<PAGE>
DEAN WITTER SHORT-TERM BOND FUND TWO WORLD TRADE CENTER, NEW YORK, NEW YORK
10048
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1995
DEAR SHAREHOLDER:
During the past six months, interest rates fell by as much as one percentage
point on indications that the U.S. economy's recovery was moderating. With
inflation remaining subdued, the Federal Reserve Board's confidence in a "soft
landing" -- under which the economy grows at a rate sufficient to ward off a
recession, while preventing excessive inflation and high interest rates -- was
highlighted in July by a 0.25 percentage point reduction in the federal-funds
rate to 5.75 percent. (The federal-funds rate is the interest rate banks charge
each other for overnight loans.)
In the fall, anticipation of meaningful balanced budget legislation, coupled
with concern over consumers' willingness to continue to support the economy, led
investors to believe that additional central-bank easing would occur before
year-end. Although the economy was reported to have grown by more than 4 percent
during the third quarter of 1995, fourth-quarter growth estimates are being
tempered by slackening retail sales -- both in department stores and in
automobile showrooms -- as well as reduced activity in the manufacturing sector.
On October 31, 1995, one-year U.S. Treasury bills were yielding 5.54 percent,
down more than 0.75 percentage points compared to six months earlier. Similarly,
two- and five-year U.S. Treasury notes were yielding only 5.61 and 5.81 percent,
respectively, approximately one percentage point below their April 30, 1995
levels.
PERFORMANCE AND PORTFOLIO
Over the last six months, Dean Witter Short-Term Bond Fund's net assets grew by
more than $7.6 million, or approximately 25 percent. On October 31, 1995, the
Fund had net assets in excess of $37 million. Approximately $1.4 million of this
increase was attributable to price appreciation of the securities held in the
portfolio. For the six-month period ended October 31, 1995 the Fund produced a
total return of 5.26 percent, versus 4.89 percent for the average short-term
corporate bond fund as measured by Lipper Analytical Services, Inc. That
performance
<PAGE>
DEAN WITTER SHORT-TERM BOND FUND
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1995, CONTINUED
ranked the Fund #50 out 153 short-term investment-grade debt funds, based on
total return and including reinvestment of dividends. During the same period,
the Lehman Brothers Short (1-5) Investment Grade Debt Index posted a total
return of 6.11 percent. (The Index is unmanaged and should not be considered an
investment. Its performance does not include any expenses, fees or charges.) The
investment manager has waived fees and assumed all expenses (except brokerage
fees) since the Fund's inception on January 10, 1994, and will continue to waive
fees and assume expenses until December 31, 1995. After that date, through
December 31, 1996, the expense waiver will be capped at 100 basis points (1.00
percent). Had expenses not been waived during the six-month period under review,
the Fund's total return for the six months ended October 31, 1995 would have
been 4.43 percent.
The Fund's performance compared to its Lipper peer group was aided by the
portfolio's modestly longer average maturity and duration early in the period
under review relative to the majority of comparable funds. The Fund's emphasis
on higher-yielding corporate bonds and mortgage-backed securities and the
portfolio managers' desire to maintain cash reserves at less than 10 percent for
most of the period was also a positive influence. A sizable amount of new
subscriptions in mid to late October resulted in a substantially higher cash
position at the end of the period. It is expected that the portfolio's level of
temporary cash reserves will be reduced as attractive opportunities arise in the
corporate, U.S. agency and mortgage-backed securities sectors.
During the past six months, positive corporate activity enabled the portfolio
managers to add to the Fund's holdings in the electric utilities, industrial and
financial services sectors, while commitments to banks and Yankees
(dollar-denominated securities issued in the United States by foreign entities)
were reduced. The average quality rating of the corporate-bond portfolio
improved during the last six months as the percentage of bonds rated "A" or
better by Standard & Poor's Corp. or Moody's Investors Service, Inc., rose to 66
percent from 48 percent. On October 31, 1995, the Fund maintained approximately
45 percent of its holdings in investment-grade corporate bonds, 34 percent in
U.S. government securities, 3 percent in non-investment grade corporate bonds
and 18 percent in money-market securities.
GLOBAL SECTOR
Over the course of the past six months the Fund has purchased only U.S. dollar
denominated investments. This has been due to the extreme volatility in the
Mexican peso and the Canadian dollar, the former plagued by economic problems
and the latter associated with uncertainty surrounding the potential separation
of Quebec from Canada. As set forth by the Fund's prospectus,
<PAGE>
DEAN WITTER SHORT-TERM BOND FUND
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1995, CONTINUED
not more than 25 percent of total assets may be invested in securities issued by
foreign corporations and governments. As of October 31, 1995, 0 percent of the
Fund's total assets was invested in non-U.S. securities.
U.S. GOVERNMENT/MORTGAGE-BACKED SECTOR
As interest rates declined, five-year balloon mortgage-backed securities and
certain U.S. Treasury positions were added to the portfolio. In the current
market environment, and as market conditions warrant, the portfolio managers
will continue to pursue a diversified strategy in these sectors by purchasing
those securities that enhance both the Fund's current yield and its total-return
potential.
As of October 31, 1995, this sector of the Fund was well diversified with 10.2
percent in mortgage-backed securities issued by the Federal Home Loan Mortgage
Corporation (FHLMC), 9.5 percent in U.S. Treasury securities and 14.3 percent
invested in U.S. government agency securities.
LOOKING AHEAD
In the final quarter of 1995, the economy appears to be growing at an acceptable
pace with little reason to expect an increase in inflation -- a true soft
landing. The Federal Reserve Board will continue to focus on the strength of the
economy in determining its future strategy. While the central bank does not
expect a balanced-budget resolution to have a near-term economic impact, fiscal
restraint will likely be rewarded with monetary easing. A continued reduction in
consumer spending through year-end could serve as further impetus for a
short-term interest rate reduction. We will continue to monitor economic and
political events for signs of a shift in the direction of interest rates.
We appreciate your ongoing support of Dean Witter Short-Term Bond Fund and look
forward to continuing to serve your investment needs and objectives.
Very truly yours,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (48.2%)
AUTOMOTIVE FINANCE (4.0%)
$ 500 Ford Motor Credit Co................. 5.625% 12/15/98 $ 492,570
1,000 General Motors Acceptance Corp....... 7.75 04/15/97 1,021,410
--------------
1,513,980
--------------
BANK HOLDING COMPANIES (7.5%)
1,000 Bankers Trust New York Corp.......... 7.25 11/01/96 1,010,390
500 Chase Manhattan Corp................. 7.50 12/01/97 514,750
625 Integra Financial Corp............... 6.50 04/15/00 625,906
608 Midlantic Corp....................... 9.25 09/01/99 669,110
--------------
2,820,156
--------------
BANKS - INTERNATIONAL (2.7%)
1,000 Kansallis-Osake Pankki (Finland)..... 6.125 05/15/98 998,583
--------------
BROKERAGE (1.4%)
500 Lehman Brothers Holdings, Inc........ 7.625 07/15/99 516,620
--------------
COMPUTER EQUIPMENT (1.4%)
500 Unisys Corp.......................... 13.50+ 07/01/97 508,750
--------------
FINANCIAL (2.7%)
500 Allstate Corp........................ 5.875 06/15/98 497,095
500 Paine Webber Group, Inc.............. 6.25 06/15/98 496,810
--------------
993,905
--------------
FINANCIAL SERVICES (1.4%)
500 Golden West Financial Corp........... 7.875 01/15/02 532,850
--------------
FOOD DISTRIBUTION (1.4%)
500 Great Atlantic & Pacific Tea Co.,
Inc.................................. 9.125 01/15/98 521,260
--------------
INDUSTRIALS (14.2%)
1,000 Chrysler Corp........................ 10.40 08/01/99 1,067,480
600 Comdisco, Inc........................ 9.75 01/15/97 625,104
500 Grand Metropolitan Investment
Corp................................. 8.125 08/15/96 508,515
1,000 Hertz Corporation.................... 9.50 05/15/98 1,075,570
1,000 Sears, Roebuck & Co.................. 6.50 06/15/00 1,007,540
500 Time Warner, Inc..................... 7.45 02/01/98 509,380
500 Xerox Corp........................... 9.20 07/15/99 510,200
--------------
5,303,789
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
TRANSPORTATION (2.2%)
$ 300 AMR Corp............................. 8.10 % 11/01/98 $ 313,140
500 Union Pacific Corp................... 7.375 05/15/01 522,540
--------------
835,680
--------------
UTILITIES - ELECTRIC (9.3%)
500 Commonwealth Edison Co............... 6.50 04/15/00 501,300
535 Commonwealth Edison Co............... 7.625 02/15/03 544,015
500 Consolidated Edison Co. of N.Y.,
Inc.................................. 5.90 12/15/96 499,625
370 Consumers Power Co................... 8.875 11/15/99 400,114
500 Long Island Lighting Co.............. 6.25 07/15/01 463,850
500 Pacific Gas & Electric Co............ 5.75 12/01/98 492,785
575 Public Service Co. of New
Hampshire............................ 8.875 05/15/96 581,808
--------------
3,483,497
--------------
TOTAL CORPORATE BONDS
(IDENTIFIED COST $18,272,671).......................................... 18,029,070
--------------
U.S. GOVERNMENT & AGENCIES OBLIGATIONS (34.0%)
MORTGAGE PASS-THROUGH SECURITIES (10.2%)
1,000 Federal Home Loan Mortgage Corp. PC
Gold................................. 6.50 * 964,735
2,797 Federal Home Loan Mortgage Corp. PC
Gold................................. 6.50 05/01/99-06/01/99 2,849,384
--------------
3,814,119
--------------
U.S. GOVERNMENT AGENCIES (14.3%)
500 Federal Home Loan Banks.............. 6.20 06/29/98 500,133
2,000 Federal Home Loan Mortgage Corp...... 8.05 01/06/97 2,006,846
1,000 Federal Home Loan Mortgage Corp...... 6.905 05/02/97 1,000,156
2,000 Federal National Mortgage Assoc.
Principal Strip...................... 0.00 12/20/01 1,860,625
--------------
5,367,760
--------------
U.S. GOVERNMENT OBLIGATIONS (9.5%)
1,000 U.S. Treasury Note................... 6.00 08/31/97 1,005,782
1,000 U.S. Treasury Note................... 5.75 09/30/97 1,002,031
500 U.S. Treasury Note................... 5.125 04/30/98 493,672
1,000 U.S. Treasury Note................... 7.125 02/29/00 1,049,063
--------------
3,550,548
--------------
TOTAL U.S. GOVERNMENT & AGENCIES OBLIGATIONS
(IDENTIFIED COST $12,669,397).......................................... 12,732,427
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- ----------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENTS (18.9%)
U.S. GOVERNMENT AGENCIES (a) (13.9%)
$ 3,200 Federal Home Loan Mortgage Corp...... 5.62 % 11/13/95-11/20/95 $ 3,191,820
2,000 Federal National Mortgage Assoc...... 5.64 11/14/95 1,995,926
--------------
TOTAL U.S. GOVERNMENT AGENCIES
(AMORTIZED COST $5,187,747)............................................ 5,187,746
--------------
REPURCHASE AGREEMENT (5.0%)
1,872 The Bank of New York (dated 10/31/95;
proceeds $1,872,131; collateralized
by $2,285,750 Federal National
Mortgage Assoc. 6.00% due 07/25/22
valued at $2,000,236) (Identified
Cost $1,871,829)..................... 5.80 11/01/95 1,871,829
--------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $7,059,575)........................................... 7,059,575
--------------
TOTAL INVESTMENTS
(IDENTIFIED COST $38,001,644) (B)............ 101.1% 37,821,072
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS....................................... (1.1) (412,589)
----- -----------
NET ASSETS................................... 100.0% $37,408,483
----- -----------
----- -----------
<FN>
- ---------------------
PC Participation Certificate.
* Security was purchased on a forward commitment basis with an approximate
principal amount and no definite maturity date; the actual principal
amount and maturity date will be determined upon settlement.
+ Adjustable rate. Rate shown is the rate in effect at October 31, 1995.
(a) Securities were purchased on a discount basis. The interest rates shown
have been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $38,001,644; the
aggregate gross unrealized appreciation is $167,375 and the aggregate
gross unrealized depreciation is $347,947, resulting in net unrealized
depreciation of $180,572.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER SHORT-TERM BOND FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $38,001,644)............................. $ 37,821,072
Cash........................................................ 420,019
Receivable for:
Interest................................................ 575,663
Shares of beneficial interest sold...................... 288,230
Deferred organizational expenses............................ 102,293
Receivable from affiliate................................... 35,270
Prepaid expenses and other assets........................... 25,875
------------
TOTAL ASSETS........................................... 39,268,422
------------
LIABILITIES:
Payable for:
Investments purchased................................... 1,565,210
Shares of beneficial interest repurchased............... 124,478
Dividends to shareholders............................... 23,579
Organizational expenses..................................... 102,293
Accrued expenses and other payables......................... 44,379
------------
TOTAL LIABILITIES...................................... 1,859,939
------------
NET ASSETS:
Paid-in-capital............................................. 39,020,420
Net unrealized depreciation................................. (180,572)
Accumulated undistributed net investment income............. 108,574
Accumulated net realized loss............................... (1,539,939)
------------
NET ASSETS............................................. $ 37,408,483
------------
------------
NET ASSET VALUE PER SHARE,
3,875,082 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$9.65
----------------------
----------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER SHORT-TERM BOND FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 31, 1995 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME............................................. $1,045,472
----------
EXPENSES
Investment management fee................................... 103,836
Professional fees........................................... 25,874
Shareholder reports and notices............................. 16,536
Organizational expenses..................................... 16,087
Trustees' fees and expenses................................. 9,636
Custodian fees.............................................. 7,827
Transfer agent fees and expenses............................ 7,505
Registration fees........................................... 1,068
Other....................................................... 850
----------
TOTAL EXPENSES BEFORE AMOUNTS WAIVED/ASSUMED........... 189,219
LESS: AMOUNTS WAIVED/ASSUMED........................... (189,219)
----------
TOTAL EXPENSES AFTER AMOUNTS WAIVED/ASSUMED............ --
----------
NET INVESTMENT INCOME.................................. 1,045,472
----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss........................................... (131,351)
Net change in unrealized depreciation....................... 595,494
----------
NET GAIN............................................... 464,143
----------
NET INCREASE................................................ $1,509,615
----------
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER SHORT-TERM BOND FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED FOR THE YEAR
OCTOBER 31, 1995 ENDED
(UNAUDITED) APRIL 30, 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income....................................... $ 1,045,472 $ 2,882,945
Net realized loss........................................... (131,351) (2,020,148)
Net change in unrealized depreciation....................... 595,494 738,462
------------------ --------------
NET INCREASE........................................... 1,509,615 1,601,259
------------------ --------------
DIVIDENDS AND DISTRIBUTIONS FROM:
Net investment income....................................... (926,546) (2,314,420)
Paid-in-capital............................................. -- (46,360)
------------------ --------------
TOTAL.................................................. (926,546) (2,360,780)
------------------ --------------
Net increase (decrease) from transactions in shares of
beneficial interest....................................... 7,007,577 (12,825,279)
------------------ --------------
TOTAL INCREASE (DECREASE).............................. 7,590,646 (13,584,800)
NET ASSETS:
Beginning of period......................................... 29,817,837 43,402,637
------------------ --------------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME AND
DISTRIBUTIONS IN EXCESS OF NET INVESTMENT INCOME OF
$108,574 AND $10,352, RESPECTIVELY)..................... $37,408,483 $ 29,817,837
------------------ --------------
------------------ --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER SHORT-TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1995 (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 commenced operations on 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, if available, in determining what it believes is the fair valuation
of the portfolio securities valued by such pricing service; and (4) short-term
debt securities having a maturity date of more than sixty days at the time of
purchase are valued on a mark-to-market basis until sixty days prior to maturity
and thereafter at amortized cost based on their value on the 61st day. Short-
term debt securities having a maturity date of sixty days or less at the time of
purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Discounts are accreted over the life of the respective 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 rate
prevailing on the respective dates of such transactions. The resultant exchange
gains and losses are included in the Statement of Operations. Pursuant to U.S.
Federal income tax regulations, certain foreign exchange gains/losses
<PAGE>
DEAN WITTER SHORT-TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1995 (UNAUDITED) CONTINUED
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.
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 -- Dean Witter InterCapital Inc. (the "Investment
Manager") paid the organizational expenses of the Fund in the amount of
approximately $160,000 which will be reimbursed, exclusive of any amounts
assumed. 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 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.
<PAGE>
DEAN WITTER SHORT-TERM BOND FUND
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1995 (UNAUDITED) CONTINUED
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, 1995,
whichever comes first.
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, 1995 were
$11,128,769 and $7,157,762, respectively. Included in the aforementioned are
purchases and sales of U.S. Government securities of $5,971,759 and $3,076,027,
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 MONTHS ENDED FOR THE YEAR ENDED
OCTOBER 31, 1995 APRIL 30, 1995
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 2,163,132 $ 20,829,596 1,807,698 $ 17,153,744
Reinvestment of dividends........................................ 74,717 718,297 215,629 2,044,701
----------- -------------- ----------- ------------
2,237,849 21,547,893 2,023,327 19,198,445
Repurchased...................................................... (1,513,933) (14,540,316) (3,382,816) (32,023,724)
----------- -------------- ----------- ------------
Net increase (decrease).......................................... 723,916 $ 7,007,577 (1,359,489) $(12,825,279)
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
5. FEDERAL INCOME TAX STATUS
At April 30, 1995, the Fund had a net capital loss carryover of approximately
$378,000 which will be available through April 30, 2003 to offset future capital
gains to the extent provided by regulations.
Capital and foreign currency 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 and foreign currency losses of approximately $369,000 and $662,000,
respectively during fiscal 1995. As of April 30, 1995, the Fund had temporary
book/tax differences primarily attributable to post-October losses and permanent
book/tax differences attributable to foreign currency losses.
<PAGE>
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
FOR THE PERIOD
SIX MONTHS FOR THE JANUARY
ENDED YEAR 10, 1994*
OCTOBER ENDED THROUGH
31, 1995 APRIL 30, APRIL 30,
(UNAUDITED) 1995 1994
- --------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of period............... $ 9.46 $ 9.62 $ 10.00
---------- --------- ---------
Net investment income.............. 0.33 0.77 0.21
Net realized and unrealized gain
(loss)............................ 0.16 (0.33) (0.40)
---------- --------- ---------
Total from investment operations... 0.49 0.44 (0.19)
---------- --------- ---------
Less dividends and distributions
from:
Net investment income........... (0.30) (0.59) (0.19)
Paid-in-capital................. -- (0.01) --
---------- --------- ---------
Total dividends and
distributions..................... (0.30) (0.60) (0.19)
---------- --------- ---------
Net asset value, end of period..... $ 9.65 $ 9.46 $ 9.62
---------- --------- ---------
---------- --------- ---------
TOTAL INVESTMENT RETURN............ 5.26%(1) 4.76% (2.01)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... --% (5) --%(4) --%(2)(3)
Net investment income.............. 7.66% (5) 7.64%(4) 6.36%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $37,408 $29,818 $43,403
Portfolio turnover rate............ 27%(1) 74% 9%(1)
<FN>
- ---------------------
* 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 1.05% and 6.59%, respectively.
(5) 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 1.39% and 6.27%, respectively.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
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 M. Avelar
Vice President
Rajesh K. Gupta
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
[Graphic]
SEMIANNUAL REPORT
OCTOBER 31, 1995
