<PAGE>
TCW/DW NORTH AMERICAN GOVERNMENT INCOME TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- -----------------------------------------------------------------------------
Over the last six months, accumulating evidence of a slowdown in economic
growth and minimal inflationary pressure in the United States has led to a
decline in long-term bond yields. An example of a braking economy is
reflected in housing starts reported for the first quarter, which fell by
200,000 units from peak levels reached last year, as well as the 852,000-unit
drop in automobile purchases (on an annualized basis). Also, businesses have
trimmed capital spending plans and unemployment has edged higher. While the
weakness in the U.S. dollar remains of major concern to the Federal Reserve
Board because of its inflationary implications, the economic slowdown,
coupled with high real interest rates and other macroeconomic factors portend
further rate declines over the longer term.
The collapse of the Mexican economy has put a significant damper on the
future of U.S. exports. The dominant theme within the Mexican sector has been
peso volatility since the unexpected devaluation of the currency in December.
Only recently has the peso stabilized, bringing down yields on both peso- and
dollar-denominated Mexican debt.
Although the Canadian bond market recently has appeared attractive, the
high costs related to hedging currency risk have reduced the relative value
of this sector and reinforced the portfolio manager's decision not to commit
assets to Canada at this time.
Following one of the most volatile periods for fixed-income securities on
record, TCW/DW North American Government Income Trust's net asset value
declined from $8.89 to $8.09 per share over the six-months ended April 30,
1995. Based on this change, the Fund's total return for the period was -5.25
percent. This return assumes the reinvestment of income distributions
totaling approximately $0.34 per share. As a result of net foreign currency
losses, these distributions may be considered a nontaxable return of capital
at year end for federal income tax purposes, based on currently available
information.
INVESTMENT SECTORS
Bearing in mind the problems in Mexico, TCW has geographically allocated
approximately 80 percent of the Fund's portfolio investments in the U.S. and
20 percent in Mexico (in U.S. dollar-denominated securities).
United States
The slowdown in the housing sector has diminished the supply of new
mortgage loans, causing the volume of new agency pass-through securities to
reach a seven-year low in the first quarter of 1995. Similarly, issuance of
new collateralized mortgage obligations (CMOs) reached a ten-year low.
Limited supply has helped support price levels and recently has been a
positive factor for the performance of mortgage-backed securities. The Fund's
investment adviser, TCW Funds Management, Inc. (TCW), has maintained its
strategy of focusing on high-quality, high-yielding mortgage-backed
securities with call protection. In that connection, the Fund's portfolio
manager purchases various types of AAA-rated CMOs, when they are attractively
priced relative to pass-throughs and are therefore believed likely to deliver
higher yields and total returns. A number of factors currently support TCW's
favorable outlook for the U.S. mortgage-backed securities sector. For
instance, TCW expects normal seasonal factors and the recent decline in
interest rates to speed mortgage prepayment rates later this year, benefiting
discounted and call-protected mortgage- backed securities. Moreover, TCW
anticipates cash inflows to mortgage-backed mutual funds to turn positive
again later in 1995, as investors return to the fixed-income market.
<PAGE>
Mexico
The Zedillo administration's abrupt and unexpected decision to devalue the
peso last December led to an outflow of capital from Mexico and an economic
crisis. The United States and the International Monetary Fund sought to
stabilize the situation by making available to Mexico $40 billion to pay
maturing dollar-denominated obligations. Mexico has been able to meet the
stringent guidelines required to accept the loan, and will most likely need
to utilize all of the money in order to meet its obligations. The peso
depreciated by more than 50 percent, from 3.5 to 7.5 pesos per dollar between
early December 1994 and mid March 1995, when the funds from the stabilization
package became available, and has since recovered to 6.0 pesos per dollar.
Simultaneously, yields on Mexican Treasury bills (Cetes) rose from 15 percent
to 90 percent. (Between late December and early January, the Fund's portfolio
managers sold all Cetes at an average rate of 25 percent.) Yields on Cetes
are currently at 60 percent and have been declining at a rate of 5 percent
per week. Dollar-linked Mexican bond (tesobonos) yields have moved in tandem
with those on Cetes. When purchased by the Fund in late 1994, tesobonos were
yielding 16 percent; by early March 1995, tesobono yields had risen to 30
percent. Currently, tesobonos are yielding 15 percent. This contributed to
the increase in the Fund's net asset value for the six months ended April 30,
1995, and demonstrated that TCW's decision to invest in dollar-payable
tesobonos was sound.
Canada
Over the past six months, yields in Canada have declined in line with
yields in the U.S. Moody's recently downgraded Canada's domestic debt from
AAA to AA1 and its foreign debt from AA1 to AA2. As mentioned earlier, the
combination of high currency-hedging costs in this market, coupled with the
unattractive yield relationship of Canadian government bonds versus U.S.
government bonds, has kept the Fund out of this sector since November 1994.
TCW continues to actively monitor the Canadian government bond market for
opportunities.
OUTLOOK
Over the past six months we have seen significant improvement in the U.S.
fixed-income markets, in general, and the mortgage-backed securities sector,
in particular. TCW expects real economic growth in 1995 to continue to slow
relative to 1994. Revised gross domestic product growth figures calculate the
U.S. economy to have grown approximately four percent last year; estimates
for 1995 are for growth of closer to three percent. It appears that the
Federal Reserve Board is satisfied for the time being with the effect of its
tighter monetary policy, which has thus far successfully held inflationary
pressure at bay.
The situation in Mexico has improved over the past several months, but
remains volatile. Recently, however, Mexico's finance minister acknowledged
that the government's short-term debt-service obligations were becoming
increasingly less burdensome. TCW is viewing the movement of the peso as a
proxy for Mexican stability, and believes that as long as the peso stays
within a trading range of 5.5 to 6 per U.S. dollar, Mexico is complying with
the requirements set for the continuation of stabilization funds. Although
the dollar-linked Mexican bonds held in the portfolio are currently yielding
an average of 27 percent, yields will change as the peso continues to
stabilize. For now, unless things change significantly, the Fund will
continue to hold U.S. dollar-linked tesobonos in the Mexican portion of the
Fund. TCW believes that the pressure on Mexican bond prices and yields will
be much less drastic going forward.
We appreciate your support of TCW/DW North American Government Income
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 NORTH AMERICAN GOVERNMENT INCOME TRUST
Portfolio of Investments April 30, 1995 (unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS) COUPON RATE MATURITY DATES VALUE
- ----------- -------------- ----------------- --------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATION (6.7%)
$49,300 U.S. Treasury Note (IDENTIFIED COST $48,637,530) ... 4.25 % 07/31/95 $ 49,084,312
--------------
MORTGAGE-BACKED SECURITIES (21.5%)
U.S. GOVERNMENT AGENCIES
18,743 Federal Home Loan Mortgage Corp. ARM ................ 6.259++ 03/01/25 19,094,077
28,672 Federal Home Loan Mortgage Corp. PC Gold ............ 6.00 11/01/00-12/01/00 27,471,219
13,876 Federal Home Loan Mortgage Corp. PC Gold ............ 7.00 02/01/98 13,832,182
2,533 Federal National Mortgage Assoc. .................... 9.50 06/01/20 2,640,156
47,271 Government National Mortgage Assoc. II .............. 6.00 08/20/22 46,827,633
16,938 Government National Mortgage Assoc. II .............. 6.50 06/20/22 16,943,046
17,185 Government National Mortgage Assoc. II .............. 6.75 04/20/23 17,286,930
12,685 Government National Mortgage Assoc. II .............. 7.00 10/20/24-12/20/24 12,831,326
--------------
TOTAL MORTGAGE-BACKED SECURITIES
(IDENTIFIED COST $159,480,735) ...................................................... 156,926,569
--------------
COLLATERALIZED MORTGAGE
OBLIGATIONS (45.3%)
U.S. GOVERNMENT AGENCIES (42.3%)
16,508 Federal Home Loan Mortgage Corp. 1067 I ............. 8.00 04/15/21 15,919,892
45 Federal Home Loan Mortgage Corp. 1370 K (PAC I/O) ..1089.16 09/15/22 1,360,638
10,966 Federal Home Loan Mortgage Corp. 1504 A (PAC) ...... 7.00 07/15/22 10,451,718
2,257 Federal Home Loan Mortgage Corp. 1508 Q ............. 6.00+ 05/15/23 1,880,007
13,998 Federal Home Loan Mortgage Corp. 1560 A (PAC) ...... 6.50 02/15/23 12,698,583
13,420 Federal Home Loan Mortgage Corp. 1606 LB ............ 5.785+ 05/15/08 8,710,319
28,102 Federal Home Loan Mortgage Corp. 1610 A ............. 6.50 11/15/23 25,985,185
18,355 Federal Home Loan Mortgage Corp. G 15 P ............. 6.50 08/25/20 16,376,054
50,650 Federal Home Loan Mortgage Corp. G 21 M ............. 6.50 10/25/23 46,217,724
20,973 Federal National Mortgage Assoc. 1993-121 A ........ 7.00 10/25/22 20,278,545
18,304 Federal National Mortgage Assoc. 1993-138 MA (PAC) . 7.00 05/25/23 17,583,479
54,098 Federal National Mortgage Assoc. 1993-139 M (PAC) .. 6.50 08/25/23 48,687,789
10,394 Federal National Mortgage Assoc. 1993-163 A ........ 7.00 03/25/23 9,933,075
9,181 Federal National Mortgage Assoc. 1993-163 SB ....... 10.00+ 04/25/23 7,579,614
9,017 Federal National Mortgage Assoc. 1993-165 SE ....... 14.14+ 09/25/23 5,525,988
15,905 Federal National Mortgage Assoc. 1993-166 M (PAC) .. 7.00 06/25/23 14,920,589
22,036 Federal National Mortgage Assoc. 1993-167 M (PAC) .. 6.00 09/25/23 19,680,807
17,857 Federal National Mortgage Assoc. 1993-179 SJ ....... 14.14+ 10/25/23 11,077,014
17,519 Federal National Mortgage Assoc. G 1993-31 A (PAC) . 6.50 12/25/21 14,814,485
--------------
309,681,505
--------------
PRIVATE ISSUES (3.0%)
2,358 Citicorp Mortgage Securities, Inc 1991-1 A ......... 8.50 03/25/06 2,292,284
12,232 CountryWide Funding Corp. 1993-7 AS3 (TAC) ......... 14.328+ 11/25/23 10,741,421
4,063 General Electric Capital Mortgage Services, Inc.
1992-11 M .......................................... 8.00 09/25/22 3,933,021
4,910 Resolution Trust Corp. 1991-6 C1 .................... 9.00 09/25/28 4,848,607
--------------
21,815,333
--------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(IDENTIFIED COST $377,721,425) ...................................................... 331,496,838
--------------
</TABLE>
<PAGE>
TCW/DW NORTH AMERICAN GOVERNMENT INCOME TRUST
Portfolio of Investments April 30, 1995 (unaudited) (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN
THOUSANDS) COUPON RATE MATURITY DATES VALUE
- ----------- -------------- ----------------- --------------
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENTS (28.7%)
MEXICAN GOVERNMENT SECURITIES (A) (20.5%)
$158,655 Tesobonos (Amortized Cost $145,664,951) .............18.89-42.50% 05/04/95-02/15/96 $149,622,383
--------------
UNITED STATES (8.2%)
COMMERCIAL PAPER (A) (0.3%)
CHEMICALS
2,355 BASF Corp. (Amortized Cost $2,355,000) .............. 5.93 05/01/95 2,355,000
--------------
U.S GOVERNMENT AGENCIES (A) (6.3%)
25,740 Federal Home Loan Mortgage Corp. .................... 5.85 05/01/95 25,740,001
20,000 Federal Home Loan Mortgage Corp. .................... 5.87 05/22/95 19,931,516
--------------
TOTAL U.S. GOVERNMENT AGENCIES
(Amortized Cost $45,671,517) ........................................................ 45,671,517
--------------
REPURCHASE AGREEMENT (1.6%)
11,733 The Bank of New York
(dated 04/28/95, proceeds $11,738,896;
collateralized by $10,000,000, U.S. Treasury Note
5.00% due 01/31/99, valued at $9,525,035; $553,573
U.S. Treasury Note 8.75% due 10/15/97, valued at
$580,417 and U.S. Treasury Strip 5.82% due
05/15/97, valued at $2,062,810.)
(Identified Cost $11,732,968) ...................... 6.0625 05/01/95 11,732,968
--------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $205,424,436) ...................................................... 209,381,868
--------------
TOTAL INVESTMENTS
(IDENTIFIED COST $791,264,126) (B) .......................................102.2% 746,889,587
LIABILITIES IN EXCESS OF OTHER ASSETS ..................................... (2.2) (16,362,087)
-------- --------------
NET ASSETS ................................................................100.0% $730,527,500
======== ==============
- --------------------
<FN>
ARM Adjustable rate mortgage.
I/O Interest-only securities.
PC Participation Certificate.
PAC Planned Amortization Class.
TAC Targeted Amortization Class.
+ Inverse floater--coupon rate moves inversely to a designated index, such
as LIBOR (London Inter-Bank Offered Rate) or COFI (Cost of Funds Index),
typically at a multiple of the changes of the relevant index rate.
++ Floating rate security. Rate shown is the rate in effect at April 30,
1995.
(a) Securities were purchased on a discount basis. The interest rate shown
has been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost of investments for federal income tax purposes is
$791,264,126; the aggregate gross unrealized appreciation is
$7,649,162 and the aggregate gross unrealized depreciation is
$52,023,701, resulting in net unrealized depreciation of $44,374,539.
</TABLE>
See Notes to Financial Statements
<PAGE>
TCW/DW NORTH AMERICAN GOVERNMENT INCOME TRUST
Financial Statements
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1995 (unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(Identified cost $791,264,126) ........... $ 746,889,587
Receivable for:
Interest ................................. 3,408,936
Shares of beneficial interest sold ...... 1,238,109
Deferred organizational expenses .......... 90,361
Prepaid expenses and other assets ........ 425,479
---------------
TOTAL ASSETS ............................ 752,052,472
---------------
LIABILITIES:
Payable for:
Investments purchased .................... 19,174,222
Shares of beneficial interest repurchased 583,349
Dividends to shareholders ................ 523,395
Plan of distribution fee ................. 452,914
Management fee ........................... 235,515
Investment advisory fee .................. 157,010
Accrued expenses and other payables ...... 398,567
Contingencies (Note 10) ...................
---------------
TOTAL LIABILITIES ....................... 21,524,972
---------------
NET ASSETS:
Paid-in-capital ........................... 1,082,471,879
Net unrealized depreciation ............... (44,374,539)
Accumulated undistributed net investment
income ................................... 228,206
Accumulated net realized loss ............. (307,798,046)
---------------
NET ASSETS .............................. $ 730,527,500
===============
NET ASSET VALUE PER SHARE, 90,278,948
shares outstanding (unlimited shares
authorized of $.01 par value) ............ $8.09
===============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended April 30, 1995 (unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INTEREST INCOME ......................... $ 44,766,669
---------------
EXPENSES
Plan of distribution fee ............... 3,064,172
Management fee ......................... 1,766,280
Investment advisory fee ................ 1,177,520
Transfer agent fees and expenses ...... 504,255
Registration fees ...................... 214,205
Professional fees ...................... 158,935
Custodian fees ......................... 105,594
Shareholder reports and notices ....... 55,621
Organizational expenses ................ 19,825
Trustees' fees and expenses ............ 17,600
Other .................................. 59,058
---------------
TOTAL EXPENSES ........................ 7,143,065
---------------
NET INVESTMENT INCOME ................ 37,623,604
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss on:
Investments ............................ (158,779,092)
Foreign exchange transactions .......... (95,900,549)
---------------
Total Loss ............................ (254,679,641)
Net change in unrealized depreciation on
investments ............................ 141,437,199
---------------
NET LOSS .............................. (113,242,442)
---------------
NET INCREASE ......................... $ (75,618,838)
===============
</TABLE>
See Notes to Financial Statements
<PAGE>
TCW/DW NORTH AMERICAN GOVERNMENT INCOME TRUST
Financial Statements
- -----------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
APRIL 30, 1995 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 1994
------------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ........................................... $ 37,623,604 $ 159,532,551
Net realized loss ............................................... (254,679,641) (106,304,030)
Net change in unrealized depreciation ........................... 141,437,199 (182,144,828)
------------------------ ------------------
Net decrease ................................................... (75,618,838) (128,916,307)
------------------------ ------------------
Dividends and distributions to shareholders from:
Net investment income ........................................... (36,086,450) (111,457,152)
Net realized gain ............................................... -- (6,378,851)
Paid-in-capital ................................................. -- (56,645,215)
------------------------ ------------------
Total .......................................................... (36,086,450) (174,481,218)
------------------------ ------------------
Net decrease from transactions in shares of beneficial interest . (517,378,527) (1,323,313,917)
------------------------ ------------------
Total decrease .................................................. (629,083,815) (1,626,711,442)
NET ASSETS:
Beginning of period .............................................. 1,359,611,315 2,986,322,757
------------------------ ------------------
END OF PERIOD (including undistributed net investment income of
$228,206 and distribution in excess of net investment income of
$1,308,948, respectively) ....................................... $ 730,527,500 $ 1,359,611,315
======================== ==================
</TABLE>
See Notes to Financial Statements
<PAGE>
TCW/DW NORTH AMERICAN GOVERNMENT INCOME TRUST
Notes to Financial Statements (unaudited)
- -----------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- TCW/DW North American Government
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 February 19, 1992 and commenced operations on July 31, 1992.
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 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; (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 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); and (4) short-term debt securities
having a maturity date of more than sixty days at time of purchase are
valued on a mark-to-market basis until sixty days prior to maturity and
thereafter at amortized cost based on their value on the 61st day.
Short-term debt securities having a maturity date of sixty days or less
at the time of purchase are valued at amortized cost.
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. In determining net investment income, the Fund
amortizes premiums and accretes discounts on securities purchased based
on the respective life of the 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 currencies
gain or loss. The Fund records realized gains or losses on delivery of
the currency or at the time the forward contract is extinguished
(compensated) by entering into a closing transaction prior to delivery.
E. Dollar Rolls -- The Fund may enter into dollar rolls in which the
Fund sells securities for delivery and simultaneously contracts to
repurchase substantially similar securities at the current sales price
on
<PAGE>
TCW/DW NORTH AMERICAN GOVERNMENT INCOME TRUST
Notes to Financial Statements (unaudited) (continued)
- -----------------------------------------------------------------------------
a specified future date. The difference between the current sales price
and the lower forward price for the future purchase (often referred to
as the "drop") is amortized over the life of the dollar roll.
F. Federal Income Tax Status -- It is the Fund's policy to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to its
shareholders. Accordingly, no federal income tax provision is required.
G. Dividends and Distributions to Shareholders -- The Fund records
dividends and distributions to its shareholders on the 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 -- The Fund has reimbursed Dean Witter
InterCapital Inc., an affiliate of Dean Witter Services Company Inc.
(the "Manager"), for $200,000. Such expenses have been deferred and are
being amortized by the Fund 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
its 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: 0.39% to the average daily net assets of the
Fund's not exceeding $3 billion and 0.36% to the average daily net assets
exceeding $3 billion. 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 with TCW Funds Management, Inc. (the "Adviser"), the Fund pays the
Adviser an advisory fee, calculated 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: 0.26% to the average daily net assets of the Fund
not exceeding $3 billion and 0.24% to the average daily net assets exceeding
$3 billion. 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 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.
<PAGE>
TCW/DW NORTH AMERICAN GOVERNMENT INCOME TRUST
Notes to Financial Statements (unaudited) (continued)
- -----------------------------------------------------------------------------
4. PLAN OF DISTRIBUTION -- Dean Witter Distributors Inc. (the "Distributor"),
an affiliate of the Manager, is the distributor of the Fund's shares and, in
accordance with a Plan of Distribution (the "Plan") pursuant to Rule 12b-1
under the Act, finances certain expenses in connection with the distribution
of shares of the Fund. Under the Plan, the Distributor bears the expense of
all promotional and distribution related activities on behalf of the Fund,
except for expenses that the Trustees determine to reimburse, as described
below. The following activities and services may be provided by the
Distributor under the Plan: (1) compensation to sales representatives of Dean
Witter Reynolds Inc., ("DWR") an affiliate of the Manager and Distributor,
and other broker-dealers; (2) sales incentives and bonuses to sales
representatives and to marketing personnel in connection with promoting sales
of the Fund's shares; (3) expenses incurred in connection with promoting
sales of the Fund's shares; (4) preparing and distributing sales literature;
and (5) providing advertising and promotional activities, including direct
mail solicitation and television, radio, newspaper, magazine and other media
advertisements. The Fund is authorized to reimburse the Distributor for
specific expenses the Distributor incurs or plans to incur in promoting the
distribution of the Fund's shares. The amount of each monthly reimbursement
payment may in no event exceed an amount equal to a payment at the annual
rate of 0.75% of the Fund's average daily net assets during the month.
Expenses incurred pursuant to the Plan in any fiscal year in excess of 0.75%
of the Fund's average daily net assets will not be reimbursed by the Fund
through payments accrued in any subsequent fiscal year. For the six months
ended April 30, 1995, the distribution fee was accrued at the annual rate of
0.68%.
5. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES -- The cost of
purchases and proceeds from sales/prepayments of portfolio securities,
excluding short-term investments, for the six months ended April 30, 1995
were $188,698,491 and $526,307,774, respectively. Dean Witter Trust Company,
an affiliate of the Manager and Distributor, is the Fund's transfer agent. At
April 30, 1995, the Fund had transfer agent fees and expenses payable of
approximately $193,500.
6. SHARES OF BENEFICIAL INTEREST -- Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED APRIL FOR THE YEAR ENDED OCTOBER 31,
30, 1995 1994
------------------------------ --------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Sold ......................... 4,373,491 $ 36,054,187 156,152,730 $ 1,548,418,896
Reinvestment of dividends and
distributions ............... 3,421,232 27,699,264 14,740,453 141,335,062
-------------- -------------- --------------- ---------------
7,794,723 63,753,451 170,893,183 1,689,753,958
Repurchased .................. (70,425,888) (581,131,978) (313,455,527) (3,013,067,875)
-------------- -------------- --------------- ---------------
Net increase ................. (62,631,165) $(517,378,527) (142,562,344) $(1,323,313,917)
============== ============== =============== ===============
</TABLE>
7. FEDERAL INCOME TAX STATUS -- At October 31, 1994, the Fund had approximate
net capital loss carryovers of $53,118,000 which will be available through
October 31, 2002 and $5,235,000 which will be available through October 31,
2001 to offset future capital gains to the extent provided by regulations. As
of October 31, 1994, the Fund had temporary book/tax differences primarily
attributable to the mark-to- market of open forward foreign currency
contracts and dividend payable and permanent book/tax differences primarily
attributable to foreign currency losses. Based on the information currently
available, it appears likely that all or a substantial portion of the
distributions made for the six months ended April 30, 1995, may be considered
a nontaxable return-of-capital at year-end for federal income tax purposes.
<PAGE>
TCW/DW NORTH AMERICAN GOVERNMENT INCOME TRUST
Notes to Financial Statements (unaudited) (continued)
- -----------------------------------------------------------------------------
8. REVERSE REPURCHASE AND DOLLAR ROLL AGREEMENTS -- Reverse repurchase
agreements and dollar rolls involve the risk that the market value of the
securities the Fund is obligated to repurchase under the agreement may
decline below the repurchase price. In the event the buyer of securities
under a reverse repurchase agreement or dollar roll files for bankruptcy or
becomes insolvent, the Fund's use of proceeds of the agreement may be
restricted pending a determination by the other party, or its trustee or
receiver, whether to enforce the Fund's obligation to repurchase the
securities and the Fund's use of the proceeds of the reverse repurchase
agreement may also effectively be restricted pending such decision. Reverse
repurchase agreements are collateralized by Fund securities with a market
value in excess of the Fund's obligation under the contract.
9. 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 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.
10. LITIGATION -- Several purported class action lawsuits, which have been
consolidated for pretrial purposes, were instituted in 1995 in the United
States District Court, in New York, against the Fund, some of its Trustees
and officers, its underwriter and distributor, the Adviser, the Manager, and
other defendants, by certain shareholders of the Fund. The consolidated
amended complaint asserts claims under the Securities Act of 1933 and
generally alleges that the defendants made indequate and misleading
disclosures in the prospectuses for the Fund, in particular as such
disclosures relate to the nature and risks of the Fund's investments in
mortgage-backed securities and Mexican securities. The plaintiffs also
challenge certain fees paid by the Fund as excessive. Damages are sought in
an unspecified amount. No defendant has yet responded to the consolidated
amended complaint.
Three additional purported class actions relating to the Fund were
instituted, one in United States District Court in New Jersey and two in the
Superior Court for the State of California. Plaintiffs' Counsel in those
actions have agreed to discontinue them in the courts in which they were
originally filed so that they may be consolidated with the related action
already pending in New York.
The ultimate outcome of these matters is not presently determinable, and
no provision has been made in the Fund's financial statements for the effect,
if any, of such matters.
<PAGE>
TCW/DW NORTH AMERICAN GOVERNMENT INCOME TRUST
Financial Highlights
- -----------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED FOR THE YEAR FOR THE YEAR JULY 31, 1992*
APRIL 30, 1995 ENDED OCTOBER ENDED OCTOBER THROUGH OCTOBER
(UNAUDITED) 31, 1994 31, 1993 31, 1992
-------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .... $ 8.89 $10.11 $ 9.96 $10.00
-------------- ---------------- ---------------- ----------------
Net investment income .................... 0.35 0.68 0.77 0.18
Net realized and unrealized gain (loss) . (0.81) (1.18) 0.14 (0.05)
-------------- ---------------- ---------------- ----------------
Total from investment operations ........ (0.46) (0.50) 0.91 0.13
-------------- ---------------- ---------------- ----------------
Less dividends and distributions from:
Net investment income ................... (0.34) (0.47) (0.76) (0.17)
Net capital gain ........................ -- (0.02) -- --
Paid-in-capital ......................... -- (0.23) -- --
-------------- ---------------- ---------------- ----------------
Total dividends and distributions ....... (0.34) (0.72) (0.76) (0.17)
-------------- ---------------- ---------------- ----------------
Net asset value, end of period ........... $ 8.09 $ 8.89 $10.11 $ 9.96
============== ================ ================ ================
TOTAL INVESTMENT RETURN+ ................. (5.25)%(1) (5.06)% 9.35% 1.28%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ................................ 1.58%(2) 1.52% 1.54% 1.80%(2)
Net investment income ................... 8.31%(2) 6.85% 7.78% 8.36%(2)
SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $730,528 $1,359,611 $2,986,323 $762,377
Portfolio turnover rate .................. 30% (1) 27% 77% 2%(1)
<FN>
- ------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge.
(1) Not annualized.
(2) Annualized.
</TABLE>
See Notes to Financial Statements
<PAGE>
TRUSTEES
Jack C. Argue
Richard M. DeMartini
Charles A. Fiumefreddo
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Thomas E. Larkin, Jr.
Michael E. Nugent
John L. Schroeder
Marc I. Stern
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Thomas E. Larkin, Jr.
President
Sheldon Curtis
Vice President, Secretary and
General Counsel
Philip A. Barach
Vice President
James M. Goldberg
Vice President
Jeffrey E. Gundlach
Vice President
Douglas R. Metcalf
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.
The financial statements included herein have been taken from the records of
the Trust 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
Trust. For more detailed information about the Trust, its officers and
trustees, fees, expenses and other pertinent information, please see the
prospectus of the Trust.
This report is not authorized for distribution to prospective investors in
the Trust unless preceded or accompanied by an effective
prospectus.
TCW/DW
NORTH AMERICAN
GOVERNMENT
INCOME TRUST
Semiannual Report
April 30, 1995
