<PAGE>
TCW/DW GLOBAL TELECOM TRUST Two World Trade Center, New York, New York 10048
LETTER TO THE SHAREHOLDERS May 31, 1997
DEAR SHAREHOLDER:
We are pleased to present the first annual report for TCW/DW Global Telecom
Trust, for the fiscal year ended May 31, 1997. The Fund, which commenced
operations on August 28, 1996, seeks long-term capital appreciation by
investing in a portfolio consisting primarily of securities of domestic and
foreign companies operating in all aspects of the telecommunications and
information industries. TCW Funds Management, Inc., an affiliate of Trust
Company of the West, is the Fund's investment adviser.
PERFORMANCE AND PORTFOLIO COMPOSITION
For the period under review (August 28, 1996, through May 31, 1997), TCW/DW
Global Telecom Trust produced a total return of 14.30 percent. This compares
to a return of 29.78 percent for the broad-based Standard & Poor's 500
Composite Stock Price Index (S&P 500) and 22.51 percent for the Lipper
Science and Technology Funds Index. The accompanying chart illustrates the
growth of a hypothetical $10,000 investment in the Fund from inception
(August 28, 1996) through May 31, 1997, versus a similar investment in the
issues that comprise the S&P 500 Index and the Lipper Science and Technology
Funds Index.
On May 31, 1997, the Fund's net assets exceeded $122 million, with
approximately 60 percent invested in the United States, 20 percent in Europe,
11 percent in Asia and the Pacific Rim and 7 percent in Latin America. At the
sector level, approximately 42 percent of the portfolio was invested in
transporters of telecommunications, voice, video and data, 20 percent in
enabling technology (e.g., Microsoft Corp. and Intel Corp.), 19 percent in
content providers (e.g., Sterling Commerce, Inc.) and 17 percent in
infrastructure (e.g., Motorola, Inc. and Ericsson (L.M.) Telephone Co. AB).
TELECOMMUNICATIONS MARKET OVERVIEW
The telephone sector underwent considerable pressure during the latter part
of 1996 as uncertainty regarding regulation plagued the
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
LETTER TO THE SHAREHOLDERS, May 31, 1997, continued
large-capitalization telecommunications companies. Slowing long-distance
sales and a court battle between the regional bell operating companies
(RBOCs) and the long-distance companies over provisions of the FCC
interconnection order placed several stocks under significant pressure.
Acknowledging the difficulties faced by most RBOCs and long-distance
carriers, TCW has focused the Fund's investments in smaller-cap companies
that have developed niche markets and in telecommunications infrastructure
companies. In addition, the Fund has considerable exposure to international
companies that not only provide diversification, but also are faced with
faster-growing underlying economic demands for advanced telecommunication
networks.
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
TCW/DW GLOBAL TELECOM TRUST
GROWTH OF $10,000
DATE TOTAL S&P 500 LIPPER
- -------------------------------------------------------------------------------
August 28, 1996 $10,000 $10,000 $10,000
- -------------------------------------------------------------------------------
August 31, 1996 $10,000 $ 9,827 $10,000
- -------------------------------------------------------------------------------
September 30, 1996 $10,410 $10,379 $10,943
- -------------------------------------------------------------------------------
October 31, 1996 $10,120 $10,669 $10,764
- -------------------------------------------------------------------------------
November 30, 1996 $10,700 $11,471 $11,772
- -------------------------------------------------------------------------------
December 31, 1996 $10,490 $11,243 $11,572
- -------------------------------------------------------------------------------
January 31, 1997 $11,080 $11,951 $12,475
- -------------------------------------------------------------------------------
February 28, 1997 $10,630 $12,040 $11,347
- -------------------------------------------------------------------------------
March 31, 1997 $10,190 $11,545 $10,492
- -------------------------------------------------------------------------------
April 30, 1997 $10,380 $12,240 $10,948
- -------------------------------------------------------------------------------
May 31, 1997 $10,930(3) $12,978 $12,251
===============================================================================
CUMULATIVE TOTAL RETURNS
LIFE OF FUND
===========================================================
14.30 (1)
-----------------------------------------------------------
9.30 (2)
===========================================================
==============================================================================
Fund S&P 500 (4) LIPPER IX (5)
------- ------- -------
==============================================================================
Past performance is not predictive of future returns.
- ---------------------------------------------------
(1) Figure shown assumes reinvestment of all distributions and does not
reflect the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction
of the maximum applicable contingent deferred sales charge (CDSC) (since
inception-5%). See the Fund's current prospectus for complete details on
fees and sales charges.
(3) Closing value after the deduction of a 5% CDSC, assuming a complete
redemption on May 31, 1997.
(4) The Standard & Poor's 500 Composite Stock Price Index (S&P 500) is a
broad-based index, the performance of which is based on the average
performance of 500 widely held common stocks. The performance of the
index does not include any expenses, fees or charges. The Index is
unmanaged and should not be considered an investment.
(5) The Lipper Science & Technology Funds Index is an equally-weighted
performance index of the largest qualifying funds (based on net assets)
in the Lipper Science & Technology Funds objective. The Index, which is
adjusted for capital gains distributions and income dividends, is
unmanaged and should not be considered an investment. There are
currently 10 funds represented in this index.
Based on fears of an overheated economy and higher interest rates, the
telecommunications industry underwent significant selling pressures during
the first quarter of 1997, that coincided with a 10 percent correction in the
stock market. The correction was particularly severe in networking, internet
and telecommunication equipment stocks. Despite the severity of the
correction on these sectors, the Fund's foreign exposure provided outstanding
stability throughout the entire fiscal year.
During May, the Fund benefited from a rally in technology stocks. Wireless
equipment companies such as Motorola, Inc., Nokia Corp. and Lucent
Technologies, Inc. paced the portfolio as the long-awaited switch to digital
in the United States appeared to be coming to fruition.
LOOKING AHEAD
TCW believes that the telecommunications area continues to offer outstanding
long-term investment opportunities. Supporting this position are several
positive long-term trends, including the worldwide infrastructure expansion
of existing communications networks, the growth of wireless networks and the
gradual shift from analog to digital technologies.
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
LETTER TO THE SHAREHOLDERS, May 31, 1997, continued
On June 30, 1997, the Fund's Board of Trustees approved a proposal to adopt a
multiple class share structure. Through this arrangement, the Fund will offer
four classes of shares with various sales charges, ongoing fees and other
features. This conversion is scheduled to take place on July 28, 1997. A
revised prospectus, which includes complete details regarding this change,
will be mailed to shareholders in the coming weeks.
We appreciate your support of TCW/DW Global Telecom Trust and look forward to
continuing to serve your investment needs and objectives.
Very truly yours,
/s/ Charles A. Fiumefreddo
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
PORTFOLIO OF INVESTMENTS May 31, 1997
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCKS (98.1%)
ARGENTINA (0.4%)
Telecommunications
10,000 Telecom Argentina Stet - France Telecom S.A. (Class B)(ADR) ..... $ 533,750
--------------
BRAZIL (3.0%)
Cable Television Equipment
100,000 TV Filme, Inc.* ................................................. 975,000
--------------
Telecommunications
20,000 Telecomunicacoes Brasileiras S.A. - Telebras (ADR) .............. 2,747,500
--------------
TOTAL BRAZIL .................................................... 3,722,500
--------------
CZECH REPUBLIC (0.5%)
Telecommunications
7,000 SPT Telekom AS* ................................................. 643,582
--------------
FINLAND (1.6%)
Telecommunications
30,000 Nokia Corp. (ADR) ............................................... 1,980,000
--------------
HONG KONG (5.1%)
Telecommunications
150,000 APT Satellite Holdings Ltd. (ADR) * ............................. 2,137,500
681,500 Asia Satellite Telecommunications Holdings Ltd. ................ 1,908,692
10,000 Asia Satellite Telecommunications Holdings Ltd.* (ADR) .......... 276,250
1,000,000 Smartone Telecommunications* .................................... 1,968,250
--------------
TOTAL HONG KONG ................................................ 6,290,692
--------------
HUNGARY (0.8%)
Cable/Cellular
2,800 Matav RT* ....................................................... 918,685
--------------
INDONESIA (0.9%)
Telecommunications
360,000 PT Indosat ...................................................... 1,073,191
--------------
ITALY (2.8%)
Communications Equipment
800,000 Pirelli SpA ..................................................... 1,746,281
--------------
Telecommunications
600,000 Telecom Italia SpA .............................................. 1,655,772
--------------
TOTAL ITALY .................................................... 3,402,053
--------------
JAPAN (3.6%)
Electric & Electrical Equipment
24,000 Sony Corp. (ADR) ................................................ $2,046,000
--------------
Utilities - Telephone
50,000 Nippon Telegraph & Telephone (ADR) .............................. 2,343,750
--------------
TOTAL JAPAN .................................................... 4,389,750
--------------
LUXEMBOURG (1.9%)
Telecommunications
50,000 Millicom International Cellular S.A.* ........................... 2,268,750
--------------
NETHERLANDS (3.8%)
Electronics
50,000 Philips Electronics NV (ADR) ................................... 2,800,000
--------------
Telecommunications
54,000 Koninklijke PTT Nederland NV .................................... 1,890,099
--------------
TOTAL NETHERLANDS ............................................... 4,690,099
--------------
PAKISTAN (1.3%)
Telecommunications
25,000 Pakistan Telecommunications Corp. (GDR)* ........................ 1,550,000
--------------
PERU (1.7%)
Telecommunications
80,000 CPT Telefonica del Peru S.A. (Class B)(ADR) ..................... 2,030,000
--------------
PORTUGAL (1.8%)
Telecommunications
56,400 Portugal Telecom S.A. (ADR) ..................................... 2,171,400
--------------
<PAGE>
RUSSIA (1.7%)
Telecommunications
22 Rostelecom (RDC) - 144A** * ..................................... 823,900
40,000 Vimpel - Communications (ADR)* .................................. 1,195,000
--------------
TOTAL RUSSIA .................................................... 2,018,900
--------------
SPAIN (1.9%)
Utilities - Telephone
80,000 Telefonica de Espana ............................................ 2,310,249
--------------
SWEDEN (1.9%)
Utilities - Telephone
66,000 Ericsson (L.M.) Telephone Co. AB (ADR) .......................... 2,351,250
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
PORTFOLIO OF INVESTMENTS May 31, 1997, continued
NUMBER OF
SHARES VALUE
- -------------------------------------------------------------------------------------------
UNITED KINGDOM (1.3%)
Electric
600,000 Pace Micro Technology PLC ....................................... $ 758,050
--------------
Telecommunications
50,000 COLT Telecom Group PLC (ADR)* ................................... 881,250
--------------
TOTAL UNITED KINGDOM ........................................... 1,639,300
--------------
UNITED STATES (60.3%)
Aerospace & Defense
27,900 Raytheon Co. .................................................... 1,332,225
--------------
Broadcast Media
36,700 American Radio Systems Corp.* ................................... 1,367,075
Cox Communications, Inc.
46,600 (Class A)* ...................................................... 1,019,375
Emmis Broadcasting Corp.
47,200 (Class A)* ...................................................... 1,805,400
20,000 Evergreen Media Corp. (Class A) ................................. 775,000
Heftel Broadcasting Corp.
17,000 (Class A)* ...................................................... 833,000
Tele-Communications, Inc.
71,400 (Class A) ....................................................... 1,079,925
141,196 Westinghouse Electric Corp. ..................................... 2,859,219
--------------
9,738,994
--------------
Business Services
44,700 Cognizant Corp. ................................................. 1,653,900
42,800 LCC International, Inc. (Class A)* .............................. 545,700
34,500 Omnicom Group, Inc. ............................................. 2,001,000
60,100 Orbital Sciences Corp.* ......................................... 991,650
--------------
5,192,250
--------------
Cable Television Equipment
18,700 CIENA Corp.* .................................................... 871,887
81,100 Harmonic Lightwaves, Inc.* ...................................... 1,297,600
--------------
2,169,487
--------------
Communications - Equipment & Software
24,200 Ascend Communications, Inc.* .................................... 1,349,150
20,800 Cascade Communications Corp.* ................................... 793,000
36,000 Cisco Systems, Inc.* ............................................ 2,430,000
19,000 Harris Corp. .................................................... 1,683,875
24,200 Lucent Technologies, Inc. ....................................... 1,539,725
69,700 Pairgain Technologies, Inc. ..................................... $ 1,454,987
35,100 Tellabs, Inc. ................................................... 1,763,775
--------------
11,014,512
--------------
Computer Software
19,800 Microsoft Corp. ................................................. 2,455,200
44,800 Security Dynamics Technologies, Inc. ............................ 1,646,400
114,700 Trusted Information Systems, Inc. ............................... 1,218,687
--------------
5,320,287
--------------
Computer Software & Services
95,800 Checkfree Corp.* ................................................ 1,664,525
100,800 CUC International, Inc. ......................................... 2,318,400
127,700 GT Interactive Software Corp.* .................................. 1,277,000
56,500 Sterling Commerce, Inc.* ........................................ 1,878,625
--------------
7,138,550
--------------
Consumer Services
63,100 E*TRADE Group, Inc.* ............................................ 1,104,250
--------------
Electronics - Defense
27,500 General Motors Corp. (Class H) .................................. 1,515,938
--------------
Electronics - Semiconductors/Components
11,300 Intel Corp. ..................................................... 1,710,538
39,100 LSI Logic Corp.* ................................................ 1,632,425
25,100 Maxim Integrated Products, Inc. ................................. 1,349,125
45,200 Motorola, Inc. .................................................. 3,000,150
20,500 Rambus Inc.* .................................................... 640,625
--------------
8,332,863
--------------
<PAGE>
Entertainment
80,900 TCI Satellite Entertainment, Inc.* .............................. 768,550
--------------
Home Entertainment
55,800 Electronic Arts, Inc.* .......................................... 1,778,625
178,600 T-HQ, Inc.* ..................................................... 1,428,800
--------------
3,207,425
--------------
Media
65,400 Tele-Communication Liberty Media Group (Class A) ................ 1,414,275
184,400 VDI Media* ...................................................... 1,659,600
--------------
3,073,875
--------------
Publishing
50,100 Mecklermedia Corp.* ............................................. 951,900
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
PORTFOLIO OF INVESTMENTS May 31, 1997, continued
NUMBER OF
SHARES VALUE
- -------------------------------------------------------------------------------------------
Retail
14,400 Amazon.Com, Inc.* ............................................... $ 259,200
--------------
Telecommunication Equipment
150,000 Loral Space & Communications Ltd.* .............................. 2,512,500
15,000 Tekelec* ........................................................ 521,250
--------------
3,033,750
--------------
Telecommunications
46,200 Airtouch Communications, Inc. Series B (Conv. Pref.)* ........... 1,362,900
40,000 Globalstar Telecommunications Ltd. .............................. 1,080,000
73,300 LCI International, Inc.* ........................................ 1,777,525
307,000 PLD Telekom, Inc.* .............................................. 1,688,500
50,700 Teleport Communications Group Inc. (Class A)* ................... 1,527,338
44,000 Winstar Communications, Inc. (Units) ++* ........................ 1,100,000
--------------
8,536,263
--------------
Wire & Cable
100,000 Asia Pacific Wire & Cable Corp. ................................ 1,012,500
--------------
TOTAL UNITED STATES ............................................ 73,702,819
--------------
VENEZUELA (1.8%)
Telecommunications
Compania Anonima Nacional Telefonos de Venezuela
60,000 (Class A)(ADR) .................................................. $ 2,227,500
--------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $106,507,664)
98.1% 119,914,470
CASH AND OTHER ASSETS IN EXCESS
OF LIABILITIES ................. 1.9 2,325,846
-------- -------------
NET ASSETS...................... 100.0% $122,240,316
======== =============
<FN>
- ------------
ADR American Depository Receipt.
GDR Global Depository Receipt.
RDC Russian Depository Certificate.
* Non-income producing security.
** Resale is restricted to qualified institutional investors.
++ Consists of more than one class of securities traded together as a
unit; stocks with attached warrants.
(a) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$17,530,264 and the aggregate gross unrealized depreciation is
$4,123,458, resulting in net unrealized appreciation of $13,406,806.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
Summary of Investments May 31, 1997
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- --------------------------------------- -------------- ------------
<S> <C> <C>
Aerospace & Defense..................... $ 1,332,225 1.1%
Broadcast Media......................... 9,738,994 8.0
Business Services....................... 5,192,250 4.2
Cable Television Equipment ............. 3,144,487 2.6
Cable/Cellular.......................... 918,685 0.8
Communications - Equipment & Software .. 11,014,512 9.0
Communications Equipment ............... 1,746,281 1.4
Computer Software....................... 5,320,288 4.4
Computer Software & Services............ 7,138,550 5.8
Consumer Services....................... 1,104,250 0.9
Electric................................ 758,050 0.6
Electronic & Electrical Equipment ...... 2,046,000 1.7
Electronics............................. 2,800,000 2.3
Electronics - Defense................... 1,515,938 1.2
Electronics - Semiconductors/Components 8,332,863 6.8
Entertainment .......................... 768,550 0.6
Home Entertainment...................... 3,207,425 2.6
Media................................... 3,073,875 2.5
Publishing.............................. 951,900 0.8
Retail.................................. 259,200 0.2
Telecommunication Equipment ............ 3,033,750 2.5
Telecommunications ..................... 38,498,648 31.6
Utilities-Telephone..................... 7,005,249 5.7
Wire & Cable............................ 1,012,500 0.8
-------------- ----------
$119,914,470 98.1%
============== ==========
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
- --------------------------- -------------- ------------
<S> <C> <C>
Common Stocks............... $118,551,570 97.0%
Convertible Preferred
Stock...................... 1,362,900 1.1
-------------- ------------
$119,914,470 98.1%
============== ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1997
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $106,507,664)....................................... $119,914,470
Cash.................................................................. 2,413,294
Receivable for:
Investments sold.................................................... 910,450
Shares of beneficial interest sold ................................. 186,034
Dividends........................................................... 95,889
Foreign withholding taxes reclaimed................................. 26,895
Interest............................................................ 25,972
Deferred organizational expenses ..................................... 142,809
Prepaid expenses ..................................................... 22,659
--------------
TOTAL ASSETS........................................................ 123,738,472
--------------
LIABILITIES:
Payable for:
Investments purchased............................................... 1,191,375
Plan of distribution fee............................................ 93,306
Management fee...................................................... 60,017
Investment advisory fee............................................. 40,011
Shares of beneficial interest repurchased........................... 13,887
Accrued expenses and other payables................................... 99,560
--------------
TOTAL LIABILITIES................................................... 1,498,156
--------------
NET ASSETS:
Paid-in-capital....................................................... 108,305,959
Net unrealized appreciation........................................... 13,406,131
Undistributed net realized gain....................................... 528,226
--------------
NET ASSETS.......................................................... $122,240,316
==============
NET ASSET VALUE PER SHARE,
10,694,150 shares outstanding (unlimited shares authorized of $.01
par value)........................................................... $ 11.43
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
For the period August 28, 1996* through May 31, 1997
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $62,966 foreign withholding tax).................. $ 588,159
Interest............................................................ 286,523
-------------
TOTAL INCOME...................................................... 874,682
-------------
EXPENSES
Plan of distribution fee............................................ 758,025
Management fee...................................................... 474,078
Investment advisory fee............................................. 316,052
Transfer agent fees and expenses.................................... 137,527
Professional fees................................................... 61,285
Registration fees................................................... 33,514
Shareholder reports and notices..................................... 32,249
Custodian fees...................................................... 26,596
Organizational expenses............................................. 25,537
Trustees' fees and expenses......................................... 12,824
Other............................................................... 196
-------------
TOTAL EXPENSES.................................................... 1,877,883
-------------
NET INVESTMENT LOSS............................................... (1,003,201)
-------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain (loss) on:
Investments....................................................... 1,508,375
Foreign exchange transactions..................................... (1,035)
-------------
NET GAIN.......................................................... 1,507,340
-------------
Net unrealized appreciation on:
Investments....................................................... 13,406,806
Translation of other assets and liabilities denominated in
foreign currencies............................................... (675)
-------------
NET APPRECIATION.................................................. 13,406,131
-------------
NET GAIN.......................................................... 14,913,471
-------------
NET INCREASE........................................................ $13,910,270
=============
</TABLE>
* Commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
AUGUST 28, 1996*
THROUGH
MAY 31, 1997
- -------------------------------------------------------------- ----------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss ........................................... $ (1,003,201)
Net realized gain.............................................. 1,507,340
Net unrealized appreciation ................................... 13,406,131
----------------
NET INCREASE................................................. 13,910,270
Net increase from transactions in shares of beneficial
interest...................................................... 108,230,046
----------------
NET INCREASE................................................. 122,140,316
NET ASSETS:
Beginning of period............................................ 100,000
----------------
END OF PERIOD................................................ $122,240,316
================
</TABLE>
* Commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1997
1. ORGANIZATIONAL AND ACCOUNTING POLICIES
TCW/DW Global Telecom Trust (the "Fund") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as a diversified, open-end
management investment company. The Fund's investment objective is long-term
capital appreciation. The Fund seeks to achieve its objective by investing
primarily in securities of domestic and foreign companies operating in all
aspects of the telecommunications and information industries. The Fund was
organized as a Massachusetts business trust on March 28, 1996 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. ("InterCapital"), an affiliate of Dean Witter Services
Company Inc. (the "Manager"), to effect the Fund's initial capitalization.
The Fund commenced operations on August 28, 1996.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures. Actual results could differ
from those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American 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 Adviser); (2) 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; (3) when market quotations are not
readily available, including circumstances under which it is determined by
TCW Funds Management, Inc. (the "Adviser") 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); (4)
certain portfolio securities may be valued by an outside pricing service
approved by the Trustees. The pricing service may utilize a matrix system
incorporating security quality, maturity and coupon as the evaluation model
parameters, and/or research and evaluations by its staff, including review of
broker-dealer market price quotations, if available, in determining what it
believes is the fair valuation of the securities valued by such pricing
service; and (5) short-term debt securities having a maturity date of more
than sixty days at time of purchase are valued on a mark-to-market basis
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1997, continued
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. Dividend income and other distributions are recorded on the
ex-dividend date except for certain dividends on foreign securities which are
recorded as soon as the Fund is informed after the ex-dividend date.
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
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.
D. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward
foreign currency contracts which are valued daily at the appropriate exchange
rates. The resultant unrealized exchange gains and losses are included in the
Statement of Operations as unrealized foreign currency gain or loss and in
the Statement of Assets and Liabilities as part of the related foreign
currency denominated asset or liability. 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.
E. 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.
F. 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
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1997, continued
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.
G. ORGANIZATIONAL EXPENSES -- InterCapital paid the organizational expenses
in the amount of approximately $168,000 which has been reimbursed for the
full amount thereof. 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. MANAGEMENT AGREEMENT
Pursuant to a Management Agreement, the Fund pays the Manager a management
fee, accrued daily and payable monthly, by applying the annual rate of 0.60%
to the net assets of the Fund determined as of the close of each business
day.
Under the terms of the Management Agreement, the 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 Manager. The Manager also bears the cost of telephone
services, heat, light, power and other utilities provided to the Fund.
3. INVESTMENT ADVISORY AGREEMENT
Pursuant to an Investment Advisory Agreement, the Fund pays the Adviser an
advisory fee, accrued daily and payable monthly, by applying the annual rate
of 0.40% to the net assets of the Fund determined as of the close of each
business day.
Under the terms of the Investment Advisory Agreement, the Fund has retained
the Adviser to invest the Fund's assets, including placing orders for the
purchase and sale of portfolio securities. The Adviser obtains and evaluates
such information and advice relating to the economy, securities markets, and
specific securities as it considers necessary or useful to continuously
manage the assets of the Fund in a manner
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1997, continued
consistent with its investment objective. In addition, the Adviser pays the
salaries of all personnel, including officers of the Fund, who are employees
of the Adviser.
4. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the 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 1.0% of the lesser of: (a) the average daily
aggregate gross sales of the Fund's shares since the Fund's inception (not
including reinvestment of dividend or capital gain distributions) less the
average daily aggregate net asset value of the Fund's shares redeemed since
the Fund's inception upon which a contingent deferred sales charge has been
imposed or upon which such charge has been waived; or (b) the Fund's average
daily net assets. Amounts paid under the Plan are paid to the Distributor to
compensate it for the services provided and the expenses borne by it and
others in the distribution of the Fund's shares, including the payment of
commissions for sales of the Fund's shares and incentive compensation to, and
expenses of, the account executives of Dean Witter Reynolds Inc. ("DWR"), an
affiliate of the Manager and Distributor, and others who engage in or support
distribution of the Fund's shares or who service shareholder accounts,
including overhead and telephone expenses, printing and distribution of
prospectuses and reports used in connection with the offering of the Fund's
shares to other than current shareholders and preparation, printing and
distribution of sales literature and advertising materials. In addition, the
Distributor may utilize fees paid pursuant to the Plan to compensate DWR and
other selected broker-dealers for their opportunity costs in advancing such
amounts, which compensation would be in the form of a carrying charge on any
unreimbursed distribution expenses.
Provided that the Plan continues in effect, any cumulative expenses incurred
but not yet recovered, may be recovered through future distribution fees from
the Fund and contingent deferred sales charges from the Fund's shareholders.
Although there is no legal obligation for the Fund to pay expenses incurred
in excess of payments made to the Distributor under the Plan and the proceeds
of contingent deferred sales charges paid by investors upon redemption of
shares, if for any reason the Plan is terminated, the Trustees will consider
at that time the manner in which to treat such expenses. The Distributor has
advised the Fund that such excess amounts, including carrying charges,
totaled $6,967,812 at May 31, 1997.
The Distributor has informed the Fund that for the period ended May 31, 1997,
it received approximately $253,000 in contingent deferred sales charges from
certain redemptions of the Fund's shares.
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1997, continued
5. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the period ended May 31, 1997
aggregated $178,435,703 and $73,436,415, respectively.
Dean Witter Trust Company, an affiliate of the Manager and Distributor, is
the Fund's transfer agent. At May 31, 1997, the Fund had transfer agent fees
and expenses payable of approximately $17,000.
6. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
AUGUST 28, 1996*
THROUGH
MAY 31, 1997
----------------------------
SHARES AMOUNT
--------------- ------------
<S> <C> <C>
Sold 11,662,388 $118,594,978
Repurchased (978,238) (10,364,932)
------------ --------------
Net increase 10,684,150 $108,230,046
============ ==============
</TABLE>
- ------------
* Commencement of operations.
7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS
The Fund may enter into forward foreign currency contracts ("forward
contracts") to facilitate settlement of foreign currency denominated
portfolio transactions or to manage foreign currency exposure associated with
foreign currency denominated securities.
Forward contracts involve elements of market risk in excess of the amounts
reflected in the Statement of Assets and Liabilities. The Fund bears the risk
of an unfavorable change in foreign exchange rates underlying the forward
contracts. Risks may also arise upon entering into these contracts from the
potential inability of the counterparties to meet the terms of their
contracts.
At May 31, 1997, there were no outstanding forward contracts.
8. FEDERAL INCOME TAX STATUS
As of May 31, 1997, the Fund had permanent book/tax differences primarily
attributable to a net operating loss. To reflect reclassifications arising
from these differences, paid-in-capital was charged $24,087, undistributed
net realized gain was charged $979,114 and net investment loss was credited
$1,003,201.
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1997, continued
9. SUBSEQUENT EVENT
On June 30, 1997, the Fund's Board of Trustees approved a proposal to adopt a
multiple class share structure. Through this arrangement, the Fund will offer
four classes of shares with various sales charges, ongoing fees and other
features. This conversion is scheduled to take place on July 28, 1997.
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout the period:
<TABLE>
<CAPTION>
FOR THE PERIOD
AUGUST 28, 1996*
THROUGH
MAY 31, 1997
- --------------------------------------- ----------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
$
Net asset value, beginning of period ... 10.00
----------------
Net investment loss..................... (0.09)
Net realized and unrealized gain ....... 1.52
----------------
Total from investment operations ....... 1.43
----------------
$
Net asset value, end of period.......... 11.43
================
TOTAL INVESTMENT RETURN+................ 14.30%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................ 2.38 %(2)
Net investment loss..................... (1.27)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands.............................. $122,240
Portfolio turnover rate................. 80%(1)
Average commission rate paid............ $ 0.0283
</TABLE>
- ------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW GLOBAL TELECOM TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND TRUSTEES
OF TCW/DW GLOBAL TELECOM 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 TCW/DW Global
Telecom Trust (the "Fund") at May 31, 1997, and the results of its
operations, the changes in its net assets and the financial highlights for
the period August 28, 1996 (commencement of operations) through May 31, 1997,
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 audit. We conducted our audit 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 audit, which included
confirmation of securities at May 31, 1997 by correspondence with the
custodian and brokers, provides a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
July 10, 1997
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
TRUSTEES
John C. Argue
Richard M. DeMartini
Charles A. Fiumefreddo
John R. Haire
Dr. Manuel H. Johnson
Thomas E. Larkin, Jr.
Michael E. Nugent
John L. Schroeder
Marc L. Stern
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Thomas E. Larkin, Jr.
President
Barry Fink
Vice President, Secretary and
General Counsel
Robert M. Hanisee
Vice President
John A. Healey
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
MANAGER
Dean Witter Services Company Inc.
ADVISER
TCW Funds Management, Inc.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officer 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.
T C W / D W
GLOBAL
TELECOM TRUST
ANNUAL REPORT
MAY 31, 1997
