<PAGE> 1
DEAN WITTER SHORT-TERM BOND FUND
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------
The six months ended October 31, 1994 were difficult for many fixed-income
investors as interest rates continued to rise and bond prices declined. After
three months of relative stability, interest rates resumed their upward trend in
August. This move was fueled by an additional 1.0 percentage point increase in
the federal-funds rate to 4.75 percent. This Federal Reserve Board action was in
response to economic reports reaffirming a strong economy which were perceived
as a precursor to higher inflation. Although higher prices have yet to be passed
on to the consumer, signs of a potential increase in inflation are beginning to
emerge in the form of higher raw materials prices, an improved labor market,
increases in personal income and a higher rate of capacity usage by factories
and mines. (Following the end of the reporting period, the Federal Reserve Board
increased the federal-funds rate to 5.50 percent.)
The Federal Reserve Board's moves and the subsequent rise in interest rates
have impacted the bond markets. Interest rates on 2-year Treasury securities
rose by almost 2.6 percentage points to yield 6.82 percent at the end of the
reporting period. Similarly, by October 31, 1994, 5-year Treasury securities
were yielding 7.48 percent, an increase of 2.29 percentage points from December
31, 1993.
Despite the volatility in the fixed-income market, Dean Witter Short-Term
Bond Fund provided a total return of 1.82 percent for the six months ended
October 31, 1994, compared to a return of 1.61 percent for U.S. government
securities, maturing in one to three years, and a return of 1.95 percent for
comparable-maturity corporate bonds, as measured by Salomon Brothers. The Fund's
performance during the period under review was reflective of the management's
conservative strategy within the rising interest rate environment.
At the end of the reporting period, the Fund's net assets totaled $35.2
million. The Fund distributed income dividends in the amount of $0.30 per share
during the six months ended October 31, 1994.
INVESTMENT STRATEGY
In reaction to rising interest rates, funds from new subscriptions were
invested gradually in U.S. government and corporate securities with an emphasis
on maturities of less than three years. Attention was placed on preserving or
improving quality with the majority of new purchases in the corporate market
rated A or better.
At the end of the reporting period, the Fund's portfolio was diversified
among 47 issues with an average quality rating of A3. The Fund's average
maturity was 2.50 years and the average duration (the weighted average life of
the portfolio) was 2.11 years. The Fund's assets were allocated among
investment-grade corporate securities (48 percent), U.S. government securities
(27 percent), foreign government securities (16 percent), non-investment-grade
corporate securities (4 percent) and cash equivalents (4 percent).
The Fund's U.S. government sector was diversified with 13 percent in
mortgage-backed securities issued by the Federal Home Loan Mortgage Corporation
(FHLMC) and the Federal National Mortgage Association (FNMA) and 14 percent in
U.S. Treasuries. Rising interest rates have affected mortgage-
<PAGE> 2
backed securities to the same degree as the U.S. Treasury security market.
Recognizing this market environment, the Fund has not added additional current
coupon mortgages in recent months. Until market conditions warrant a more
aggressive approach, this sector of the Fund will continue to pursue a defensive
strategy when making new investments, those which would enhance both the Fund's
current yield and total return potential.
As of October 31, 1994, 100 percent of the Fund's foreign government
component consisted of twenty-eight-day Mexican government treasury bills
(Cetes) denominated in Mexican pesos. Over the course of the past six months,
the Fund has purchased these investments at yields ranging from a high in excess
of 17.00 percent to a current 13.50 percent. Due to the vagaries of the Mexican
political system and its economy, the currency component of this position has
ranged from approximately 3.11 pesos to 3.43 pesos to the U.S. dollar. This
fluctuation in currency has partially offset the income obtained by the Fund's
Mexican exposure.
During the past six months, the Fund has maintained several positions in
the Canadian treasury bill market, denominated in Canadian dollars. At the time
of purchase, these investments provided attractive yield premiums over their
U.S. counterparts. However, with the recent contraction in yield spreads between
Canadian and U.S. investments, the Fund has either sold these investments or
allowed them to mature.
LOOKING AHEAD
As long as the economy stays strong and further rises in interest rate
hikes remain a possibility, we will continue to manage the portfolio with a
conservative strategy. While more interest rate hikes are likely before
year-end, much of the rate increase for the current cycle is probably behind us.
Although 1994 will likely end without inflationary expectations subsiding, we
would expect 1995 to be a friendlier year to fixed income markets with higher
positive rates of return from the Fund, as interest rates begin falling later
that year.
We would like to thank you for your support of Dean Witter Short-Term Bond
Fund and look forward to continuing to serve your investment needs.
Very truly yours,
/s/ C. FIUMEFREDDO
----------------------
Charles A. Fiumefreddo
Chairman of the Board
<PAGE> 3
DEAN WITTER SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS October 31, 1994 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ------------ ------ --------- -----------
<C> <S> <C> <C> <C>
CORPORATE BONDS (51.6%)
AUTOMOTIVE FINANCE (4.2%)
$ 500 Ford Motor Credit Corp. ............................. 6.25 % 2/26/98 $ 479,690
1,000 General Motors Acceptance Corp. ..................... 7.75 4/15/97 1,000,860
-----------
1,480,550
-----------
BANK HOLDING COMPANIES (9.3%)
593 Bank of Boston Corp. ................................ 10.30 9/ 1/00 609,284
1,000 Bankers Trust N.Y. Corp. ............................ 7.25 11/ 1/96 999,390
500 Home Savings America Co. ............................ 6.00 11/ 1/00 446,945
625 Integra Financial Corp. ............................. 6.50 4/15/00 578,594
608 Midlantic Corp. ..................................... 9.25 9/ 1/99 631,651
-----------
3,265,864
-----------
BANKS - COMMERCIAL (1.4%)
500 Chase Manhattan Bank................................. 7.50 12/ 1/97 496,435
-----------
BANKS - INTERNATIONAL (2.7%)
1,000 Kansalis-Osake Pankki................................ 6.125 5/15/98 941,250
-----------
BROKERAGE (2.7%)
500 Lehman Brothers Holdings, Inc. ...................... 7.625 7/15/99 481,855
500 Smith Barney Shearson, Inc. ......................... 6.00 3/15/97 482,120
-----------
963,975
-----------
CHEMICALS (1.5%)
500 Georgia Gulf Corp. .................................. 15.00 4/15/00 520,000
-----------
COMPUTER EQUIPMENT (1.5%)
500 Unisys Corp. ........................................ 13.50 7/ 1/97 540,000
-----------
FINANCIAL SERVICES (1.4%)
500 Golden West Financial Corp. ......................... 7.875 1/15/02 485,470
-----------
FOOD & TOBACCO (1.5%)
500 RJR Nabisco, Inc. ................................... 10.50 4/15/98 526,100
-----------
FOREST & PAPER PRODUCTS (1.5%)
500 Boise Cascade Corp. ................................. 9.625 7/15/98 515,190
-----------
INDUSTRIALS (11.0%)
1,000 Chrysler Corp. ...................................... 10.40 8/ 1/99 1,065,420
500 Comdisco, Inc. ...................................... 9.75 1/15/97 516,075
500 Grand Metropolitan Investment Corp. ................. 8.125 8/15/96 508,190
500 Hertz Corp. ......................................... 9.50 5/15/98 523,475
</TABLE>
<PAGE> 4
DEAN WITTER SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS October 31, 1994 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ------------ ------ --------- -----------
<C> <S> <C> <C> <C>
$ 500 Mitchell Energy & Development Co. ................... 5.10 % 2/15/97 $ 473,115
500 Reynolds Metals, Inc. ............................... 9.375 6/15/99 517,055
250 USX-Marathon Corp. .................................. 9.80 7/ 1/01 260,827
-----------
3,864,157
-----------
INSURANCE (2.8%)
1,000 Continental Corp. ................................... 8.25 4/15/99 984,310
-----------
PUBLISHING (1.3%)
500 Time Warner, Inc. ................................... 0.00 8/15/02 468,125
-----------
TRANSPORTATION (0.8%)
300 AMR Corp. ........................................... 8.10 11/ 1/98 292,824
-----------
UTILITIES - ELECTRIC (8.0%)
500 Commonwealth Edison Co. ............................. 6.50 4/15/00 457,270
500 Consolidated Edison Co. ............................. 5.90 12/15/96 487,349
370 Consumers Power Co. ................................. 8.875 11/15/99 379,602
500 Long Island Lighting Co. ............................ 6.25 7/15/01 403,115
500 Ohio Edison Co. ..................................... 8.75 2/15/98 508,545
575 Public Service Co. of New Hampshire.................. 8.875 5/15/96 588,581
-----------
2,824,462
-----------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $19,422,980)............................................ 18,168,712
-----------
U.S. GOVERNMENT AGENCIES & OBLIGATIONS (27.0%)
MORTGAGE PASS-THROUGH CERTIFICATES (13.0%)
500 Federal Home Loan Mortgage Corp. .................... 5.65 6/20/96 496,875
726 Federal Home Loan Mortgage Corp. .................... 6.50 5/ 1/99 501,011
1,274 Federal Home Loan Mortgage Corp. .................... 6.50 6/ 1/99 1,410,781
500 Federal National Mortgage Association................ 6.90 11/12/96 498,750
2,000 Federal National Mortgage Association (principal
strip)............................................. 0.00 12/20/01 1,651,250
-----------
TOTAL MORTGAGE PASS-THROUGH
CERTIFICATES (IDENTIFIED COST $4,686,529)................................ 4,558,667
-----------
U.S. GOVERNMENT OBLIGATIONS (14.0%)
1,000 U.S. Treasury Note................................... 4.00 1/31/96 971,563
2,000 U.S. Treasury Note................................... 4.625 2/29/96 1,953,750
2,000 U.S. Treasury Note................................... 7.50 2/29/96 2,025,313
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $5,042,196)............................................... 4,950,626
-----------
TOTAL U.S. GOVERNMENT AGENCIES &
OBLIGATIONS (IDENTIFIED COST $9,728,725)................................. 9,509,293
-----------
</TABLE>
<PAGE> 5
DEAN WITTER SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS October 31, 1994 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount (in Coupon Maturity
thousands) Rate Date Value
- ------------ ------ --------- -----------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENTS (17.6%)
MEXICAN GOVERNMENT SECURITIES(A)(15.6%)
MXP 18,881 Cetes 13.10%- 11/ 3/94-
(AMORTIZED COST $5,506,002).......................... 14.05 11/24/94 $ 5,473,050
-----------
REPURCHASE AGREEMENT (2.0%)
$ 691 The Bank of New York (dated 10/31/94; proceeds
$691,178; collateralized by $687,278 U.S. Treasury
Note 7.50% due 2/28/96 valued at $704,908)
(IDENTIFIED COST $691,086)......................... 4.8125 11/ 1/94 691,086
-----------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $6,197,088)............................................... 6,164,136
-----------
TOTAL INVESTMENTS
(IDENTIFIED COST $35,348,793)(B).............................. 96.2% 33,842,141
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES................ 3.8 1,344,792
------ -----------
NET ASSETS.................................................... 100.0% $35,186,933
====== ===========
</TABLE>
- ---------------
(a) Securities were purchased on a discount basis. The rates shown have been
adjusted to reflect a bond equivalent yield. The bond equivalent yield for
Mexican Cetes does not reflect the effect of exchange rates.
(b) The aggregate cost for federal income tax purposes is $35,348,793; the
aggregate gross unrealized appreciation is $10,000 and the aggregate gross
unrealized depreciation is $1,516,652, resulting in net unrealized
depreciation of $1,506,652.
See Notes to Financial Statements
<PAGE> 6
DEAN WITTER SHORT-TERM BOND FUND
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1994 (unaudited)
- --------------------------------------------
ASSETS:
Investments in securities, at value
(identified cost $35,348,793) (Note 1).... $ 33,842,141
Cash........................................ 179
Receivable for:
Investments sold.......................... 1,065,916
Interest.................................. 462,929
Shares of beneficial interest sold........ 205,836
Deferred organizational expenses (Note 1)... 134,361
------------
TOTAL ASSETS........................ 35,711,362
------------
LIABILITIES:
Payable for:
Shares of beneficial interest
repurchased............................. 361,522
Dividends to shareholders................. 28,546
Organizational expenses payable (Note 1).... 134,361
------------
TOTAL LIABILITIES................... 524,429
------------
NET ASSETS:
Paid-in-capital............................. 37,291,501
Accumulated net realized loss on
investments............................... (1,047,145)
Net unrealized depreciation on
investments............................... (1,506,651)
Accumulated undistributed net investment
income.................................... 449,228
------------
NET ASSETS.......................... $ 35,186,933
===========
NET ASSET VALUE PER SHARE,
3,708,697 shares outstanding (unlimited
authorized shares of $.01 par value)...... $9.49
=====
STATEMENT OF OPERATIONS For the six months
ended October 31, 1994 (unaudited)
- --------------------------------------------
INVESTMENT INCOME:
INTEREST INCOME............................ $ 1,759,066
------------
EXPENSES
Investment management fee (Note 2)........ 156,175
Professional fees......................... 29,500
Custodian fees............................ 17,079
Trustees' fees and expenses............... 9,450
Transfer agent fees (Note 3).............. 7,519
Registration fees......................... 5,997
Shareholder reports and notices........... 4,500
Organizational expenses (Note 1).......... 16,000
------------
TOTAL EXPENSES BEFORE FEES
WAIVED/ASSUMED........................ 246,220
LESS: Expenses Waived/Assumed by
Investment Manager (Note 2)....... (246,220)
------------
TOTAL EXPENSES AFTER FEES
WAIVED/ASSUMED........................ --
------------
NET INVESTMENT INCOME................... 1,759,066
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
(Note 1):
Net realized gain (loss) on:
Investments............................... (272,700)
Foreign exchange transactions............. (723,672)
------------
(996,372)
Net change in unrealized depreciation on
investments............................... 7,877
------------
NET LOSS ON INVESTMENTS................. (988,495)
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS..................... $ 770,571
===========
</TABLE>
See Notes to Financial Statements
<PAGE> 7
DEAN WITTER SHORT-TERM BOND FUND
FINANCIAL STATEMENTS (continued)
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
For the six January 10, 1994
months ended through
October 31, 1994 April 30, 1994
(unaudited) (Note 1)
---------------- ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income................................................... $ 1,759,066 $ 666,656
Net realized loss....................................................... (996,372) (50,773)
Net change in unrealized depreciation on investments.................... 7,877 (1,514,528)
-------------- ---------------
Net increase (decrease) in net assets resulting from operations....... 770,571 (898,645)
Dividends to shareholders from net investment income...................... (1,393,294) (583,200)
Net increase (decrease) from shares of beneficial interest (Note 4)....... (7,592,981) 44,784,482
-------------- ---------------
Total increase (decrease)............................................. (8,215,704) 43,302,637
NET ASSETS:
Beginning of period....................................................... 43,402,637 100,000
-------------- ---------------
END OF PERIOD (including undistributed net investment income of $449,228
and $83,456, respectively).............................................. $ 35,186,933 $ 43,402,637
============== ===============
</TABLE>
See Notes to Financial Statements
<PAGE> 8
DEAN WITTER SHORT-TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- Dean Witter Short-Term Bond Fund
(the "Fund") is registered under the Investment Company Act of 1940, as amended,
as a diversified, open-end management investment company. The Fund was organized
as a Massachusetts business trust on October 22, 1993 and had no operations
other than those relating to organizational matters and the issuance of 10,000
shares of beneficial interest for $100,000 to Dean Witter InterCapital Inc. (the
"Investment Manager"). The Fund commenced operations January 10, 1994.
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) when market
quotations are not readily available, portfolio securities are valued at
their fair value as determined in good faith under procedures established
by and under the general supervision of the Trustees (valuation of
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); (3) certain of the portfolio securities may be valued by an
outside pricing service approved by the Trustees. The pricing service
utilizes a matrix system incorporating security quality, maturity and
coupon as the evaluation model parameters, and/or research and evaluation
by its staff, including review of broker-dealer market price quotations, in
determining what it believes is the fair valuation of the portfolio
securities valued by such pricing service; (4) 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; and (5) all other
securities and other assets are valued at their fair value as determined in
good faith under procedures established by and under the general
supervision of the Trustees.
B. Accounting for Investments -- Security transactions are accounted for on
the trade date (date the order to buy or sell is executed). Realized gains
and losses on security transactions are determined on the identified cost
method. Discounts on securities purchased are amortized over the life of
the respective securities. The Fund does not amortize premiums on
securities. Interest income is accrued daily.
C. 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.
<PAGE> 9
DEAN WITTER SHORT-TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- --------------------------------------------------------------------------------
D. 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.
E. 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.
F. Organizational Expenses -- The Investment Manager paid the
organizational expenses of the Fund in the amount of approximately
$160,000. The Fund will reimburse the Investment Manager for these
expenses, exclusive of any amounts assumed by the Investment Manager. Such
expenses have been deferred and are being amortized on the straight-line
method over a period not to exceed five years from the commencement of
operations.
2. INVESTMENT MANAGEMENT AGREEMENT -- Pursuant to an Investment Management
Agreement, the Fund pays its Investment Manager a management fee, accrued daily
and payable monthly, by applying the annual rate of 0.70% to the net assets of
the Fund determined as of the close of each business day.
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.
The Investment Manager has undertaken to assume all expenses (except for
brokerage fees) and waive the compensation provided for in the Agreement until
such time as the Fund has $50 million of net assets or until December 31, 1994,
whichever comes first.
<PAGE> 10
DEAN WITTER SHORT-TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
- --------------------------------------------------------------------------------
3. 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 October 31, 1994 were $14,197,067 and
$9,867,506, respectively. Included in the aforementioned are purchases and sales
of U.S. Government securities of $8,559,977 and $4,523,559, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager, is the
Fund's transfer agent.
4. SHARES OF BENEFICIAL INTEREST -- Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
For the six For the period
months ended January 10, 1994*
October 31, 1994 through April 30, 1994
----------------------------- -----------------------------
Shares Amount Shares Amount
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold............................ 1,208,581 $ 11,547,199 5,562,083 $ 55,179,598
Reinvestment of dividends....... 128,102 1,224,451 52,040 505,222
----------- ------------- ----------- -------------
1,336,683 12,771,650 5,614,123 55,684,820
Repurchased..................... (2,138,641) (20,364,631) (1,113,468) (10,900,338)
----------- ------------- ----------- -------------
Net increase (decrease)......... (801,958) $ (7,592,981) 4,500,655 $ 44,784,482
========== ============= ========== =============
</TABLE>
- ---------------
* Commencement of operations.
5. FEDERAL INCOME TAX STATUS -- Any net capital losses incurred after October
31 ("post-October losses") within the taxable year are deemed to arise on the
first business day of the Fund's next taxable year. The Fund incurred and will
elect to defer net capital losses of approximately $51,000 during fiscal 1994.
To the extent that these losses are used to offset future capital gains, it is
probable that the gains so offset will not be distributed to shareholders.
At April 30, 1994, the Fund had temporary book/tax differences primarily
attributable to post-October losses.
<PAGE> 11
DEAN WITTER SHORT-TERM BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
For the six For the period
months ended January 10, 1994*
October 31, 1994 through
(unaudited) April 30, 1994
---------------- -----------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.............. $ 9.62 $ 10.00
------------ ------------
Net investment income............................. 0.38 0.21
Net realized and unrealized loss
on investments.................................. (0.21) (0.40)
------------ ------------
Total from investment operations.................. 0.17 (0.19)
Less dividends and distributions from net
investment income............................... (0.30) (0.19)
------------ ------------
Net asset value, end of period.................... $ 9.49 $ 9.62
============ ============
TOTAL INVESTMENT RETURN........................... 1.82%(1) (2.01)%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands).......... $ 35,187 $43,403
Ratios to average net assets:
Expenses........................................ 0.00%(2)(4) 0.00%(2)(3)
Net investment income........................... 7.88%(2)(4) 6.36%(2)(3)
Portfolio turnover rate........................... 34%(1) 9%(1)
</TABLE>
- ---------------
* Commencement of Operations.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all expenses that were assumed or waived by the
Investment Manager, the above annualized expense and net investment income
ratios would have been 1.55% and 4.81%, respectively.
(4) If the Fund had borne all expenses that were assumed or waived by the
Investment Manager, the above annualized expense and net investment income
ratios would have been 1.11% and 6.77%, respectively.
See Notes to Financial Statements
<PAGE> 12
TRUSTEES
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
Peter Avelar
Vice President
Rajesh K. Gupia
Vice President
Rochelle G. Siegel
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 trustees,
fees, expenses and other pertinent information, please see the prospectus of
the Fund.
This report is not authorized for distribution to prospective investors in the
Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER
SHORT-TERM
BOND FUND
[PHOTO]
SEMIANNUAL REPORT
OCTOBER 31, 1994
<PAGE> 13
APPENDIX TO ELECTRONIC FORMAT DOCUMENT
The back cover of the Semiannual Report in the printed version contains
a picture of financial magazines.
<PAGE> 14
EXHIBIT INDEX
-------------
Exhibit No. Description
----------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
Article 6 FDS for Short-Term Bond Fund
</LEGEND>
<S> <C>
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