<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND Two World Trade Center,
LETTER TO THE SHAREHOLDERS July 31, 1998 New York, New York 10048
DEAR SHAREHOLDER:
Latin American equity markets suffered declines overall during the six months
ended July 31, 1998. This downturn was due in part to concerns about the
persistent weakness of the Japanese yen, and the recessionary fallout from the
Asian currency crisis. Investors have also been concerned about the impact of
lower commodity prices on current account and fiscal deficits, which have
dampened the region's near-term economic outlook. Regional economic growth is
expected to slow to around 3.0 percent in 1998, down from 5.2 percent in 1997.
PERFORMANCE AND PORTFOLIO COMPOSITION
In this depressed market environment, TCW/DW Latin American Growth Fund's Class
B shares posted a total return of -5.05 percent during the six months ended
July 31, 1998. During the same time period the IFC Investable Latin America
Total Return Index returned -4.73 and the Lipper Latin American Funds Average
returned -4.79 percent. For the same period, the Fund's Class A, C and D shares
had total returns of -4.70 percent, -5.12 percent and -4.61 percent,
respectively. The performance of the Fund's four share classes varies because
of differing expenses.
Investment decisions for the Fund are made by its investment adviser, TCW Funds
Management, Inc. (TCW), an affiliate of Trust Company of the West. In terms of
country allocation, the Fund's assets as of July 31, 1998 were invested 40.0
percent in Brazil, 37.7 percent in Mexico, 10.0 percent in Argentina, 3.5
percent in Chile, 3.3 percent in Colombia and
1.6 percent in Peru. At the end of the period the Fund held a cash position of
2.9 percent. The Fund eliminated its position in Venezuela over the period.
LATIN AMERICAN MARKET OVERVIEW
At the beginning of this year, investor concerns were focused on the ability of
Latin American economies to post solid economic growth given
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
LETTER TO THE SHAREHOLDERS July 31, 1998, continued
the fallout from Asia and subsequently the possibility of declining exports.
The decline in oil prices and continued weakness of the Japanese yen and other
emerging market currencies has since exacerbated these concerns. However, the
announcement of a coordinated intervention by the U.S. and Japan to support the
yen, together with expectations of an emergency loan facility for Russia,
helped Latin American stocks stabilize toward the end of the reporting period.
BRAZIL
The Brazilian equity market went through a volatile period during the six
months ended July 31, 1998, but ended the period up 6.4 percent in U.S. dollar
terms. Investors have been concerned about data pointing toward excessive
fiscal spending. In spite of these concerns, the central bank of Brazil reduced
interest rates by over 1100 basis points -- from 32.3 percent to 21.0 percent
- -- due to its strong international reserve position, which exceeded $75 billion
in the second quarter. The highlight of the period was the sale of the
Brazilian government's controlling stake in its telecommunications company,
Telebras (18.77 percent of net assets at the end of July). The 20 percent stake
sold for $19 billion, versus the government's minimum bid level of $11.7
billion and analysts' expectations of $15 billion. The price per share paid is
equivalent to $294, while the stock traded in the market at $113 1/2. The
market was encouraged by the wide array of multinational telecommunications
companies willing to bid aggressively for Brazilian assets.
MEXICO
Mexican stock prices fell 12.1 percent during the first half of the Fund's
fiscal year, as a sharp drop in crude oil prices weakened the outlook for
Mexican exports and prospects for narrowing the federal budget deficit. Also
hurting sentiment was the ongoing debate in Mexico's Congress regarding the
manner in which the bank bailout occurred following the peso crisis in 1994.
While the near-term outlook remains uncertain, the Zedillo administration has
been responding prudently to the series of external shocks with three separate
budget cuts, which bodes well for the longer term. TCW expects economic growth
to moderate from the 6.6 percent year-over-year pace in the first quarter to
about 4.5 percent for the full year. This should ease pressure on the current
account deficit while still providing for solid corporate earnings growth.
ARGENTINA
The Argentine equity market gained less than 1 percent during the period, as
investors were initially concerned that the economy might be overheating.
However, the market stabilized in June as the economy began to show signs of a
soft landing. TCW anticipates economic growth to moderate to a more sustainable
level of around 5.5 percent in 1998, from more than 8 percent last year.
2
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
LETTER TO THE SHAREHOLDERS July 31, 1998, continued
CHILE
Chilean stock prices fell 3.0 percent in the first six months of the Fund's
fiscal year. Lower copper prices and projections of a 1998 current account
deficit of 6.5 percent of GDP resulted in capital outflows requiring heavy
Central Bank intervention in the currency market. To reduce further outflows,
the Central Bank permitted the peso to weaken, set a new foreign exchange band,
implemented a series of fiscal cuts and reduced reserve requirements on foreign
currency inflows from 30 percent to 10 percent. TCW remains concerned about the
outlook for economic growth in light of these measures, but is encouraged by
these proactive, free market-oriented actions.
COLOMBIA
Colombian equities fell 22.9 percent during the six months ended July 31, 1998.
The Central Bank's policy of higher interest rates to keep inflation in check
and to defend the peso hurt equity prices. Despite the market's poor showing,
political changes caused the first half of the year to end on a decidedly more
positive note. The conservative, opposition party candidate, Andres Pastrana,
came from behind to upset the ruling liberal party candidate in the
presidential run-off election. This boosted hopes that Colombia can put a
definitive end to a term marked by presidential corruption scandals, rebel
advances, poor relations with the U.S. and poor economic management. While the
new administration will need to make painful budget cuts to address the
ballooning fiscal deficit, investor confidence should gradually improve as
witnessed by the sharp strengthening of the currency following the recent
election.
PERU
Peruvian stock prices moved sideways during the first half of the Fund's fiscal
year, hurt by the release of economic data showing that El Nino's economic
impact had been more extensive and prolonged than expected. The Peruvian
currency came under some pressure due to expectations that the current account
deficit could exceed the government's estimate of 5.9 percent of GDP. On the
political front, the unexpected resignation of the prime minister, together
with the long-expected departure of the finance minister, caused concerns about
the Fujimori administration's handling of several political issues to
resurface.
VENEZUELA
As stated earlier, the Fund exited the Venezuelan equity market, which fell
nearly 40 percent in dollar terms during the six months ended July 31, 1998.
The impact of continued low oil prices, as well as the government's willingness
and ability to continue the current exchange rate regime were at the forefront
of
3
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
LETTER TO THE SHAREHOLDERS July 31, 1998, continued
investor concerns. The resignation of Finance Minister Rojas Parra and
indications that Hugo Chavez is leading opinion polls for the December
presidential elections have exacerbated these concerns. Many investors are
worried that if elected, Mr. Chavez's administration would stall, if not
reverse, foreign investment approvals, and that his populist rhetoric could
become government policy.
LOOKING AHEAD
TCW is encouraged to see that, in general, Latin American policy makers have
responded to the external shocks faced by the region with appropriate and
timely monetary and fiscal adjustments. The Fund's managers continue to believe
that valuation levels are compelling, while acknowledging that equity returns
will continue to be more dependent upon external factors than domestic
developments.
We appreciate your support of TCW/DW Latin American Growth Fund 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
4
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1998 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCKS (96.1%)
ARGENTINA (10.0%)
Banks
152,339 Banco de Galicia y Buenos Aires
S.A. de C.V. (ADR) ........................ $ 3,122,950
------------
Brewery
132,400 Quilmes Industrial S.A. (ADR) ............. 1,506,050
------------
Multi-Industry
606,054 Perez Companc S.A. (Class B) .............. 3,516,872
------------
Oil & Gas
140,479 Yacimentos Petroliferos Fiscales
S.A. (ADR) ................................ 4,109,011
------------
Steel
1,022,770 Siderca S.A. (Class A) .................... 1,954,468
------------
Telecommunications
72,103 Telecom Argentina Stet - France
Telecom S.A. (Class B) .................... 491,988
52,140 Telecom Argentina Stet - France
Telecom S.A. (ADR) ........................ 1,850,970
133,735 Telefonica de Argentina S.A.
(ADR) ..................................... 4,839,535
------------
7,182,493
------------
TOTAL ARGENTINA ........................... 21,391,844
------------
BRAZIL (40.0%)
Banking
20,670,000 Banco do Estado de Sao Paulo
S.A.* ..................................... 1,093,134
2,160,156 Banco Itau S.A. (Pref.) ................... 1,430,321
------------
2,523,455
------------
Beverages
4,694,564 Companhia Cervejaria Brahma
(Pref.)* .................................. 3,370,850
------------
Building Materials
3,469,000 Companhia Cimento Portland Itau
(Pref.) ................................... 611,527
------------
Electric
249,600,000 Companhia Paranaense de
Energia - Copel
(Class B) (Pref.) ......................... 2,700,119
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
5,160,000 Light-Servicos de Eletricidade
S.A. ...................................... $ 1,686,130
------------
4,386,249
------------
Financial Services
4,598,300 Itausa Investimentos Itau S.A.
(Pref.) ................................... 3,084,250
------------
Metals & Mining
218,848 Companhia Vale do Rio Doce
(Class A) (Pref.) ......................... 4,516,598
266,358 Companhia Vale do Rio Doce S.A.
12/31/99 (Debentures)* .................... --
------------
4,516,598
------------
Multi-Industry
3,026,600 Empresa Nacional de Comercio
Redito e Participacoes S.A.
(Pref.)* .................................. 7,027
------------
Oil & Gas
24,028,000 Petroleo Brasileiro S.A. (Pref.) .......... 5,268,845
------------
Telecommunications
63,300 Telecomunicacoes Brasileiras S.A.
(ADR) ..................................... 7,663,256
229,083,140 Telecomunicacoes Brasileiras S.A.
(Pref.) ................................... 27,716,914
49,422,000 Telecomunicacoes Brasileiras S.A. 4,377,389
17,663,300 Telecomunicacoes de Sao Paulo
S.A. (Pref.)* ............................. 4,374,587
8,968,064 Telesp Celular S.A.* ...................... 921,561
------------
45,053,707
------------
Utilities - Electric
30,804,030 Centrais Electricas Brasileiras
S.A. (Class B) (Pref.) .................... 979,827
20,063,380 Centrais Electricas Brasileiras
S.A. ...................................... 612,477
20,063,380 Centrais Geradoras do Sul do
Brasil S.A.* .............................. 33,988
30,804,030 Centrais Geradoras do Sul do
Brasil S.A. (Pref.)* ...................... 54,302
246,253 Companhia Energetica de Minas
Gerais S.A. (ADR) (Pref.) ................. 8,357,211
5,166 Companhia Energetica de Minas
Gerais S.A. (ADR) - 144A** ................ 175,321
99,089,880 Companhia Energetica de Minas
Gerais S.A. (Pref.) ....................... 3,365,767
------------
13,578,893
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1998 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
Water
16,194,000 Companhia de Saneamento Basico
do Estado de Sao Paulo+ .............. $ 2,229,478
-----------
TOTAL BRAZIL ......................... 84,630,879
-----------
CHILE (3.5%)
Beverages
83,240 Embotelladora Andina S.A.
(Series A) (ADR) ..................... 1,612,775
33,440 Embotelladora Andina S.A.
(Series B) (ADR) ..................... 572,660
54,300 Vina Concha Y Toro (ADR) ............. 1,696,875
-----------
3,882,310
-----------
Pharmaceuticals
85,150 Laboratorio Chile S.A. (ADR) ......... 1,149,525
-----------
Telecommunications
51,368 Compania de
Telecommunicaciones de Chile
S.A. (ADR) ........................... 1,133,306
-----------
Utilities - Electric
49,500 Chilectra S.A. (ADR) - 144A** ........ 1,194,188
-----------
TOTAL CHILE .......................... 7,359,329
-----------
COLOMBIA (3.3%)
Banking
306,725 Banco de Bogota ...................... 1,040,694
126,470 Bancolombia S.A. (ADR) ............... 1,327,935
-----------
2,368,629
-----------
Beverages
321,170 Bavaria S.A. ......................... 1,863,044
-----------
Financial Services
614,272 Suramericana de Inversiones S.A....... 1,344,630
290,875 Valores Bavaria S.A.* ................ 498,552
-----------
1,843,182
-----------
Food, Beverage, Tobacco, &
Household Products
149,299 Compania Nacional de Chocolates
S.A. ................................. 533,794
-----------
Retail
193,527 Almacenes Exito S.A. ................. 338,902
-----------
TOTAL COLOMBIA ....................... 6,947,551
-----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
MEXICO (37.7%)
Beverages
56,900 Coca-Cola Femsa S.A. (ADR) ........... $ 1,006,419
140,840 Fomento Economico Mexicano
S.A. de C.V. (ADR)* .................. 4,366,040
139,400 Panamerican Beverages, Inc.
(Class A) ............................ 4,330,112
-----------
9,702,571
-----------
Brewery
614,500 Grupo Modelo S.A. de C.V.
(Series C) ........................... 5,524,293
-----------
Building Materials
778,600 Apasco S.A. de C.V. .................. 3,993,493
39,599 Cemex S.A. de C.V. ................... 146,219
1,764,660 Cemex S.A. de C.V. (B Shares) ........ 7,129,939
-----------
11,269,651
-----------
<PAGE>
Conglomerates
813,899 Grupo Carso S.A. de C.V.
(Series A1)* ......................... 3,471,174
-----------
Food, Beverage, Tobacco, &
Household Products
2,126,200 Grupo Industrial Bimbo S.A. de
C.V. (Series A) ...................... 4,343,080
-----------
Media Group
250,500 Grupo Televisa S.A. de C.V.
(GDR)* ............................... 8,830,125
-----------
Multi-Industry
291,420 DESC S.A. de C.V. (Series B) ......... 1,740,016
-----------
Paper & Forest Products
2,246,000 Kimberly-Clark de Mexico S.A. de
C.V. (A Shares) ...................... 6,553,984
-----------
Retail
5,418,918 Cifra S.A. de C.V. (Series C) ........ 7,906,390
961,417 Cifra S.A. de C.V. (Series V) ........ 1,456,692
815,200 Organizacion Soriana S.A. de C.V.
(Series B) ........................... 2,648,714
-----------
12,011,796
-----------
Steel & Iron
84,544 Tubos de Acero de Mexico S.A.
de C.V. (ADR)* ....................... 829,588
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1998 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------------------
<S> <C> <C>
Telecommunications
313,733 Telefonos de Mexico S.A. de C.V.
(Series L) (ADR) ............... $15,686,650
-----------
TOTAL MEXICO ................... 79,962,928
-----------
PERU (1.6%)
Brewery
1,336,606 Union de Cervecerias Peruanas
Backus & Johnston S.A.
(T Shares) ..................... 739,515
-----------
Building Materials
615,399 Cementos Lima, S.A. ............ 1,240,046
-----------
Metals & Mining
228,930 Compania de Minas Buenaventura
S.A. (B Shares) ................ 1,317,442
-----------
TOTAL PERU ..................... 3,297,003
-----------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL COMMON AND PREFERRED STOCKS
(Identified Cost $168,292,458) (a)..... 96.1% 203,589,534
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES ................. 3.9 8,183,597
----- -----------
NET ASSETS ............................ 100.0% $211,773,131
===== ============
</TABLE>
- --------------------------------
ADR American Depository Receipt.
GDR Global Depository Receipt.
* Non-income producing security.
** Resale is restricted to qualified institutional investors.
(a) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$49,203,035 and the aggregate gross unrealized depreciation is
$13,905,959, resulting in net unrealized appreciation of
$35,297,076.
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
SUMMARY OF INVESTMENTS July 31, 1998 (unaudited)
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ------------------------------------------------------- --------------- ----------
<S> <C> <C>
Banking ............................................... $ 4,892,084 2.3%
Banks ................................................. 3,122,950 1.5
Beverages ............................................. 18,818,775 8.9
Brewery ............................................... 7,769,858 3.7
Building Materials .................................... 13,121,224 6.2
Conglomerates ......................................... 3,471,174 1.6
Electric .............................................. 4,386,249 2.1
Financial Services .................................... 4,927,432 2.3
Food, Beverage, Tobacco, & Household Products ......... 4,876,874 2.3
Media Group ........................................... 8,830,125 4.2
Metals & Mining ....................................... 5,834,040 2.8
Multi-Industry ........................................ 5,263,915 2.5
Oil & Gas ............................................. 9,377,856 4.4
Paper & Forest Products ............................... 6,553,984 3.1
Pharmaceuticals ....................................... 1,149,525 0.5
Retail ................................................ 12,350,698 5.8
Steel ................................................. 1,954,468 0.9
Steel & Iron .......................................... 829,588 0.4
Telecommunications .................................... 69,056,156 32.6
Utilities -- Electric ................................. 14,773,081 7.0
Water ................................................. 2,229,478 1.0
------------ ----
$203,589,534 96.1%
============ ====
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
- -------------------------- --------------- -----------
<S> <C> <C>
Common Stocks ............ $137,751,389 65.0%
Preferred Stocks ......... 65,838,145 31.1
------------ ----
$203,589,534 96.1%
============ ====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1998 (unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $168,292,458)............. $203,589,534
Cash ......................................... 6,049,182
Receivable for:
Investments sold ........................... 2,772,362
Dividends .................................. 52,739
Shares of beneficial interest sold ......... 48,607
Interest ................................... 28,116
Prepaid expenses and other assets ............ 104,992
-------------
TOTAL ASSETS ............................... 212,645,532
-------------
LIABILITIES:
Payable for:
Shares of beneficial interest
repurchased ............................. 249,350
Plan of distribution fee ................... 187,434
Management fee ............................. 140,623
Investment advisory fee .................... 93,749
Accrued expenses and other payables .......... 201,245
-------------
TOTAL LIABILITIES .......................... 872,401
-------------
NET ASSETS ................................ $211,773,131
=============
COMPOSITION OF NET ASSETS:
Paid-in-capital .............................. $262,482,724
Net unrealized appreciation .................. 35,294,244
Accumulated net investment loss .............. (197,032)
Accumulated net realized loss ................ (85,806,805)
-------------
NET ASSETS ................................. $211,773,131
=============
CLASS A SHARES:
Net Assets ................................... $ 80,334
Shares Outstanding (unlimited authorized,
$.01 par value) ........................... 6,942
NET ASSET VALUE PER SHARE ............... $ 11.57
=============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net
asset value) ......................... $ 12.21
=============
CLASS B SHARES:
Net Assets ................................... $210,938,949
Shares Outstanding (unlimited authorized,
$.01 par value) ........................... 18,378,590
NET ASSET VALUE PER SHARE .................. $ 11.48
=============
CLASS C SHARES:
Net Assets ................................... $ 746,215
Shares Outstanding (unlimited authorized,
$.01 par value) ........................... 64,997
NET ASSET VALUE PER SHARE .................. $ 11.48
=============
CLASS D SHARES:
Net Assets ................................... $ 7,633
Shares Outstanding (unlimited authorized,
$.01 par value) ........................... 658
NET ASSET VALUE PER SHARE .................. $ 11.60
=============
</TABLE>
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $246,910 foreign
withholding tax) ............................... $ 4,064,823
Interest .......................................... 136,169
------------
TOTAL INCOME .................................... 4,200,992
------------
EXPENSES
Plan of distribution fee (Class A shares) ......... 119
Plan of distribution fee (Class B shares) ......... 1,262,774
Plan of distribution fee (Class C shares) ......... 4,047
Management fee .................................... 950,547
Investment advisory fee ........................... 633,698
Custodian fees .................................... 312,444
Transfer agent fees and expenses .................. 307,942
Foreign exchange provisional tax .................. 58,301
Shareholder reports and notices ................... 40,622
Registration fees ................................. 39,957
Professional fees ................................. 30,751
Trustees' fees and expenses ....................... 13,143
Other ............................................. 10,423
------------
TOTAL EXPENSES .................................. 3,664,768
------------
NET INVESTMENT INCOME ........................... 536,224
------------
NET REALIZED AND UNREALIZED GAIN
(LOSS):
Net realized gain (loss) on:
Investments ..................................... 13,733,818
Foreign exchange transactions ................... (2,147,226)
------------
NET GAIN ........................................ 11,586,592
------------
Net change in unrealized
appreciation/depreciation on:
Investments ..................................... (23,533,878)
Translation of forward foreign
currency contracts, other assets and
liabilities denominated in foreign
currencies ................................ 1,391,026
------------
NET DEPRECIATION ................................ (22,142,852)
------------
NET LOSS ........................................ (10,556,260)
------------
NET DECREASE ...................................... $(10,020,036)
============
</TABLE>
STATEMENT OF OPERATIONS
For the six months ended July 31, 1998 (unaudited)
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JULY 31, 1998 JANUARY 31, 1998*
--------------- ------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) ......................... $ 536,224 $ (2,058,685)
Net realized gain .................................... 11,586,592 25,945,579
Net change in unrealized depreciation ................ (22,142,852) (8,606,911)
------------- -------------
NET INCREASE (DECREASE) ............................ (10,020,036) 15,279,983
------------- -------------
Net decrease from transactions in shares of beneficial
interest ........................................... (51,827,000) (12,503,040)
------------- -------------
NET INCREASE (DECREASE) ............................ (61,847,036) 2,776,943
NET ASSETS:
Beginning of period .................................. 273,620,167 270,843,224
------------- -------------
END OF PERIOD
(Including accumulated net investment losses of
$197,032 and $733,256, respectively)............... $ 211,773,131 $ 273,620,167
============= =============
</TABLE>
- ---------------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1998 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
TCW/DW Latin American Growth Fund (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's investment objective is
long-term capital appreciation. The Fund seeks to achieve its objective by
investing primarily in equity securities of Latin American issuers. The Fund
was organized as a Massachusetts business trust on February 25, 1992 and
commenced operations on December 30, 1992. On July 28, 1997, the Fund commenced
offering three additional classes of shares, with the then current shares
designated as Class B shares.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase, some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year,
six years and one year, respectively. Class D shares are not subject to a sales
charge. Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.
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 pursuant to
procedures adopted by the Trustees); (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); 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
11
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1998 (unaudited) continued
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. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date
such items are recognized. Distribution fees are charged directly to the
respective class.
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 foreign
currency 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 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. 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.
12
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1998 (unaudited) 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.
2. MANAGEMENT AGREEMENT
Pursuant to a Management Agreement, the Fund pays the 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 $500 million and 0.72%
to the portion of the daily net assets exceeding $500 million.
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 following
annual rates to the net assets of the Fund determined as of the close of each
business day: 0.50% to the portion of daily net assets not exceeding $500
million and 0.48% to the portion of the daily net assets exceeding $500
million.
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
13
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1998 (unaudited) 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 Morgan Stanley 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. The
Plan provides that the Fund will pay the Distributor a fee which is accrued
daily and paid monthly at the following annual rates: (i) Class A -- up to
0.25% of the average daily net assets of Class A; (ii) Class B -- 1.0% of the
lesser of: (a) the average daily aggregate gross sales of the Class B shares
since the inception of the Fund (not including reinvestment of dividend or
capital gain distributions) less the average daily aggregate net asset value of
the Class B shares redeemed since the Fund's inception upon which a contingent
deferred sales charge has been imposed or waived; or (b) the average daily net
assets of Class B; and (iii) Class C -- up to 1.0% of the average daily net
assets of Class C. In the case of Class A shares, amounts paid under the Plan
are paid to the Distributor for services provided. In the case of Class B and
Class C shares, amounts paid under the Plan are paid to the Distributor for
services provided and the expenses borne by it and others in the distribution of
the shares of these Classes, including the payment of commissions for sales of
these Classes and incentive compensation to, and expenses of, Morgan Stanley
Dean Witter Financial Advisors, and others who engage in or support distribution
of the 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 these 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, in the case of Class B shares, to compensate Dean Witter
Reynolds Inc. ("DWR"), an affiliate of the Manager and Distributor, 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
expenses.
In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund
pursuant to the Plan and contingent deferred sales charges paid by investors
upon redemption of Class B shares. 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 $19,675,067 at July 31, 1998.
14
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1998 (unaudited) continued
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the six months ended July 31, 1998, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.22% and
1.00%, respectively.
The Distributor has informed the Fund that for the six months ended July 31,
1998, it received contingent deferred sales charges from certain redemptions of
the Fund's Class A shares, Class B shares and Class C shares of $2, $581,761
and $962, respectively and received $1,120 in front-end sales charges from
sales of the Fund's Class A shares. The respective shareholders pay such
charges which are not an expense of the Fund.
5. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the six months ended July 31, 1998
aggregated $20,757,954 and $74,691,430, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Manager and
Distributor, is the Fund's transfer agent. At July 31, 1998, the Fund had
transfer agent fees and expenses payable of approximately $16,000.
6. FEDERAL INCOME TAX STATUS
At January 31, 1998, the Fund had a net capital loss carryover of approximately
$93,089,000 of which $73,250,000 will be available through January 31, 2004 and
$19,839,000 will be available through
January 31, 2005 to offset future capital gains to the extent provided by
regulations.
Foreign currency losses incurred after October 31 ("post-October" losses)
within the taxable year are deemed to arise on the first business day of the
Fund's next taxable year. The Fund incurred and will elect to defer net foreign
currency losses of approximately $2,102,000 during fiscal 1998.
As of January 31, 1998, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales, mark-to-market of open
forward foreign currency contracts and post-October losses.
15
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1998 (unaudited) continued
7. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JULY 31, 1998 JANUARY 31, 1998*
---------------------------------- ----------------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
--------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold ....................................... 2,384 $ 30,155 10,002 $ 142,946
Redeemed ................................... (4,500) (54,782) (944) (11,957)
------ ------------- ------ -------------
Net increase (decrease) -- Class A ......... (2,116) (24,627) 9,058 130,989
------ ------------- ------ -------------
CLASS B SHARES
Sold ....................................... 1,392,204 17,216,492 5,890,546 80,346,802
Redeemed ................................... (5,565,159) (69,010,739) (6,955,022) (93,949,547)
---------- ------------- ---------- -------------
Net decrease -- Class B .................... (4,172,955) (51,794,247) (1,064,476) (13,602,745)
---------- ------------- ---------- -------------
CLASS C SHARES
Sold ....................................... 12,953 162,218 72,243 1,050,903
Redeemed ................................... (13,413) (170,344) (6,786) (92,205)
---------- ------------- ---------- -------------
Net increase (decrease) -- Class C ......... (460) (8,126) 65,457 958,698
---------- ------------- ---------- -------------
CLASS D SHARES
Sold ....................................... -- -- 658 10,018
---------- ------------- ---------- -------------
Net decrease in Fund ....................... (4,175,531) $ (51,827,000) (989,303) $ (12,503,040)
========== ============= ========== =============
</TABLE>
- ---------------
* For Class A, C, and D shares, for the period July 28, 1997, (issue date)
through January 31, 1998.
8. 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 July 31, 1998, there were no outstanding forward contracts.
At July 31, 1998, the Fund's cash balance consisted principally of interest
bearing deposits with Chase Manhattan Bank N.A., the Fund's custodian.
16
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
JULY 31, 1998++
------------------
(unaudited)
<S> <C>
CLASS B SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .......... $ 12.09
----------
Net investment income (loss) .................. 0.03
Net realized and unrealized gain (loss) ....... (0.64)
----------
Total from investment operations .............. (0.61)
Less distributions from net realized gain ..... --
----------
Net asset value, end of period ................ $ 11.48
==========
TOTAL INVESTMENT RETURN+ ...................... (5.05)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ...................................... 2.89 %(2)
Net investment income (loss) .................. 0.42 %(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ....... $210,939
Portfolio turnover rate ....................... 8 %(1)
<CAPTION>
FOR THE YEAR ENDED JANUARY 31,
-------------------------------------------------------------------------------
1998*++ 1997 1996 1995 1994
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
CLASS B SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .......... $ 11.47 $ 9.48 $ 9.35 $ 16.05 $ 9.56
--------- --------- --------- ---------- ----------
Net investment income (loss) .................. (0.09) (0.04) (0.06) (0.17) (0.04)
Net realized and unrealized gain (loss) ....... 0.71 2.03 0.19 (6.21) 6.68
--------- --------- --------- ---------- ----------
Total from investment operations .............. 0.62 1.99 0.13 (6.38) 6.64
Less distributions from net realized gain ..... -- -- -- (0.32) (0.15)
--------- --------- --------- ---------- ----------
Net asset value, end of period ................ $ 12.09 $ 11.47 $ 9.48 $ 9.35 $ 16.05
========= ========= ========= ========== ==========
TOTAL INVESTMENT RETURN+ ...................... 5.41 % 20.99 % 1.39 % (40.12)% 69.49 %
RATIOS TO AVERAGE NET ASSETS:
Expenses ...................................... 2.81 % 2.78 % 2.98 % 2.87 % 2.89 %
Net investment income (loss) .................. (0.64)% (0.29)% (0.61)% (1.46)% (0.90)%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ....... $272,710 $270,843 $261,066 $294,774 $325,956
Portfolio turnover rate ....................... 30 % 29 % 64 % 145 % 111 %
</TABLE>
- -------------
* Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date have been designated Class B shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ 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
17
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX JULY 28, 1997*
MONTHS ENDED THROUGH
JULY 31, 1998++ JANUARY 31, 1998++
----------------- -------------------
(unaudited)
<S> <C> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ............ $12.14 $15.22
------ -------
Net investment income (loss) .................... 0.08 (0.07)
Net realized and unrealized loss ................ (0.65) (3.01)
------ -------
Total from investment operations ................ (0.57) (3.08)
------ -------
Net asset value, end of period .................. $11.57 $12.14
====== =======
TOTAL INVESTMENT RETURN+ ........................ (4.70)%(1) (20.24)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 2.12 %(2) 2.15 %(2)
Net investment income (loss) .................... 1.24 %(2) (1.04)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $ 80 $ 110
Portfolio turnover rate ......................... 8 %(1) 30 %
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ............ $12.10 $15.22
------ -------
Net investment income (loss) .................... 0.03 (0.12)
Net realized and unrealized loss ................ (0.65) (3.00)
------ -------
Total from investment operations ................ (0.62) (3.12)
------ -------
Net asset value, end of period .................. $11.48 $12.10
====== =======
TOTAL INVESTMENT RETURN+ ........................ (5.12)%(1) (20.50)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 2.90 %(2) 2.91 %(2)
Net investment income (loss) .................... 0.47 %(2) (1.76)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $ 746 $ 792
Portfolio turnover rate ......................... 8 %(1) 30 %
</TABLE>
- --------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ 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
18
<PAGE>
TCW/DW LATIN AMERICAN GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX JULY 28, 1997*
MONTHS ENDED THROUGH
JULY 31, 1998++ JANUARY 31, 1998++
----------------- -------------------
(unaudited)
<S> <C> <C>
CLASS D SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ............ $12.16 $15.22
------ -------
Net investment income (loss) .................... 0.09 (0.04)
Net realized and unrealized loss ................ (0.65) (3.02)
------ -------
Total from investment operations ................ (0.56) (3.06)
------ -------
Net asset value, end of period .................. $11.60 $12.16
====== =======
TOTAL INVESTMENT RETURN+ ........................ (4.61)%(1) (20.11)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ........................................ 1.90 %(2) 1.86 %(2)
Net investment income (loss) .................... 1.49 %(2) (0.52)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ......... $ 8 $ 8
Portfolio turnover rate ......................... 8 %(1) 30 %
</TABLE>
- --------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ 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
19
<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 I. Stern
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
Michael P. Reilly
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Morgan Stanley Dean Witter Trust FSB
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
MANAGER
Morgan Stanley Dean Witter Services Company Inc.
ADVISER
TCW Funds Management, Inc.
The financial statements included herein have been taken from the records of
the Fund without examination by the independent accountants and accordingly
they do not express an opinion thereon.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and trustees,
fees, expenses and other pertinent information, please see the prospectus of
the Fund.
This report is not authorized for distribution to prospective investors
in the Fund unless preceded or accompanied by an effective prospectus.
TCW/DW
LATIN AMERICAN
GROWTH FUND
[GRAPHIC OMITTED]
SEMIANNUAL REPORT
JULY 31, 1998
