<PAGE> 1
TCW/DW INCOME AND GROWTH FUND Two World Trade Center, New York, New York 10048
LETTER TO THE SHAREHOLDERS July 31, 1997
DEAR SHAREHOLDER:
The first half of 1997 was a spectacular period for the stock market. The best
performance was generated by large-capitalization stocks, although mid-sized and
smaller issues also did well. With interest rates rising slightly, the returns
on high-grade and high-yield bonds were well below those of stocks, but in
positive territory. This backdrop was generally positive for convertibles with
most convertible indexes generating returns of nine to ten percent.
PERFORMANCE
As of July 28, 1997, TCW/DW Income and Growth Fund began offering four classes
of shares: A, B, C and D, each with its own sales charge and distribution fee
structure. Most fund shares held prior to July 28 were designated Class C
shares. A revised prospectus, which includes complete details regarding the
Fund's conversion to multiple classes of shares, was mailed to shareholders in
mid-summer.
For the six-month period ended July 31, 1997, the Fund's Class C shares
registered a total return of 8.72 percent. Over the same period, the Standard &
Poor's 500 Composite Stock Price Index produced a total return of 22.50 percent,
while the Lehman Brothers Government/ Corporate Bond Index and the Lipper
Analytical Services, Inc. Flexible Income Funds Average returned 5.76 percent
and 4.95 percent, respectively.
CONVERTIBLE SECURITIES
During the first half of 1997, the convertible portion of the Fund benefited
from its overweighting in the health care, technology, hotel and specialty
insurance sectors. In the health care industry, the Fund's holdings in Sandoz
Capital BVI, Ltd., Sepracor Inc., Tenet Healthcare Corp., Vencor and Aetna Inc.
were strong performers. In the hotel industry, our holdings in Host Marriott
Financial Trust and Marriott International Inc. added incremental value. The
technology area added significant performance as holdings in Motorola Inc., SCI
Systems Inc.,
<PAGE> 2
TCW/DW INCOME AND GROWTH FUND
LETTER TO THE SHAREHOLDERS July 31, 1997, continued
Quantum Corp., and Xilinx Inc. performed well. Finally, in specialty insurance,
the Fund's holdings in American Bankers Insurance Group Inc. (Series B),
Penncorp Financial Group Inc. and Financial Security Assurance were profitable.
On the negative side, holdings in the retail sector underperformed, as consumer
spending weakened in the second quarter and the Fund's holdings in the pollution
control industry, particularly Thermo Electron Corp. and U.S. Filter Corp.,
underperformed.
The new-issue market for convertibles remained robust during the first half of
the year despite a stock market correction in March and April. In total, 66
issues with a net value of $11.7 billion came to market. Generally, these
securities were issued by speculative-grade companies. The terms on new issues
ranged from cheap to overvalued, making selectivity the key. As the year
progressed and the stock market appreciated, demand for convertibles was strong
and terms became less favorable. Specifically, this was reflected in slightly
lower coupons/dividends and higher conversion premiums.
During the last several years new types of convertible structures have
proliferated. One interesting new structure, called CrEDITS, combines a letter
of credit from a U.S. financial institution with a convertible issued by a
foreign company. The letter of credit guarantees the principal, interest and the
premium redemption of the bonds, which have a maturity of five years. In
essence, these securities allow participation in emerging markets equities
without the attendant credit risk and with a minimum rate of return that has
ranged from 5 to 155 basis points below the yield of the five-year U.S.
Treasury. Given the fact that these securities offer attractive potential
returns with a relatively low level of risk, the Fund has participated in
several CrEDITS issues.
HIGH-YIELD BONDS
The high-yield bond market produced solid returns during the first half of 1997
primarily on the strength of robust economic activity and falling interest
rates. The high-yield market's favorable technical conditions can be attributed
to the $9.3 billion in mutual fund cash inflows, as well as increased
allocations to high-yield securities from pension funds and insurance companies.
The strong liquidity positions of high yield bond buyers, coupled with a very
favorable interest rate climate laid the groundwork for a frenetic pace of
new-issue activity. Year-to-date, primary issuance has totaled more than $57.6
billion, a 38 percent increase over the comparable period last year.
The yield on the average cash-paying high-yield bond fell to 8.97 percent as of
June 30, representing a 248 basis point spread over comparable U.S. Treasury
securities. This risk premium was 24 basis points tighter than at the end of the
first quarter and 54 basis points narrower than at the beginning of the year.
While a robust equity market and a strong economy have both contributed to the
high-yield market's solvency, we believe that the immense liquidity in the U.S.
financial system is the principal reason for the recent low level of defaults.
<PAGE> 3
TCW/DW INCOME AND GROWTH FUND
LETTER TO THE SHAREHOLDERS July 31, 1997, continued
LOOKING AHEAD
The U.S. economy slowed significantly during the second quarter. The Fund's
adviser, TCW Funds Management, Inc. (TCW), expects real gross domestic product
(GDP) growth in the 1.5 to 2 percent range down from 5.9 percent in the first
quarter. This slowing was the result primarily of sluggish consumer spending,
which was reflected in the disappointing sales figures of apparel and consumer
durables such as automobiles. While consumer spending has taken a pause, TCW
expects that spending will accelerate as the year progresses. Employment and
income gains remain solid and consumer sentiment reached its highest level in 28
years in June. In addition, the housing market remains resilient and the outlook
for exports is improving. Therefore, TCW's expectation is that growth in real
GDP will increase during the second half of the year.
The stock market has appreciated to a level that has far surpassed most
forecasts made at the beginning of the year. The combination of a strong bond
market, lower inflation, a Fed on hold and strong corporate profits have all
fueled a tremendous surge in equity prices. According to TCW this has left many
stocks, particularly those of the new "Nifty Fifty," at seemingly extended
valuations. Are valuations too high? Perhaps. However, in TCW's view, if the
current environment continues, stocks could move higher. While the question of
when the market may begin to correct is anyone's guess, TCW believes that
current valuations leave little room for disappointment. Therefore, if the
market continues to appreciate as second quarter earnings are reported, TCW
would most likely use such an opportunity to reduce positions in convertible
securities that have appreciated significantly and reinvest the proceeds in
convertibles with greater defensive characteristics.
We appreciate your ongoing support of TCW/DW Income and Growth Fund and look
forward to continuing to serve your investment needs.
Very truly yours,
/S/ CHARLES A. FIUMEFREDDO
CHARLES A. FIUMEFREDDO
Chairman of the Board
<PAGE> 4
TCW/DW INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1997 (unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
CONVERTIBLE BONDS (42.8%)
Advertising (1.3%)
$ 620 Omicom Group, Inc...................... 4.25% 01/03/07 $ 788,423
-----------
Aerospace (1.5%)
345 Hexcel Corp............................ 7.00 08/01/03 601,852
210 Titan Corp............................. 8.25 11/01/03 343,499
-----------
945,351
-----------
Auto Parts (0.8%)
430 Tower Automotive Inc. - 144A*.......... 5.00 08/01/04 467,625
-----------
Biotechnology (0.8%)
330 Sepracor Inc. - 144A*.................. 7.00 12/01/02 469,837
-----------
Business Services (1.2%)
360 Personnel Group of America - 144A*..... 5.75 07/01/04 417,600
385 U.S. Office Products Co................ 5.50 05/15/03 350,350
-----------
767,950
-----------
Cable & Telecommunications (0.5%)
420 Tele-Communications International,
Inc.................................... 4.50 02/15/06 342,300
-----------
Commercial Services (1.8%)
1,075 CUC International, Inc. - 144A*........ 3.00 02/15/02 1,111,958
-----------
Computer Equipment (0.6%)
320 GVC Corp., Ltd. - 144A*................ 0.00 05/21/02 347,200
-----------
Electronics - Semiconductors/Components (2.9%)
240 Analog Devices......................... 3.50 12/01/00 385,843
385 Micron Technology...................... 7.00 07/01/04 407,053
910 Xilinx Inc. - 144A*.................... 5.25 11/01/02 1,025,525
-----------
1,818,421
-----------
Entertainment (0.4%)
250 California Hotel Finance Corp.......... 11.00 12/01/02 263,438
-----------
Financial Services (2.4%)
300 Berkshire Hathaway..................... 1.00 12/02/01 342,375
320 Morgan Stanley Group, Inc. (1)+........ 0.00 09/30/00 419,274
325 Morgan Stanley Group, Inc. (2)+........ 2.00 03/29/02 368,469
355 Southern Pacific Funding............... 6.75 10/15/06 357,219
-----------
1,487,337
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
TCW/DW INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Healthcare (1.8%)
$ 50 Phymatrix Corp......................... 6.75% 06/15/03 $ 43,594
380 Phymatrix Corp. - 144A*................ 6.75 06/15/03 331,314
310 Sunrise Assisted Living - 144A*........ 5.50 06/15/02 363,475
325 Tenet Healthcare Corp.................. 6.00 12/01/05 393,143
-----------
1,131,526
-----------
Healthcare Services (0.6%)
345 Quintiles Transportational
Corp. - 144A*.......................... 4.25 05/31/00 391,378
-----------
Hotels (2.7%)
1,105 HFS, Inc............................... 4.75 03/01/03 1,251,755
410 Signature Resorts...................... 5.75 01/15/07 436,650
-----------
1,688,405
-----------
Medical Services (1.3%)
400 Occusystems, Inc. - 144A*.............. 6.00 12/15/01 466,412
320 Sterling House Corp.................... 6.75 06/30/06 353,501
-----------
819,913
-----------
Oil & Gas Products (0.5%)
240 Apache Corp. - 144A*................... 6.00 01/15/02 295,800
-----------
Oil Services (1.2%)
840 Baker Hughes, Inc...................... 0.00 05/05/08 724,987
-----------
Pharmaceuticals (1.6%)
680 Sandoz Capital BVI, Ltd. - 144A*
(Switzerland)......................... 2.00 10/06/02 1,016,600
-----------
Pollution Control (3.8%)
1,100 Thermo Electron Corp. - 144A*.......... 4.25 01/01/03 1,208,350
1,135 U.S. Filter Corp....................... 4.50 12/15/01 1,161,343
-----------
2,369,693
-----------
Real Estate Investment Trust (1.4%)
315 Capstone Capital Corp.................. 6.55 03/14/02 304,630
255 LTC Properties, Inc.................... 8.50 01/01/01 314,349
245 LTC Properties, Inc.................... 8.25 07/01/01 266,854
-----------
885,833
-----------
Restaurants (1.3%)
270 Einstein/Noah Bagel Corp............... 7.25 06/01/04 251,775
615 Einstein/Noah Bagel Corp. - 144A*...... 7.25 06/01/04 572,141
-----------
823,916
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
TCW/DW INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Retail (4.2%)
$ 405 Charming Shoppes, Inc.................. 7.50% 07/15/06 $ 428,186
660 Home Depot, Inc........................ 3.25 10/01/01 784,872
355 Nine West Group, Inc. - 144A*.......... 5.50 07/15/03 335,198
845 Staples, Inc. - 144A*.................. 4.50 10/01/00 1,064,083
-----------
2,612,339
-----------
Technology (2.8%)
50 Adaptec, Inc........................... 4.75 02/01/04 54,375
330 Adaptec, Inc. - 144A*.................. 4.75 02/01/04 358,050
865 Safeguard Scientifics, Inc. - 144A*.... 6.00 02/01/06 915,006
385 Wind River Systems, Inc. - 144A*....... 5.00 07/31/02 431,200
-----------
1,758,631
-----------
Telecommunications (3.4%)
1,700 Motorola, Inc.......................... 0.00 09/27/13 1,591,302
480 Premiere Technologies - 144A*.......... 5.75 07/01/04 507,302
-----------
2,098,604
-----------
Transportation (0.4%)
250 Blue Bird Body Co. (Series B).......... 10.75 11/15/06 265,625
-----------
Waste Management (1.6%)
890 USA Waste Services, Inc................ 4.00 02/01/02 1,001,731
-----------
TOTAL CONVERTIBLE BONDS
(Identified Cost $23,861,097)................................. 26,694,821
-----------
CORPORATE BONDS (35.7%)
Banks (1.0%)
175 First Nationwide Escrow................ 10.625 10/01/03 194,250
375 First Nationwide Escrow - 144A*........ 12.25 05/15/01 417,656
-----------
611,906
-----------
Building & Construction (0.4%)
250 Johns Manville International Group..... 10.875 12/15/04 279,375
-----------
Building Materials (0.8%)
500 K Hovnanian Enterprises................ 11.25 04/15/02 521,250
-----------
Business Services (1.3%)
531 American Pad & Paper Co................ 13.00 11/15/05 626,580
75 Big Flower Press, Inc.................. 8.875 07/01/07 74,437
135 Jorgensen (Earle M.) Co................ 10.75 03/01/00 137,025
-----------
838,042
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
TCW/DW INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Business Services - Distributors (1.1%)
$ 250 Data Documents, Inc.................... 13.50% 07/15/02 $ 280,000
350 Iron Mountain, Inc..................... 10.125 10/01/06 381,500
-----------
661,500
-----------
Chemicals (0.7%)
375 NL Industries, Inc..................... 11.75 10/15/03 412,969
-----------
Consumer - Non-Cyclical (0.9%)
100 E&S Holdings Corp. (Series B).......... 10.375 10/01/06 103,625
400 International Home Foods,
Inc. - 144A*........................... 10.375 11/01/06 425,000
-----------
528,625
-----------
Containers (0.8%)
275 Plastic Containers, Inc. - 144A*....... 10.00 12/15/06 288,750
225 U.S. Can Corp. - 144A*................. 10.125 10/15/06 237,375
-----------
526,125
-----------
Energy (1.2%)
250 Chesapeake Energy Corp................. 12.00 03/01/01 274,395
75 Transamerican Energy................... 0.00 06/15/02 58,500
325 Transamerican Energy - 144A*........... 11.50 06/15/02 325,406
100 Trico Marine Services - 144A*.......... 8.50 08/01/05 100,625
-----------
758,926
-----------
Entertainment/Gaming (1.7%)
595 Fitzgeralds Gaming Corp. (Units)++..... 13.00 12/31/02 565,250
500 Showboat, Inc.......................... 9.25 05/01/08 517,500
-----------
1,082,750
-----------
Finance - Leasing (0.9%)
190 Williams Scotsman, Inc. - 144A*........ 9.875 06/01/07 193,325
365 Xerox Credit Corp...................... 2.875 07/01/02 377,574
-----------
570,899
-----------
Financial - Miscellaneous (0.5%)
250 Cityscape Financial Corp. (Series B)... 12.75 06/01/04 237,500
75 North Atlantic Trading - 144A*......... 11.00 06/15/04 78,000
-----------
315,500
-----------
Financial Services (0.7%)
400 American Annuity Group, Inc............ 11.125 02/01/03 421,032
-----------
Foods (0.5%)
290 American Rice, Inc..................... 13.00 07/31/02 303,050
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
TCW/DW INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Forest Products, Paper & Packing (0.2%)
$ 125 SD Warren Co. (Series B)............... 12.00% 12/15/04 $ 140,625
-----------
Healthcare (0.9%)
500 Dade International, Inc. (Series B).... 11.125 05/01/06 565,000
-----------
Healthcare Services (0.4%)
210 Integrated Health Services - 144A*..... 9.50 09/15/07 221,550
-----------
Home Building (0.6%)
350 U.S. Home Corp......................... 9.75 06/15/03 367,500
-----------
Industrials (2.0%)
275 American Media Operations, Inc......... 11.625 11/15/04 302,500
250 Hayes Wheels International, Inc........ 11.00 07/15/06 278,437
50 Hayes Wheels International, Inc........ 9.125 07/15/07 51,062
100 International Wire Group - 144A*....... 11.75 06/01/05 109,500
210 Oregon Steel Mills, Inc................ 11.00 06/15/03 228,900
250 Pierce Leahy Corp...................... 11.125 07/15/06 277,500
-----------
1,247,899
-----------
Manufacturing (5.4%)
335 Communications & Power Industries, Inc.
(Series B)............................ 12.00 08/01/05 374,363
50 Foamex L.P............................. 9.875 06/15/07 51,000
500 Jordan Telecom Products - 144A*........ 9.875 08/01/07 500,000
250 Mettler Toledo, Inc.................... 9.75 10/01/06 265,000
575 Newflo Corp............................ 13.25 11/15/02 615,250
500 Sweetheart Cup, Inc.................... 10.50 09/01/03 506,875
750 Talley Manufacturing & Technology,
Inc.................................... 10.75 10/15/03 787,500
225 Telex Communications, Inc. - 144A*..... 10.50 05/01/07 236,250
-----------
3,336,238
-----------
Media Group (3.1%)
125 Ackerly Communications, Inc. (Series
B)..................................... 10.75 10/01/03 133,750
500 Adams Outdoor Advertising L.P.......... 10.75 03/15/06 547,500
545 Garden State Newspapers, Inc........... 12.00 07/01/04 610,400
575 Heritage Media Services, Inc........... 11.00 06/15/02 600,875
25 Outdoor Systems, Inc. - 144A*.......... 8.875 06/15/07 25,750
-----------
1,918,275
-----------
Multi-Industry (0.8%)
500 Valcor, Inc............................ 9.625 11/01/03 509,375
-----------
Oil - Exploration & Production (0.6%)
375 Magnum Hunter Resources - 144A*........ 10.00 06/01/07 382,500
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9
TCW/DW INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Paper & Forest Products (1.3%)
$ 435 Malette, Inc. (Canada)................. 12.25% 07/15/04 $ 493,725
300 Stone Container Corp................... 10.75 10/01/02 320,250
-----------
813,975
-----------
Real Estate Investment Trust (0.6%)
305 Trizec Finance Ltd. (Canada)........... 10.875 10/15/05 349,988
-----------
Retail (2.4%)
420 Cole National Group, Inc............... 11.25 10/01/01 462,000
346 Guitar Center Management............... 11.00 07/01/06 380,600
600 Michaels Stores, Inc................... 10.875 06/15/06 654,000
-----------
1,496,600
-----------
Retail - Drug Stores (0.2%)
135 Di Giorgio Corp........................ 10.00 06/15/07 133,988
-----------
Retail - Food Chains (1.4%)
750 Smith's Food & Drug Centers, Inc....... 11.25 05/15/07 888,750
-----------
Supermarkets (0.1%)
75 Marsh Supermarket, Inc. - 144A*........ 8.875 08/01/07 75,938
-----------
Telecommunications (0.4%)
250 STC Broadcasting, Inc. - 144A*......... 11.00 03/15/07 270,313
-----------
Telephones (0.5%)
250 Sprint Spectrum L.P.................... 11.00 08/15/06 280,000
-----------
Transportation (1.0%)
550 Moran Transportation Co................ 11.75 07/15/04 618,750
-----------
Utilities (1.3%)
250 California Energy...................... 10.25 01/15/04 271,250
490 Texas-New Mexico Power Co.............. 10.75 09/15/03 531,253
-----------
802,503
-----------
TOTAL CORPORATE BONDS
(Identified Cost $21,244,541)................................. 22,251,716
-----------
NUMBER OF
SHARES
- ---------
CONVERTIBLE PREFERRED STOCKS (17.5%)
Banks (0.6%)
13,500 National Australia Bank, Ltd. $1.969 (Australia) (Units)++.... 394,875
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 10
TCW/DW INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------------------------------------------
<C> <S> <C>
Broadcast Media (0.7%)
8,100 Evergreen Media Corp. $3.00 - 144A*........................... $ 453,600
-----------
Electric (1.7%)
19,900 Houston Industries, Inc. $3.21................................ 1,067,137
-----------
Financial (1.1%)
2,300 Allstate Corp. $2.30 (3)...................................... 112,987
7,400 Morgan Stanley Group, Inc. $3.99 (4)+......................... 564,250
-----------
677,237
-----------
Financial - Miscellaneous (0.5%)
11,900 Automatic Common Exchange Security Trust II (The "TRACES")
$1.55......................................................... 290,063
-----------
Financial Services (1.1%)
16,400 Merrill Lynch & Co., Inc. $3.12 (5)........................... 393,600
5,000 Penncorp Financial Group, Inc. $3.50 - 144A*.................. 305,000
-----------
698,600
-----------
Healthcare - HMOs (1.3%)
7,800 Aetna Inc. $4.758............................................. 785,850
-----------
Healthcare Products & Services (0.6%)
6,100 McKesson Corp. $2.50 - 144A*.................................. 400,697
-----------
Hotels (0.6%)
6,200 Host Marriott Financial Trust $3.375 - 144A*.................. 388,343
-----------
Industrials (1.9%)
5,600 Crown Cork & Seal Co., Inc. $1.885............................ 272,300
5,400 TCI Pacific Communications $5.00 (6).......................... 604,125
8,300 Vanstar Financing Trust $3.375 - 144A*........................ 325,070
-----------
1,201,495
-----------
Insurance (0.6%)
10,300 Salomon, Inc. $7.625 (7)...................................... 367,586
-----------
Media Group (0.6%)
4,900 SFX Broadcasting, Inc. (Series D) $3.25....................... 339,418
-----------
Medical Services (0.7%)
7,700 Laboratory Corp of America (Series A) $4.25................... 435,050
-----------
Multi-Industry (0.6%)
4,300 Daimler-Benz AG $1.00......................................... 374,100
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 11
TCW/DW INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -------------------------------------------------------------------------------------------
<C> <S> <C>
Oil & Gas Products (0.7%)
4,700 Occidental Petroleum Corp. (Series A) $3.00 (8)............... $ 451,200
-----------
Oil - Integrated (0.6%)
6,700 Unocal Corp. $3.125........................................... 386,925
-----------
Publishing (0.7%)
6,700 Golden Books Financing Trust $4.375 - 144A*................... 403,052
-----------
Restaurants (0.7%)
7,300 Apple South, Inc. $3.50 - 144A*............................... 462,039
-----------
Retail (1.0%)
11,500 Kmart Financing I $3.875...................................... 626,750
-----------
Telecommunications (0.8%)
10,300 US West, Inc. (Series D) $2.25................................ 486,675
-----------
Transportation (0.4%)
3,700 HVIDE Capital Trust $3.25 - 144A*............................. 222,004
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Identified Cost $9,278,143).................................. 10,912,696
-----------
NUMBER OF EXPIRATION
WARRANTS DATE
- --------- ----------
WARRANT (0.0%)
Entertainment/Gaming
5,866 Fitzgeralds Gaming Corp. - 144A* (Identified Cost
$26,397)......................................... 12/19/98 11,732
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 12
TCW/DW INCOME AND GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1997 (unaudited) continued
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN COUPON MATURITY
THOUSANDS RATE DATE VALUE
- -------------------------------------------------------------------------------------------
<C> <S> <C> <C>
SHORT-TERM INVESTMENT (3.0%)
REPURCHASE AGREEMENT
$1,863 The Bank of New York (dated 07/31/97;
proceeds $1,863,178) (a) (Identified
Cost $1,862,880)....................... 5.75% 08/01/97 $ 1,862,880
-----------
TOTAL INVESTMENTS
(Identified Cost $56,273,058) (b)..................... 99.0% 61,733,845
OTHER ASSETS IN EXCESS OF LIABILITIES................. 1.0 633,260
---- -----------
NET ASSETS............................................ 100.0% $62,367,105
===== ===========
</TABLE>
- ---------------------
<TABLE>
<C> <S>
* Resale is restricted to qualified institutional investors.
+ Issuer is an affiliate of the Fund's Manager, Dean Witter Services
Company Inc.
++ Consists of more than one class of securities traded together as a
unit; bonds or stocks with attached warrants.
(1) Exchangeable into Boeing Co. common stock.
(2) Exchangeable into Johnson & Johnson Co. common stock.
(3) Exchangeable into PMI Group Inc. common stock.
(4) Exchangeable into Cisco Systems Inc. common stock.
(5) Exchangeable into Cox Communications Inc. common stock.
(6) Exchangeable into Tele-Communications (Class A) common stock.
(7) Exchangeable into Financial Security Assurance Holdings, Ltd. common
stock.
(8) Exchangeable into Canadian Occidental Petroleum common stock.
"TRACES" Trust Automatic Common Exchange Securities of "Republic Industries
Inc."
(a) Collateralized by $600,000 Federal National Mortgage Assoc. 9.55% due
09/10/97 valued at $624,769, $223,724 Federal National Mortgage
Assoc. 7.17% due 06/29/01 valued at $227,770, $385,396 U.S. Treasury
Bond 7.25% due 05/15/16 valued at $428,095 and $600,000 U.S. Treasury
Bond 6.50% due 11/15/26 valued at $619,504.
(b) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$5,813,388 and the aggregate gross unrealized depreciation is
$352,601, resulting in net unrealized appreciation of $5,460,787.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 13
TCW/DW INCOME AND GROWTH FUND
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1997 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $56,273,058)............ $61,733,845
Receivable for:
Investments sold...................... 258,607
Interest.............................. 748,155
Shares of beneficial interest sold.... 133,225
Dividends............................. 29,706
Deferred organizational expenses.......... 26,498
Prepaid expenses.......................... 43,535
-----------
TOTAL ASSETS.......................... 62,973,571
-----------
LIABILITIES:
Payable for:
Investments purchased................. 472,126
Plan of distribution fee.............. 39,275
Management fee........................ 23,566
Investment advisory fee............... 15,710
Shares of beneficial interest
repurchased.......................... 13,060
Accrued expenses and other payables....... 42,729
-----------
TOTAL LIABILITIES..................... 606,466
-----------
NET ASSETS............................ $62,367,105
===========
COMPOSITION OF NET ASSETS:
Paid-in-capital........................... 54,993,970
Net unrealized appreciation............... 5,460,787
Accumulated undistributed net investment
income................................... 416,951
Accumulated undistributed net realized
gain..................................... 1,495,397
-----------
NET ASSETS............................ $62,367,105
===========
CLASS A SHARES:
Net Assets................................ $11,107
Shares Outstanding (unlimited authorized,
$.01 par value).......................... 932
NET ASSET VALUE PER SHARE............. $11.92
===========
MAXIMUM OFFERING PRICE PER SHARE
(net asset value plus 4.44% of net
asset value)......................... $12.45
CLASS B SHARES:
Net Assets................................ $5,014,682
Shares Outstanding (unlimited authorized,
$.01 par value).......................... 420,712
NET ASSET VALUE PER SHARE............. $11.92
===========
CLASS C SHARES:
Net Assets................................ $57,331,209
Shares Outstanding (unlimited authorized,
$.01 par value).......................... 4,808,601
NET ASSET VALUE PER SHARE............. $11.92
===========
CLASS D SHARES:
Net Assets................................ $10,107
Shares Outstanding (unlimited authorized,
$.01 par value).......................... 848
NET ASSET VALUE PER SHARE............. $11.92
===========
STATEMENT OF OPERATIONS
For the six months ended July 31, 1997* (unaudited)
NET INVESTMENT INCOME:
INCOME
Interest.................................. $ 1,931,475
Dividends................................. 225,878
-----------
TOTAL INCOME.......................... 2,157,353
-----------
EXPENSES
Plan of distribution fee (Class C
Shares).................................. 223,915
Management fee............................ 134,472
Investment advisory fee................... 89,648
Professional fees......................... 31,033
Transfer agent fees and expenses.......... 26,942
Shareholder reports and notices........... 24,752
Organizational expenses................... 19,737
Registration fees......................... 16,549
Trustees' fees and expenses............... 16,405
Other..................................... 15,704
-----------
TOTAL EXPENSES........................ 599,157
-----------
NET INVESTMENT INCOME................. 1,558,196
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain......................... 1,511,727
Net change in unrealized appreciation..... 1,933,693
-----------
NET GAIN.............................. 3,445,420
-----------
NET INCREASE.............................. $ 5,003,616
===========
</TABLE>
- ---------------------
* Class A, Class B and Class D shares were issued July 28, 1997
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 14
TCW/DW INCOME AND GROWTH FUND
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JULY 31, ENDED
1997* JANUARY 31, 1997
- -------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income................................. $ 1,558,196 $ 3,001,268
Net realized gain..................................... 1,511,727 3,798,985
Net change in unrealized appreciation................. 1,933,693 475,436
----------- ------------
NET INCREASE...................................... 5,003,616 7,275,689
----------- ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class C shares.................................... (1,584,575) (3,008,077)
Net realized gain
Class C shares.................................... (871,785) (2,721,147)
----------- ------------
TOTAL DIVIDENDS AND DISTRIBUTIONS................. (2,456,360) (5,729,224)
----------- ------------
Net increase (decrease) from transactions in shares of
beneficial interest.................................. (1,120,725) 1,763,514
----------- ------------
NET INCREASE...................................... 1,426,531 3,309,979
NET ASSETS:
Beginning of period................................... 60,940,574 57,630,595
----------- ------------
END OF PERIOD
(Including undistributed net investment income of
$416,951 and $443,330, respectively).............. $62,367,105 $ 60,940,574
=========== ============
</TABLE>
- ---------------------
* Class A, Class B and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 15
TCW/DW INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1997 (unaudited)
1. ORGANIZATION AND ACCOUNTING POLICIES
TCW/DW Income and 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 to generate
high total return by providing a high level of current income and the potential
for capital appreciation. The Fund seeks to achieve its objective by investing
in bonds or preferred stock convertible into common stock, other fixed income
securities, common stocks and U.S. Government securities. The Fund was organized
as a Massachusetts business trust on November 23, 1992 and commenced operations
on March 31, 1993. On July 28, 1997, the Fund commenced offering three
additional classes of shares, with the then current shareholders, other than
shares which were acquired in exchange for shares of Funds for which Dean Witter
Services Company Inc. serves as Manager and TCW Funds Management, Inc. serves as
Adviser ("TCW/DW Funds") offered with a contingent deferred sales charge
("CDSC") and shares acquired through reinvestment of dividends and distributions
thereon, have been designated Class C shares. Shares held prior to July 28, 1997
which were acquired in exchange for shares of a TCW/DW Fund sold with a CDSC,
including shares acquired through reinvestment of dividends and distributions
thereon, have been designated 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);
<PAGE> 16
TCW/DW INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1997 (unaudited) continued
(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; (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
until sixty days prior to maturity and thereafter at amortized cost based on
their value on the 61st day. Short-term debt securities having a maturity date
of sixty days or less at the time of purchase are valued at amortized cost.
B. ACCOUNTING FOR INVESTMENTS -- Security transactions are accounted for on the
trade date (date the order to buy or sell is executed). Realized gains and
losses on security transactions are determined by the identified cost method.
Discounts are accreted over the life of the respective securities. Dividend
income and other distributions are recorded on the ex-dividend date. Interest
income is accrued daily.
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. Distribution fees are charged directly to the
respective class.
C. 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.
D. 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
<PAGE> 17
TCW/DW INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1997 (unaudited) continued
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.
E. ORGANIZATIONAL EXPENSES -- Dean Witter InterCapital Inc., an affiliate of
Dean Witter Services Company Inc. (the "Manager"), paid the organizational
expenses of the Fund in the amount of approximately $206,000 of which $200,000
have been reimbursed. 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 Investment Manager a
management fee, accrued daily and payable monthly, by applying the following
annual rates to the net assets of the Fund determined as of the close of each
business day: 0.45% to the portion of daily net assets not exceeding $500
million and 0.42% 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: 0.30% to the portion of daily net assets not exceeding $500
million and 0.28% 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,
<PAGE> 18
TCW/DW INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1997 (unaudited) continued
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.
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. 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 -- 0.25% of the average
daily net assets of Class A; (ii) Class B -- 0.75% of the average daily net
assets of Class B, and (iii) Class C -- 0.75% 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, the account executives
of Dean Witter Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and
Distributor, 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 the
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 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
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.
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 0.75% 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
<PAGE> 19
TCW/DW INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1997 (unaudited) continued
expenses representing a gross sales credit to account executives may be
reimbursed in the subsequent calendar year. For the period ended July 31, 1997,
the distribution fee was accrued for Class A shares and Class C shares at the
annual rate of 0.25% and 0.75%, respectively.
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, 1997 aggregated
$29,307,640 and $31,244,417 respectively.
Included in the aforementioned sales were sales of Morgan Stanley & Co.
securities, an affiliate of the Manager since May 31, 1997, in the amount of
$426,825, including realized gains of $45,774.
For the period May 31, 1997 through July 31, 1997, the Fund incurred brokerage
commissions with Morgan Stanley & Co., Inc, in the amount of $213.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At July 31, 1997, the Fund had
transfer agent fees and expenses payable of approximately $862.
<PAGE> 20
TCW/DW INCOME AND GROWTH FUND
NOTES TO FINANCIAL STATEMENTS July 31, 1997 (unaudited) continued
6. 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, 1997 JANUARY 31, 1997
--------------------------- ---------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
CLASS A SHARES*
Sold.......................................................... 932 $ 11,012 -- --
---------- ------------ ---------- ------------
CLASS B SHARES*
Sold.......................................................... 5,019 59,486 -- --
Redeemed...................................................... (565) (6,716) -- --
---------- ------------ ---------- ------------
Net increase--Class B......................................... 4,454 52,770 -- --
---------- ------------ ---------- ------------
CLASS C SHARES
Sold.......................................................... 711,394 8,111,459 1,635,756 $ 18,613,081
Reinvestment of dividends and distributions................... 179,834 2,043,565 431,286 4,808,760
Redeemed...................................................... (1,002,070) (11,349,545) (1,909,009) (21,658,327)
---------- ------------ ---------- ------------
Net increase (decrease)--Class C.............................. (110,842) (1,194,521) 158,033 1,763,514
---------- ------------ ---------- ------------
CLASS D SHARES*
Sold.......................................................... 848 10,014 -- --
---------- ------------ ---------- ------------
Net increase (decrease) in Fund............................... (104,608) $ (1,120,725) 158,033 $ 1,763,514
========== ============ ========== ============
</TABLE>
- ---------------------
+ On July 28, 1997, 416,258, shares representing $4,916,004 were transferred to
Class B.
* For the period July 28, 1997 (issue date) through July 31, 1997.
<PAGE> 21
TCW/DW INCOME AND GROWTH FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
MARCH 31,
FOR THE SIX FOR THE YEAR ENDED 1993*
MONTHS ENDED JANUARY 31, THROUGH
JULY 31, --------------------------------------------- JANUARY 31,
1997** 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C>
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period..... $ 11.42 $ 11.13 $ 9.77 $ 10.98 $ 10.00
-------- ---------- ---------- ----------
Net investment income.................... 0.37 0.60 0.59 0.59 0.45
Net realized and unrealized gain
(loss).................................. 0.60 0.84 1.37 (1.20) 1.02
-------- ---------- ---------- ----------
Total from investment operations......... 0.97 1.44 1.96 (0.61) 1.47
-------- ---------- ---------- ----------
Less dividends and distributions from:
Net investment income................. (0.30) (0.60) (0.60) (0.55) (0.39)
Net realized gain..................... (0.17) (0.55) -- (0.05) (0.10)
-------- ---------- ---------- ----------
Total dividends and distributions........ (0.47) (1.15) (0.60) (0.60) (0.49)
-------- ---------- ---------- ----------
Net asset value, end of period........... $ 11.92 $ 11.42 $ 11.13 $ 9.77 $ 10.98
======== ========== ========== ==========
TOTAL INVESTMENT RETURN+................. 8.72%(1) 13.46% 20.52% (5.59)% 15.06%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................. 1.97%(2) 2.02% 2.21% 2.04% 1.57%(2)(3)
Net investment income.................... 5.10%(2) 5.19% 5.41% 5.83% 5.62%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands............................... $57,331 $60,941 $57,631 $55,335 $64,370
Portfolio turnover rate.................. 50%(1) 102% 79% 88% 84%(1)
Average commission rate paid............. $0.0178 $0.0540 -- -- --
</TABLE>
- ---------------------
* Commencement of operations.
** Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date, other than shares which were acquired in
exchange for shares of Funds for which Dean Witter Services Company Inc
serves as Manager and TCW Fund's Management, Inc. serves as Adviser
("TCW/DW Funds") offered with a contingent deferred sales charge ("CDSC")
and shares acquired through reinvestment of dividends and distributions
thereon, have been designated Class C shares. Shares held prior to July 28,
1997 which were acquired in exchange for shares of a TCW/DW Fund sold with
a CDSC, including shares acquired through reinvestment of dividends and
distributions thereon, have been designated Class B shares.
+ 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.
(3) If the Manager and Investment Adviser had not reimbursed all expenses and
waived the management fee, the above annualized expense and net investment
income ratios would have been 2.00% and 5.18%, respectively.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 22
TCW/DW INCOME AND GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
JULY 31, 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................................................................... $ 11.81
------
Net investment income.......................................................................................... 0.01
Net realized and unrealized gain............................................................................... 0.10
------
Total from investment operations............................................................................... 0.11
------
Net asset value, end of period................................................................................. $ 11.92
======
TOTAL INVESTMENT RETURN+....................................................................................... 0.93%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses....................................................................................................... 1.49%(2)
Net investment income.......................................................................................... 11.13%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands........................................................................ $11
Portfolio turnover rate........................................................................................ 50%(1)
Average commission rate paid................................................................................... $0.0178
CLASS B SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................................................................... $ 11.81
------
Net investment income.......................................................................................... 0.01
Net realized and unrealized gain............................................................................... 0.10
------
Total from investment operations............................................................................... 0.11
------
Net asset value, end of period................................................................................. $ 11.92
======
TOTAL INVESTMENT RETURN+....................................................................................... 0.93%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses....................................................................................................... 1.98%(2)
Net investment income.......................................................................................... 10.63%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands........................................................................ $5,015
Portfolio turnover rate........................................................................................ 50%(1)
Average commission rate paid................................................................................... $0.0178
</TABLE>
- ---------------------
* The date the shares were first issued. Class B participants holding shares
prior to July 28, 1997 should refer to the Financial Highlights of Class C
to obtain the historical per share and ratio information of their shares.
+ 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> 23
TCW/DW INCOME AND GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
JULY 31, 1997
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
CLASS D SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period........................................................................... $ 11.81
--------
Net investment income.......................................................................................... 0.01
Net realized and unrealized gain............................................................................... 0.10
--------
Total from investment operations............................................................................... 0.11
--------
Net asset value, end of period................................................................................. $ 11.92
========
TOTAL INVESTMENT RETURN+....................................................................................... 0.93%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses....................................................................................................... 1.23%(2)
Net investment income.......................................................................................... 11.39%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands........................................................................ $10
Portfolio turnover rate........................................................................................ 50%(1)
Average commission rate paid................................................................................... $0.0178
</TABLE>
- ---------------------
* The date the shares were first issued.
+ 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> 24
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
Thomas E. Larkin, Jr.
President
Barry Fink
Vice President, Secretary and
General Counsel
Robert M. Hanisee
Vice President
Kevin A. Hunter
Vice President
Mark L. Attanasio
Vice President
Melissa V. Weiler
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust FSB
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 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.
- ------ ----
T C W / D W
- ------ ----
INCOME AND
GROWTH FUND
Semiannual Report
July 31, 1997
