-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Fl+x79Z3jJy05PyNt28ZDa+gHTxmQ2dBDs5u0phFMY5AYgwheKU/5LS88ZnnMVhk sVj2mKE6rTDAY94u2MXcFw== 0000912057-94-004312.txt : 19941227 0000912057-94-004312.hdr.sgml : 19941227 ACCESSION NUMBER: 0000912057-94-004312 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19941031 FILED AS OF DATE: 19941223 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WITTER DEAN WORLD WIDE INCOME TRUST CENTRAL INDEX KEY: 0000844936 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: MA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-05744 FILM NUMBER: 94566215 BUSINESS ADDRESS: STREET 1: TWO WORLD TRADE CENTER CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2123922550 MAIL ADDRESS: STREET 2: TWO WORLD TRADE CENTER CITY: NEW YORK STATE: NY ZIP: 10048 N-30D 1 FORM N-30D DEAN WITTER WORLD WIDE INCOME TRUST Two World Trade Center New York, New York 10048 DEAR SHAREHOLDER: - -------------------------------------------------------------------------------- During the fiscal year ended October 31, 1994, global bond yields rose substantially reaching their highest levels in two years. In the United States, the Federal Reserve Board, anticipating concerns over higher inflation and strong economic growth, aggressively tightened monetary policy by raising short- term interest rates. Since February, the Federal Reserve Board has raised the federal-funds rate, the interest rate banks charge one another for overnight loans, four times, from 3.00 percent to 4.75 percent. Additionally, the Federal Reserve Board raised the discount rate, the interest rate the Federal Reserve charges member banks for loans, from 3.00 percent to 4.00 percent. (Following the end of the reporting period, the Federal Reserve Board raised the federal-funds rate and discount rate to 5.50 percent and 4.50 percent, respectively.) As a result of the Federal Reserve's monetary policy, the yield on the ten-year U.S. Treasury bond rose by more than 230 basis points (2.30 percent) during the reporting period. Interest rates in the global bond markets also rose during the reporting period, partly in sympathy with the U.S., as well as to improving economic fundamentals in many countries. In Germany, yields on ten-year bonds rose by approximately 225 basis points (2.25 percent); while in Australia, yields on ten-year bonds rose by approximately 415 basis points (4.15 percent). Concurrently, the U.S. dollar broadly declined against most major currencies, depreciating by about 11.75 percent against the Deutschemark, 11 percent against the Japanese yen, and 11.7 percent against the Australian dollar. Under these adverse market conditions, Dean Witter World Wide Income Trust's total return was -3.99 percent for the 12-month period ended October 31, 1994 (not reflecting a deduction for the applicable sales charge). This compares to the total return of -4.65 percent for the average general world income fund as reported by Lipper Analytical Services, Inc. and a total return of 4.85 percent for the Lehman Brothers Mutual Fund Global Intermediate Bond Index (the Index). Unlike the Fund, the Index is an unmanaged, unhedged index of global securities with maturities of 1 to 10 years issued in the U.S., Japan, Europe, Scandinavia, Canada, Australia and New Zealand. As of October 31, 1994, the Fund's net assets exceeded $179 million. During the fiscal year, the Fund's distributions totaled $0.47 per share. The accompanying chart illustrates the growth of a $10,000 investment in the Fund from inception (March 30, 1989) through the recently concluded fiscal year versus the performance of a similar investment in the Lehman Brothers Mutual Fund Global Intermediate Bond Index. INVESTMENT STRATEGY The Fund's strategy in this market environment has been to reduce the average maturity of its portfolio from approximately 5.70 years to 2.87 years, in order to minimize the negative effect of further interest rate hikes both here and abroad. During the period, the Fund decreased its investments in European bonds from 65.5 percent of portfolio assets to approximately 28.0 percent of portfolio assets, while increasing its exposure to short-term debt instruments in the U.S. and the dollar-bloc countries (Canada, Australia and New Zealand) in order to take advantage of the higher yields that are available in those markets and thus enhance the total return potential of the Fund. As of October 31, 1994, the Fund's assets were invested primarily in three regions, Europe (27 percent), the U.S. (40 percent) and the dollar-bloc countries of Canada (13 percent), Australia (10 percent) and New Zealand (10 percent). Positions in Europe were only partially hedged, while positions in the dollar-bloc nations were left unhedged. This strategy was designed to minimize the negative effects of rising interest rates while simultaneously allowing the portfolio to benefit from the rising values of foreign currencies. At the end of the reporting period, 97 percent of the Fund's investments were securities issued by governments of major countries and top-rated banks. LOOKING AHEAD Looking ahead, further increases in interest rates in the near term remain a possibility as many of the global economies exhibit signs of strength. With this in mind, the Fund will continue its investment strategy of diversification in different major global markets to achieve high current income, as well as its selective currency risk hedging to minimize the impact of currency fluctuations on the Fund. We appreciate your support of Dean Witter World Wide Income Trust and look forward to continuing to serve your investment needs and objectives. Very truly yours, Charles A. Fiumefreddo CHAIRMAN OF THE BOARD DEAN WITTER WORLD WIDE INCOME TRUST PORTFOLIO OF INVESTMENTS OCTOBER 31, 1994 - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT (IN COUPON MATURITY THOUSANDS) RATE DATE VALUE - --------------- ---------- --------- --------------- GOVERNMENT & CORPORATE BONDS (80.9%) AUSTRALIA (10.3%) GOVERNMENT OBLIGATIONS (10.3%) Au$ 21,600 Queensland Treasury Corp. + ............................... 8.00 % 5/14/97 $ 15,528,125 4,500 Treasury Corp. of Victoria + .............................. 6.50 12/15/98 2,949,927 --------------- TOTAL AUSTRALIA............................................ 18,478,052 --------------- CANADA (10.3%) GOVERNMENT OBLIGATION (10.3%) Ca$ 25,000 Government of Canada Treasury Bond + ...................... 7.75 9/15/96 18,521,600 --------------- FINLAND (5.8%) GOVERNMENT OBLIGATION (5.8%) FMk 50,000 Government of Finland Treasury Bond + ..................... 6.50 9/15/96 10,501,815 --------------- IRELAND (2.6%) GOVERNMENT OBLIGATION (2.6%) IEP 2,850 Ireland Treasury Gilt + ................................... 9.00 7/30/96 4,634,153 --------------- NEW ZEALAND (10.1%) GOVERNMENT OBLIGATIONS (10.1%) NZ$ 24,600 Government of New Zealand Treasury Bond +.................. 8.00 11/15/95 15,039,237 5,000 Government of New Zealand Treasury Bond.................... 9.00 11/15/96 3,084,074 --------------- TOTAL NEW ZEALAND.......................................... 18,123,311 --------------- SPAIN (6.7%) GOVERNMENT OBLIGATION (6.7%) ESP 1,500,000 Government of Spain Treasury Bond + ....................... 10.55 11/30/96 11,985,674 --------------- UNITED KINGDOM (0.2%) GOVERNMENT OBLIGATION (0.2%) L 195 United Kingdom Treasury Gilt + ............................ 13.25 5/15/96 342,753 --------------- UNITED STATES (34.9%) BANKING (2.7%) US$ 5,000 Branch Banking & Trust..................................... 4.73 8/28/96 4,797,000 --------------- FINANCIAL SERVICES (2.8%) 5,000 International Lease Finance Corp........................... 7.83 11/14/96 5,058,450 --------------- GOVERNMENT OBLIGATIONS (29.4%) 20,000 United States Treasury Note................................ 7.125 10/15/98 19,859,375 15,000 United States Treasury Bond................................ 13.125 5/15/01 19,246,875 10,000 United States Treasury Bond................................ 14.25 2/15/02 13,650,000 --------------- 52,756,250 --------------- TOTAL UNITED STATES............................................................... 62,611,700 --------------- TOTAL GOVERNMENT & CORPORATE BONDS (IDENTIFIED COST $148,748,966).................................................... 145,199,058 --------------- SHORT-TERM INVESTMENTS (22.8%) CANADA (A) (3.7%) GOVERNMENT OBLIGATION (3.7%) Ca$ 9,500 Canadian Treasury Bill..................................... 6.87 10/19/95 6,588,438 ---------------
DEAN WITTER WORLD WIDE INCOME TRUST PORTFOLIO OF INVESTMENTS OCTOBER 31, 1994 (CONTINUED) - --------------------------------------------------------------------------------
PRINCIPAL AMOUNT (IN COUPON MATURITY THOUSANDS) RATE DATE VALUE - -------------- IRELAND (A) (7.8%) ---------- --------- ------------- GOVERNMENT OBLIGATIONS (7.8%) IEP 3,153 Irish Government Exchequer Note...................... 7.24 % 9/ 7/95 $ 4,772,175 6,184 Irish Government Exchequer Note...................... 7.375 10/ 6/95 9,341,785 ------------- TOTAL IRELAND............................................................... 14,113,960 ------------- PORTUGAL (5.0%) BANKING - INTERNATIONAL (5.0%) PTE 1,384,704 Chase Manhattan Bank Time Deposit(c)................. 9.375 11/21/94 8,968,290 ------------- UNITED STATES (A) (6.3%) U.S. GOVERNMENT AGENCIES & OBLIGATIONS (6.3%) US$ 1,500 Student Loan Market Association...................... 4.60 11/ 1/94 1,500,000 10,000 United States Treasury Bill.......................... 5.095 2/ 2/95 9,870,317 ------------- TOTAL UNITED STATES......................................................... 11,370,317 ------------- TOTAL SHORT-TERM INVESTMENTS (IDENTIFIED COST $40,554,391).................. 41,041,005 -------------
TOTAL INVESTMENTS (IDENTIFIED COST $189,303,357)(B)............ 103.7% 186,240,063 LIABILITIES IN EXCESS OF CASH AND OTHER ASSETS................. (3.7) (6,677,377) ---------- ------------- NET ASSETS..................................................... 100.0% $ 179,562,686 ---------- ------------- ---------- ------------- - ---------------- + SOME OR ALL OF THESE SECURITIES ARE SEGREGATED IN CONNECTION WITH OPEN FORWARD FOREIGN CURRENCY CONTRACTS. (A) SECURITIES WERE PURCHASED ON A DISCOUNT BASIS. THE INTEREST SHOWN HAS BEEN ADJUSTED TO REFLECT A BOND EQUIVALENT YIELD. THE BOND EQUIVALENT YIELD FOR FOREIGN SECURITIES DOES NOT REFLECT THE EFFECT OF EXCHANGE RATES. (B) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $189,303,357; THE AGGREGATE GROSS UNREALIZED APPRECIATION IS $3,120,890 AND THE AGGREGATE GROSS UNREALIZED DEPRECIATION IS $6,184,184, RESULTING IN NET UNREALIZED DEPRECIATION OF $3,063,294. (C) SUBJECT TO WITHDRAWAL RESTRICTIONS UNTIL MATURITY.
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCTOBER 31, 1994:
UNREALIZED CONTRACTS IN EXCHANGE DELIVERY APPRECIATION/ TO DELIVER FOR DATE (DEPRECIATION) ------------ ----------------- --------- ------------- Ca$ 20,238,055 US$ 14,633,445 2/10/95 $ (393,325) DEM 14,058,000 US$ 9,023,686 9/ 6/95 (358,698) US$ 14,711,257 Ca$ 20,238,055 2/10/95 315,514 US$ 4,932,020 Au$ 6,729,000 9/21/95 (11,776) ------------- Net unrealized depreciation................... $(448,285) ------------- -------------
SEE NOTES TO FINANCIAL STATEMENTS DEAN WITTER WORLD WIDE INCOME TRUST FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1994 - --------------------------------------------------------------------------------
ASSETS: Investments in securities, at value (identified cost $189,303,357) (Note 1)....................................... $ 186,240,063 Unrealized appreciation on open forward foreign currency contracts (Note 1)...... 315,514 Cash (including $1,362,447 in foreign currency)................................ 1,407,369 Receivable for: Interest................................ 4,290,717 Compensated forward foreign currency contracts (Note 1)..................... 974,768 Shares of beneficial interest sold...... 20,000 Prepaid expenses and other assets......... 5,622 ------------- TOTAL ASSETS........................ 193,254,053 ------------- LIABILITIES: Unrealized depreciation on open forward foreign currency contracts (Note 1)...... 763,799 Payable for: Investments purchased................... 9,869,154 Compensated forward foreign currency contracts (Note 1)..................... 2,341,190 Shares of beneficial interest repurchased............................ 259,854 Plan of distribution fee (Note 3)....... 131,861 Investment management fee (Note 2)...... 116,348 Accrued expenses and other payables (Note 4)....................................... 209,161 ------------- TOTAL LIABILITIES................... 13,691,367 ------------- NET ASSETS: Paid-in-capital........................... 193,188,785 Accumulated net realized loss............. (9,697,493) Net unrealized depreciation............... (3,371,759) Distributions in excess of net investment income................................... (556,847) ------------- NET ASSETS.......................... $ 179,562,686 ------------- ------------- NET ASSET VALUE PER SHARE, 20,999,419 shares outstanding (unlimited authorized shares of $.01 par value)................ $8.55 ------------- -------------
STATEMENT OF OPERATIONS FOR THE YEAR ENDED OCTOBER 31, 1994 INVESTMENT INCOME: INTEREST INCOME (net of $88,128 in foreign withholding tax)............... $ 17,440,662 ------------ EXPENSES Plan of distribution fee (Note 3)..... 1,905,466 Investment management fee (Note 2).... 1,674,474 Transfer agent fees and expenses (Note 4)................................... 279,255 Custodian fees........................ 150,331 Professional fees..................... 101,190 Shareholder reports and notices....... 52,231 Registration fees..................... 43,762 Trustees' fees and expenses (Note 4)................................... 32,091 Organizational expenses (Note 1)...... 10,841 Other................................. 30,224 ------------ TOTAL EXPENSES...................... 4,279,865 ------------ NET INVESTMENT INCOME............. 13,160,797 ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) (Note 1): Net realized loss on: Investments........................... (13,535,951) Futures contracts..................... (5,707,013) Foreign exchange transactions......... (4,401,991) ------------ (23,644,955) ------------ Net change in unrealized appreciation (depreciation) on: Investments........................... (2,056,274) Translation of open forward foreign currency contracts and other assets and liabilities denominated in foreign currencies................... 1,915,576 ------------ (140,698) ------------ NET LOSS............................ (23,785,653) ------------ NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS....... $(10,624,856) ------------ ------------
STATEMENT OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------
FOR THE YEAR ENDED OCTOBER 31, -------------------------------------- 1994 1993 ------------------ ------------------ INCREASE (DECREASE) IN NET ASSETS: Operations: Net investment income................................................. $ 13,160,797 $ 18,689,959 Net realized gain (loss).............................................. (23,644,955) 7,562,927 Net change in unrealized appreciation (depreciation).................. (140,698) 502,607 ------------------ ------------------ Net increase (decrease) in net assets resulting from operations..... (10,624,856) 26,755,493 Dividends and distributions to shareholders from: Net investment income................................................. (5,584,978) (18,190,961) Paid-in-capital....................................................... (6,229,873) -- ------------------ ------------------ (11,814,851) (18,190,961) ------------------ ------------------ Net decrease from transactions in shares of beneficial interest (Note 5)..................................................................... (73,316,664) (57,430,882) ------------------ ------------------ Total decrease...................................................... (95,756,371) (48,866,350) NET ASSETS: Beginning of period..................................................... 275,319,057 324,185,407 ------------------ ------------------ END OF PERIOD (including distributions in excess of net investment income of $556,847 and undistributed net investment income of $5,814,796, respectively).............................................. $ 179,562,686 $ 275,319,057 ------------------ ------------------ ------------------ ------------------
SEE NOTES TO FINANCIAL STATEMENTS DEAN WITTER WORLD WIDE INCOME TRUST NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. ORGANIZATION AND ACCOUNTING POLICIES -- Dean Witter World Wide Income Trust (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified, open-end management investment company. The Fund was organized as a Massachusetts business trust on October 14, 1988 and commenced operations on March 30, 1989. The following is a summary of significant accounting policies: A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the New York or American Stock Exchange or other domestic or foreign stock exchange is valued at its latest sale price on that exchange prior to the time when assets are valued (if there were no sales that day, the security is valued at the latest bid price). In cases where securities are traded on more than one exchange, the securities are valued on the exchange designated as the primary market by the Trustees; (2) listed options are valued at the latest sale price on the exchange on which they are listed unless no sales of such options have taken place that day, in which case they will be valued at the mean between their latest bid and asked price; (3) futures contracts are valued at the latest sale price on the commodities exchange on which they trade unless the Trustees determine that such price does not reflect their market value, in which case it will be valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Trustees; (4) all other 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; (5) when market quotations are not readily available, including circumstances under which it is determined by the Investment Manager that sale or bid prices are not reflective of a security's market value, portfolio securities are valued at their fair value as determined in good faith under procedures established by and under the general supervision of the Trustees (valuation of debt securities for which market quotations are not readily available may be based upon current market prices of securities which are comparable in coupon, rating and maturity or an appropriate matrix utilizing similar factors); and (6) 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 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. OPTIONS AND FUTURES -- (1) Written options: When the Fund writes a call or put option, an amount equal to the premium received is included in the Statement of Assets and Liabilities as a liability which is subsequently marked-to-market to reflect the current market value of the option written. If a written option either expires or the Fund enters into a closing purchase transaction, the Fund realizes a gain or loss without regard to any unrealized gain or loss on the underlying security or currency and the liability related to such option is extinguished. If a written call option is exercised, the Fund realizes a gain or loss from the sale of the underlying security or currency and the proceeds from such sale are increased by the premium originally received. If a put option which the Fund has written is exercised, the amount of the premium originally received reduces the cost of DEAN WITTER WORLD WIDE INCOME TRUST NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- the security which the Fund purchases upon exercise of the option; (2) Purchased options: When the Fund purchases a call or put option, the premium paid is recorded as an investment and is subsequently marked-to-market to reflect the current market value. If a purchased option expires, the Fund will realize a loss to the extent of the premium paid. If the Fund enters into a closing sale transaction, a gain or loss is realized for the difference between the proceeds from the sale and the cost of the option. If a put option is exercised, the cost of the security sold upon exercise will be increased by the premium originally paid. If a call option is exercised, the cost of the security purchased upon exercise will be increased by the premium originally paid; (3) Option on futures contracts: The Fund is required to deposit U.S. Government securities as "initial margin" and "variation margin", with respect to written call and put options on futures contracts. If a written option expires, the Fund realizes a gain. If a written call or put option is exercised, the premium received will decrease or increase the unrealized loss or gain, respectively, on the future. If the Fund enters into a closing purchase transaction, the Fund realizes a gain or loss without regard to any unrealized gain or loss on the underlying futures contract and the liability related to such option is extinguished; (4) Futures contracts: A futures contract is an agreement between two parties to buy and sell financial instruments at a set price on a future date. Upon entering into such a contract, the Fund is required to pledge to the broker cash or U.S. Government securities equal to the minimum initial margin requirements of the applicable futures exchange. Pursuant to the contract, the Fund agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract which is 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 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 as a hedge against fluctuations in foreign exchange rates. Forward contracts are valued daily at the appropriate exchange rates. The resultant exchange gains and losses are included in the Statement of Operations as unrealized gain/loss on foreign exchange transactions. The Fund records realized gains or losses on delivery of the currency or at the time the forward contract is extinguished (compensated) by entering into a closing transaction prior to delivery. F. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required. DEAN WITTER WORLD WIDE INCOME TRUST NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- G. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and distributions to its shareholders on the ex-dividend 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. H. ORGANIZATIONAL EXPENSES -- Dean Witter InterCapital Inc. (the "Investment Manager") paid the organizational expenses of the Fund in the amount of approximately $132,000. The Fund has reimbursed 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. As of March 30, 1994, these expenses were fully amortized. 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 following annual rates to the net assets of the Fund determined as of the close of each business day: 0.75% to the portion of daily net assets not exceeding $250 million; 0.60% to the portion of daily net assets exceeding $250 million but not exceeding $500 million; 0.50% to the portion of daily net assets exceeding $500 million but not exceeding $750 million; 0.40% to the portion of daily net assets exceeding $750 million but not exceeding $1 billion; and 0.30% to the portion of daily net assets exceeding $1 billion. Under the terms of the Agreement, in addition to managing the Fund's investments, the Investment Manager maintains certain of the Fund's books and records and furnishes, at its own expense, office space, facilities, equipment, clerical, bookkeeping and certain legal services and pays the salaries of all personnel, including officers of the Fund who are employees of the Investment Manager. The Investment Manager also bears the cost of telephone services, heat, light, power and other utilities provided to the Fund. 3. PLAN OF DISTRIBUTION -- Shares of the Fund are distributed by Dean Witter Distributors Inc. (the "Distributor"), an affiliate of the Investment Manager. The Fund has adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act pursuant to which the Fund pays the Distributor compensation, accrued daily and payable monthly, at an annual rate of 0.85% 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 dividends 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 the account DEAN WITTER WORLD WIDE INCOME TRUST NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- executives of Dean Witter Reynolds Inc., an affiliate of the Investment Manager and Distributor, and other employees and selected broker-dealers who engage in or support distribution of the Fund's shares or who service shareholder accounts, including overhead and telephone expenses, printing and distribution of prospectuses and reports used in connection with the offering of the Fund's shares to other than current shareholders and preparation, printing and distribution of sales literature and advertising materials. In addition, the Distributor may be compensated under the Plan for its opportunity costs in advancing such amounts, which compensation would be in the form of a carrying charge on any unreimbursed expenses by the Distributor. Provided that the Plan continues in effect, any cumulative expenses incurred but not yet recovered may be recovered through future distribution fees from the Fund and contingent deferred sales charges from the Fund's shareholders. The Distributor has informed the Fund that for the year ended October 31, 1994, it received approximately $637,000 in contingent deferred sales charges from certain redemptions of the Fund's shares. The Fund's shareholders pay such charges which are not an expense of the Fund. 4. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the year ended October 31, 1994 were as follows:
PURCHASES SALES -------------- -------------- Corporate Bonds....................................................... $ 9,960,900 $ 1,473,899 Foreign Government Obligations........................................ 295,302,970 408,805,287 U.S. Government Agencies and Obligations.............................. 128,897,445 174,579,209
Transactions in written options were as follows:
CURRENCY AMOUNT PREMIUMS ----------------- ------------- Options written: outstanding at beginning of period................ -- -- Options written.................................................... DEM 20,000,000 $ 23,269 Options expired.................................................... (20,000,000) (23,269) ----------------- ------------- Options written: outstanding at end of period...................... DEM -- $ -- ----------------- ------------- ----------------- -------------
Dean Witter Trust Company, an affiliate of the Investment Manager and Distributor, is the Fund's transfer agent. At October 31, 1994, the Fund had transfer agent fees and expenses payable of approximately $42,000. On April 1, 1991, the Fund established an unfunded noncontributory defined benefit pension plan covering all independent Trustees of the Fund who will have served as independent Trustees for at least five years at the time of retirement. Benefits under this plan are based on years of service and compensation during the last five years of service. Aggregate pension costs for the year ended October 31, 1994, included in Trustees' fees and expenses in the Statement of Operations, amounted to $9,406. At October 31, 1994, the Fund had an accrued pension liability of $46,103 which is included in accrued expenses and other payables in the Statement of Assets and Liabilities. DEAN WITTER WORLD WIDE INCOME TRUST NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 5. SHARES OF BENEFICIAL INTEREST -- Transactions in shares of beneficial interest were as follows:
FOR THE YEAR ENDED OCTOBER 31, -------------------------------------------------------- 1994 1993 --------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT ------------ ------------- ------------ ------------- Sold...................................... 1,700,869 $ 15,341,706 3,405,127 $ 31,563,475 Reinvestment of dividends................. 717,268 6,333,779 1,033,162 9,475,837 ------------ ------------- ------------ ------------- 2,418,137 21,675,485 4,438,289 41,039,312 Repurchased............................... (10,739,557) (94,992,149) (10,713,382) (98,470,194) ------------ ------------- ------------ ------------- Net decrease.............................. (8,321,420) $ (73,316,664) (6,275,093) $ (57,430,882) ------------ ------------- ------------ ------------- ------------ ------------- ------------ -------------
6. FEDERAL INCOME TAX STATUS -- At October 31, 1994, the Fund had net capital loss carryovers of approximately $9,697,000 which will be available through October 31, 2002 to offset future capital gains to the extent provided by regulations. To the extent that these carryover losses are used to offset future capital gains, it is probable that the gains so offset will not be distributed to shareholders. As of October 31, 1994, 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 contracts and permanent book/tax differences primarily attributable to foreign currency losses and dividend redesignations. To reflect cumulative reclassifications arising from permanent book/tax differences as of October 31, 1993, paid-in-capital was charged $35,131,236, accumulated net realized loss was credited $30,220,998, and distributions in excess of net investment income was credited $4,910,238. To reflect reclassifications arising from permanent book/tax differences for the year ended October 31, 1994, distributions in excess of net investment income was charged and accumulated net realized loss was credited $13,947,462. 7. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK -- As of October 31, 1994, the Fund had outstanding forward foreign currency contracts ("forward contracts") as a hedge against changes in foreign exchange rates. Forward contracts 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. DEAN WITTER WORLD WIDE INCOME TRUST FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:
FOR THE PERIOD FOR THE YEAR ENDED OCTOBER 31, MARCH 30, 1989* ----------------------------------------------------------- THROUGH 1994 1993 1992 1991 1990 OCTOBER 31, 1989 ---------- --------- --------- ---------- --------- ---------------- PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period.............. $ 9.39 $ 9.11 $ 9.11 $10.38 $ 9.55 $10.00 ---------- --------- --------- ---------- --------- ---------------- Net investment income............................. 0.55 0.59 0.62 0.82 0.95 0.49 Net realized and unrealized gain (loss)........... (0.92) 0.27 0.01 (0.99) 0.78 (0.45) ---------- --------- --------- ---------- --------- ---------------- Total from investment operations.................. (0.37) 0.86 0.63 (0.17) 1.73 0.04 ---------- --------- --------- ---------- --------- ---------------- Less dividends and distributions from: Net investment income........................... (0.22) (0.58) (0.63) (0.86) (0.90) (0.49) Net realized gain on investments................ -- -- -- (0.24) -- -- Paid-in-capital................................. (0.25) -- -- -- -- -- ---------- --------- --------- ---------- --------- ---------------- Total dividends and distributions................. (0.47) (0.58) (0.63) (1.10) (0.90) (0.49) ---------- --------- --------- ---------- --------- ---------------- Net asset value, end of period.................... $ 8.55 $ 9.39 $ 9.11 $ 9.11 $10.38 $ 9.55 ---------- --------- --------- ---------- --------- ---------------- ---------- --------- --------- ---------- --------- ---------------- TOTAL INVESTMENT RETURN+.......................... (3.99)% 9.72% 7.13% (1.75)% 19.22% 0.40%(1) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (in thousands).......... $179,563 $275,319 $324,185 $421,051 $462,709 $388,578 Ratios to average net assets: Expenses........................................ 1.91% 1.87% 1.87% 1.76% 1.81% 1.90%(2) Net investment income........................... 5.87% 6.39% 6.78% 8.45% 9.76% 9.10%(2) Portfolio turnover rate........................... 229% 229% 214% 245% 109% 113%(1) - ---------------- * COMMENCEMENT OF OPERATIONS. + DOES NOT REFLECT THE DEDUCTION OF SALES LOAD. (1) NOT ANNUALIZED. (2) ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS DEAN WITTER WORLD WIDE INCOME TRUST REPORT OF INDEPENDENT ACCOUNTANTS - -------------------------------------------------------------------------------- To the Shareholders and Trustees of Dean Witter World Wide Income Trust In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Dean Witter World Wide Income Trust (the "Fund") at October 31, 1994, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended and for the period March 30, 1989 (commencement of operations) through October 31, 1989, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities owned at October 31, 1994 by correspondence with the custodian and brokers, provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP New York, New York December 9, 1994 DIRECTORS Jack F. Bennett Michael Bozic Charles A. Fiumefreddo Edwin J. Garn John R. Haire DEAN WITTER Dr. Manuel H. Johnson WORLD WIDE Paul Kolton INCOME TRUST Michael E. Nugent Philip J. Purcell John L. Schroeder OFFICERS Charles A. Fiumefreddo Chairman and Chief Executive Officer Sheldon Curtis Vice President, Secretary and General Counsel Vinh Q. Tran Vice President Thomas F. Caloia Treasurer TRANSFER AGENT Dean Witter Trust Company Harborside Financial Center - Plaza Two Jersey City, New Jersey 07311 INDEPENDENT ACCOUNTANTS [PHOTO] Price Waterhouse LLP 1177 Avenue of the Americas New York, New York 10036 INVESTMENT MANAGER Dean Witter InterCapital Inc. Two World Trade Center New York, New York 10048 This report is submitted for the general information of shareholders of the Fund. For more detailed information about the Fund, its officers and 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. ANNUAL REPORT OCTOBER 31, 1994 DEAN WITTER WORLD WIDE INCOME TRUST GROWTH OF $10,000 ($ IN THOUSANDS) LEHMAN BROS. GLOBAL TOTAL INTERMEDIATE BOND INDEX March 31, 1989 $10,000 $10,000 October 31, 1989 $10,040 $10,509 October 31, 1990 $11,969 $12,041 October 31, 1991 $11,759 $13,181 October 31, 1992 $12,598 $14,853 October 31, 1993 $13,822 $16,194 October 31, 1994 $13,185 (3) $16,981
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 5 YEARS LIFE OF FUND -3.99 (1) 5.74 (1) 5.19 (1) -8.54 (2) 5.45 (2) 5.07 (2)
Fund Lehman (4) ----- ----- Past performance is not predictive of future returns. ____________________ (1) Figure shown assumes reinvestment of all distributions and does not reflect the deduction of any sales charges. (2) Figure shown assumes the deduction of the maximum applicable contingent deferred sales charges (CDSC) (1 year-5%, 5 years-2%, since inception 1%). See the Fund's current prospectus for complete details on fees and sales charges. (3) Closing value after the deduction of a 1% CDSC, assuming a complete redemption on October 31, 1994. (4) The Lehman Brothers Global Intermediate Bond Index, includes local currency-denominated sovereign debt of 19 countries with maturities of 1 to 10 years. Unlike the Fund, the index does not include any expenses, fees or charges. -----END PRIVACY-ENHANCED MESSAGE-----