expenses are translated at the
exchange rates prevailing on the respective dates of such transactions. The
resultant exchange gains and losses are included in the Statement of Operations
as realized and unrealized gain/loss on foreign exchange transactions. Pursuant
to U.S. Federal income tax regulations, certain foreign exchange gains/losses
included in realized and unrealized gain/loss are included in or are a reduction
of ordinary income for 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.
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) CONTINUED
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 dividends in excess
of net investment income or distributions in excess of net realized capital
gains. To the extent they exceed net investment income and net realized capital
gains for tax purposes, they are reported as distributions of paid-in-capital.
2. INVESTMENT MANAGEMENT AGREEMENT
Pursuant to an Investment Management Agreement with the Investment Manager, the
Fund pays the 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
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) CONTINUED
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. ("DWR"), an
affiliate of the Investment Manager and Distributor, and others 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 utilize fees paid pursuant to the plan to compensate DWR and
other selected broker-dealers for their opportunity costs in advancing such
amounts, which compensation would be in the form of a carrying charge on any
unreimbursed distribution expenses.
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.
Although there is no legal obligation for the Fund to pay expenses incurred in
excess of payments made to the Distributor under the Plan and the proceeds of
contingent deferred sales charges paid by investors upon redemption of shares,
if for any reason the Plan is terminated, the Directors will consider at that
time the manner in which to treat such expenses. The Distributor has advised the
Fund that such excess amounts, including carrying charges, totaled $7,126,149 at
April 30, 1997.
The Distributor has informed the Fund that for the six months ended April 30,
1997, it received approximately $7,000 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, 1997 aggregated
$67,560,311 and $73,984,054, respectively. Included in the aforementioned are
purchases and sales of U.S. Government securities of $17,378,866 and
$16,118,758, respectively.
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) CONTINUED
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At April 30, 1997, the Fund had
transfer agent fees and expenses payable of approximately $10,000.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Directors of the Fund who will have served as independent
Directors 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, 1997
included in Directors' fees and expenses in the Statement of Operations amounted
to $653. At April 30, 1997, the Fund had an accrued pension liability of $46,152
which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<S> <C> <C> <C> <C>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
APRIL 30, 1997 OCTOBER 31, 1996
---------------------------- --------------------------
(UNAUDITED)
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
Sold............................................................. 9,715,053 $ 87,753,321 9,251,527 $ 85,394,562
Reinvestment of dividends........................................ 429,551 3,892,090 348,451 3,177,482
----------- -------------- ----------- ------------
10,144,604 91,645,411 9,599,978 88,572,044
Repurchased...................................................... (10,914,326) (98,544,471) (13,089,159) (120,263,631)
----------- -------------- ----------- ------------
Net decrease..................................................... (769,722) $ (6,899,060) (3,489,181) $(31,691,587)
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
6. FEDERAL INCOME TAX STATUS
At October 31, 1996, the Fund had a net capital loss carryover of approximately
$6,756,000 to offset future capital gains to the extent provided by regulations
available through October 31 of the following years:
<TABLE>
<CAPTION>
AMOUNTS IN THOUSANDS
---------------------------
2001 2002 2003
------- ------- -------
<S> <C> <C>
$ 741 $ 4,853 $ 1,162
------- ------- -------
------- ------- -------
</TABLE>
As of October 31, 1996, 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.
<PAGE>
DEAN WITTER GLOBAL SHORT-TERM INCOME FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1997 (UNAUDITED) CONTINUED
7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS
The Fund may enter into forward foreign currency contracts ("forward contracts")
to facilitate settlement of foreign currency denominated portfolio transactions
or to manage its foreign currency exposure or to sell, for a fixed amount of
U.S. dollars or other currency, the amount of foreign currency approximating the
value of some or all of its holdings denominated in such foreign currency or an
amount of foreign currency other than the currency in which the securities to be
hedged are denominated approximating the value of some or all of its holdings to
be hedged. Additionally, when the Investment Manager anticipates purchasing
securities at some time in the future, the Fund may enter into a forward
contract to purchase an amount of currency equal to some or all the value of the
anticipated purchase for a fixed amount of U.S. dollars or other currency.
To hedge against adverse interest rate, foreign currency and market risks, the
Fund may enter into forward written options on interest rate futures and
interest rate future contracts ("derivative instruments").
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.
At April 30, 1997, there were no outstanding forward contracts other than those
used to facilitate settlement of foreign currency denominated portfolio
transactions and to manage foreign currency exposure.
<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
MONTHS
ENDED
APRIL 30, FOR THE YEAR ENDED OCTOBER 31
1997 ---------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................ $ 9.44 $ 8.89 $ 8.73 $ 9.23 $ 9.41 $ 9.77
--------- --------- --------- --------- --------- ---------
Net investment income.............. 0.27 0.61 0.54 0.72 0.70 0.82
Net realized and unrealized gain
(loss)............................ (0.17) 0.48 0.16 (0.66) (0.27) (0.46)
--------- --------- --------- --------- --------- ---------
Total from investment operations... 0.10 1.09 0.70 0.06 0.43 0.36
--------- --------- --------- --------- --------- ---------
Less dividends and distributions
from:
Net investment income........... (0.79) (0.54) (0.44) (0.13) (0.61) (0.72)
Paid-in-capital................. -- -- (0.10) (0.43) -- --
--------- --------- --------- --------- --------- ---------
Total dividends and
distributions..................... (0.79) (0.54) (0.54) (0.56) (0.61) (0.72)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period..... $ 8.75 $ 9.44 $ 8.89 $ 8.73 $ 9.23 $ 9.41
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL INVESTMENT RETURN+........... 0.90%(1) 12.66% 8.27% 0.65% 4.72% 3.76%
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... 1.79%(2) 1.66% 1.68% 1.63% 1.55% 1.55%
Net investment income.............. 5.82%(2) 6.57% 6.17% 6.35% 6.97% 8.43%
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $67,959 $80,625 $106,939 $170,117 $305,278 $441,191
Portfolio turnover rate............ 116%(1) 138% 188% 123% 221% 149%
<FN>
- ---------------------
+ 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.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
- --------------------------------------------------------------------------------
DEAN WITTER
GLOBAL SHORT-TERM
INCOME FUND
[GRAPHIC]
SEMIANNUAL REPORT
APRIL 30, 1997
DIRECTORS
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
Vinh Q. Tran
Vice President
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.
