TCW DW BALANCED FUND, N-30D, 1996-05-28

TCW DW BALANCED FUND
N-30D, 1996-05-28

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<PAGE>
TCW/DW BALANCED FUND
Two World Trade Center
New York, New York 10048

DEAR SHAREHOLDER:
- --------------------------------------------------------------------------------

For the six months ended March 31, 1996, the Fund produced a total return of
5.46 percent. Over the same period, the Fund's comparative benchmarks, the
Standard & Poor's 500 Composite Stock Price Index (S&P 500) and the Lehman
Brothers Aggregate Bond Index, produced total returns of 11.72 and 2.41 percent,
respectively.

EQUITY MARKET OVERVIEW

In the fourth quarter of 1995 bonds staged a strong rally, largely in
response to fears that the U.S. economy was slipping into recession but
attributable also to lingering hopes that a balanced budget agreement would be
reached in Washington. In addition, the Federal Reserve Board continued to ease
monetary policy by cutting the federal-funds rate by 25 basis points (0.25
percent) in December and January, paralleling the program of monetary stimulus
under way in Europe and Japan. (The federal-funds rate is the interest rate
Federal Reserve banks charge other banks for overnight loans.)

Although fourth-quarter gross domestic product growth was a positive 0.5
percent there was a pronounced deceleration of momentum as inventories were
trimmed in the face of extremely weak consumer spending. Evidence of this
slowdown and resulting fears that the economy was on the verge of recession led
to marked underperformance by such cyclical groups as technology, automobile,
airline and other revitalized U.S. industrial companies. Right now the
technology sector, which posted extraordinary gains throughout much of 1995,
experienced a slowdown in the fourth quarter in connection with several major
product transitions in wireless communications, personal computers and computer
software. The Fund's investment adviser, TCW Funds Management, Inc. (TCW),
expects growth in these sectors to pick up later this year; in fact, in the
first quarter of 1996, the technology sector appeared to regain some of the
momentum seen earlier in 1995. The strongest performers over the past several
months were defensive consumer companies and other interest-rate-sensitive
groups such as utilities, all of which were driven by the rally in bonds.

Amid these signs of economic improvement and the accompanying rise in
yields, defensive and interest-rate-sensitive issues surrendered the market
leadership they had enjoyed since late 1995. Cyclical issues, whose share prices
had declined in response to expectations of slower revenue and profit growth in
1996, rebounded strongly. It remains TCW's conviction that global economic
growth will continue, at least for the intermediate term, at a noninflationary
pace, led by the United States, as well as a budding recovery in Japan and an
eventual pickup in Europe. The economies of Asia, Latin America and Eastern
Europe are also expected to be contributors as well as beneficiaries. This
growth should be positive for the Fund, as many of the portfolio's holdings have
a large and growing exposure to both the mature and emerging markets.

BOND MARKET OVERVIEW

After excellent returns registered in the last quarter of 1995, the bond
market in general and the Fund's fixed-income portfolio in particular
experienced a difficult period during the first quarter of 1996. In retrospect
it is understandable that the bond market was caught off guard during the first
quarter of 1996. At year-end, investors were optimistic that Congress had seized
the opportunity to materially reduce the federal budget deficit. Unfortunately,
the tactic of closing the government, although pleasing to Wall Street, flopped
on Main Street. The government shutdown also delayed the release of vital
economic data. During the first six weeks of the year, investors were forced to
rely on anecdotal evidence emphasizing weak Christmas retail sales and layoffs
by major corporations such as AT&T.
<PAGE>
Technical factors also affected the bond market. Unlike cash flows into
stock funds, which remained vigorous, high-quality bond funds continued to
experience only modest inflows. Without a retail buying cushion, the bond market
remained extremely vulnerable to speculative selling by hedge funds and other
opportunistic investors who, because of their short-term holding horizons, were
quick to sell on the slightest hint of trouble.

THE PORTFOLIO

The Fund combines high-quality fixed-income securities with blue-chip
quality large-capitalization stocks. Assets are allocated between stocks and
bonds, based on the investment adviser's outlook for interest rates and
corporate profits. For the past six months, asset allocation was 65 percent
equities and 35 percent fixed-income securities.

The sectors in which the Fund's equity portfolio was heavily weighted over
the past six months -- technology, automobiles and airlines -- have experienced
unexpected weakness, particularly during the fourth quarter of 1995. Despite
this underperformance, TCW believes that these groups represent the most
attractive exposure to the dynamics of the post-cold war global economy. The
Fund continues to maintain large positions in many value added technology
leaders (Intel Corp. and Hewlett-Packard Co.), basic industries (Caterpillar,
Inc. and Boeing Co.) and manufacturers of both producer and consumer durables
(Johnson & Johnson and Procter & Gamble Co.).

TCW implemented several strategies aimed at reducing the impact of the bond
market's sell-off. The portfolio's duration was gradually shortened, from 11.5
percent to 10.3 percent, as was the average maturity, which was achieved by
increasing exposure to issues maturing in 7 to 10 years and reducing exposure to
20- and 30-year securities. (Duration measures a bond fund's sensitivity to
interest-rate movements; basically, the effect of interest-rate fluctuations on
a bond portfolio can be determined by multiplying its duration by the percentage
rates rise or fall.) These actions, especially that of shortening duration,
moderated the impact of rising interest rates. In addition, the Fund's exposure
to mortgage-backed securities was increased in an attempt to capture the
relative value afforded by that sector.

Pending the release of more substantive economic data, TCW sees the
potential for further adjustments to the fixed-income portfolio's duration to
take advantage of the direction of economic growth. In the meantime, TCW
believes that increased exposure to mortgage-backed securities -- which are
currently returning between 80 and 100 basis points (0.80 and 1.00 percentage
points) above similar maturity U.S. Treasury securities -- should be beneficial.
The increased exposure to issues in the intermediate area of the yield curve
should bode well for the Fund if interest rates decline in anticipation of
additional Federal Reserve Board easing. Because of a lack of relative value
seen in the high-quality corporate-bond sector, the portfolio remains
underweighted in that area.

LOOKING AHEAD

It is TCW's conviction that the U.S. economy has, for the time being,
successfully avoided recession and staved off inflation -- the fabled "soft
landing." Through all of this, TCW believes that 1996 will be a year of
competitive returns for the Fund's equity portfolio. The portfolio has a
projected earnings per share increase that is two to three times the consensus
forecast of a 5 to 10 percent gain for the S&P 500. However, an expansion of
price/earnings ratios is unlikely since no further cuts in interest rates are
probable for the balance of this cycle. Share price gains will depend solely on
profit performance. Market leadership is expected to be concentrated among those
companies that can produce profits which substantially outpace the market.

Fears about the economy overheating, which would ultimately provoke a
tightening by the Federal Reserve Board, will most likely linger. The overriding
concern of stock and bond market investors is a coordinated global recovery,
which could result in inflation and worldwide monetary tightening. TCW remains
alert to this potential but believes currently that this is more likely a late
1996 or 1997 problem, if at all.
<PAGE>
TCW's economic forecast assumes that inflation will average 3 percent in
1996 and that real economic growth (adjusted for inflation) will advance by
slightly over 2 percent -- an outlook that is basically consistent with the
current level of interest rates. Given the uncertainty of the data, however, it
is difficult to rule out the possibility of accelerating growth and somewhat
higher inflation, a scenario that would lead to still higher interest rates.

We appreciate your support of TCW/DW Balanced Fund and look forward to
continuing to serve your investment needs and objectives.

Very truly yours,

[SIGNATURE]
Charles A. Fiumefreddo
CHAIRMAN OF THE BOARD
<PAGE>
TCW/DW BALANCED FUND
PORTFOLIO OF INVESTMENTS MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (65.3%)
AIR TRANSPORT (1.9%)
13,200 AMR Corp.*................................................................................... $ 1,181,400
9,200 Delta Air Lines, Inc......................................................................... 707,250
------------
1,888,650
------------
AIRCRAFT & AEROSPACE (3.3%)
21,800 Boeing Co.................................................................................... 1,888,425
21,600 Northrop Grumman Corp........................................................................ 1,374,300
------------
3,262,725
------------
ALUMINUM (0.7%)
11,400 Aluminum Co. of America...................................................................... 713,925
------------
AUTO PARTS - ORIGINAL EQUIPMENT (1.2%)
35,900 Lear Seating Corp.*.......................................................................... 1,171,237
------------
AUTOMOTIVE (2.7%)
30,100 Chrysler Corp................................................................................ 1,873,725
21,900 Ford Motor Co................................................................................ 752,812
------------
2,626,537
------------
BANKS (1.6%)
20,300 Citicorp..................................................................................... 1,624,000
------------
BIOTECHNOLOGY (2.1%)
38,099 Guidant Corp................................................................................. 2,062,108
------------
BROADCAST MEDIA (1.7%)
40,700 Viacom, Inc. (Class B)*...................................................................... 1,714,487
------------
BROKERAGE (2.0%)
32,600 Merrill Lynch & Co., Inc..................................................................... 1,980,450
------------
BUSINESS SYSTEMS (1.9%)
33,500 General Motors Corp. (Class E)............................................................... 1,909,500
------------
CHEMICALS (1.4%)
27,000 Union Carbide Corp........................................................................... 1,339,875
------------
COMMUNICATIONS - EQUIPMENT & SOFTWARE (1.8%)
39,500 Cisco Systems, Inc.*......................................................................... 1,831,812
------------
COMPUTER SERVICES (1.8%)
25,300 First Data Corp.............................................................................. 1,783,650
------------
COMPUTER SOFTWARE (0.7%)
13,900 Oracle Corp.*................................................................................ 651,563
------------
CONSUMER PRODUCTS (1.8%)
23,800 Kimberly-Clark Corp.......................................................................... 1,773,100
------------
ELECTRONICS - DEFENSE (1.8%)
19,000 Hewlett-Packard Co........................................................................... 1,786,000
------------
</TABLE>

<PAGE>
TCW/DW BALANCED FUND
PORTFOLIO OF INVESTMENTS MARCH 31, 1996 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- ------------
<C> <S> <C>
ELECTRONICS - SEMICONDUCTORS/COMPONENTS (3.4%)
36,700 Intel Corp................................................................................... $ 2,082,725
24,700 Motorola, Inc................................................................................ 1,309,100
------------
3,391,825
------------
FINANCE (1.9%)
21,600 Federal Home Loan Mortgage Corp.............................................................. 1,841,400
------------
HEALTH EQUIPMENT & SERVICES (1.4%)
23,700 Columbia/HCA Healthcare Corp................................................................. 1,368,675
------------
HEALTHCARE - DRUGS (4.1%)
70,600 Ivax Corp.................................................................................... 1,826,775
14,100 Johnson & Johnson............................................................................ 1,300,725
14,700 Merck & Co., Inc............................................................................. 915,075
------------
4,042,575
------------
HOTELS (2.1%)
62,100 Circus Circus Enterprises, Inc.*............................................................. 2,088,113
------------
HOUSEHOLD APPLIANCES (1.7%)
57,100 American Standard Companies, Inc.*........................................................... 1,670,175
------------
INDUSTRIALS (1.3%)
19,300 Caterpillar, Inc............................................................................. 1,312,400
------------
INSURANCE (1.2%)
13,200 American International Group, Inc............................................................ 1,235,850
------------
INSURANCE BROKERS (0.5%)
5,400 Marsh & McLennan Companies, Inc.............................................................. 501,525
------------
NATURAL RESOURCES (1.4%)
16,200 Texaco, Inc.................................................................................. 1,393,200
------------
OFFICE EQUIPMENT & SUPPLIES (0.7%)
5,300 Xerox Corp................................................................................... 665,150
------------
OIL - INTERNATIONAL (1.7%)
30,100 Chevron Corp................................................................................. 1,689,363
------------
OIL WELL EQUIPMENT & SERVICE (1.9%)
23,800 Schlumberger Ltd. (Netherlands Antilles)..................................................... 1,883,175
------------
PAPER & FOREST PRODUCTS (1.7%)
37,000 Weyerhaeuser Co.............................................................................. 1,706,625
------------
RAILROADS (0.7%)
8,000 Burlington Northern Santa Fe Corp............................................................ 657,000
------------
RECREATION (1.8%)
28,600 Walt Disney Co............................................................................... 1,826,825
------------
RESTAURANTS (1.4%)
29,000 McDonald's Corp.............................................................................. 1,392,000
------------
RETAIL (1.2%)
41,100 CUC International, Inc.*..................................................................... 1,202,175
------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- --------- --------- ------------
<C> <S> <C> <C> <C>
CORPORATE BONDS (4.5%)
BANKS (1.2%)
$ 1,200 Citicorp................................................................... 7.125% 03/15/04 1,216,056
------------
FINANCIAL (1.0%)
1,000 Abbey National PLC (United Kingdom)........................................ 6.69 10/17/05 982,380
------------
INDUSTRIALS (0.7%)
600 Caterpillar, Inc........................................................... 9.375 03/15/21 728,970
------------
UTILITIES (1.6%)
800 Florida Power & Light Co................................................... 7.05 12/01/26 744,040
800 Texas Utilities Electric Co................................................ 7.875 04/01/24 784,248
------------
1,528,288
------------
TOTAL CORPORATE BONDS (IDENTIFIED COST $4,552,490)............................................... 4,455,694
------------
</TABLE>

<TABLE>
<CAPTION>
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AGENCY MORTGAGE PASS-THROUGH CERTIFICATES (12.8%)
1,373 Federal Home Loan Mortgage Corp............................................ 6.00 03/01/11 1,317,368
1,660 Federal Home Loan Mortgage Corp............................................ 6.50 03/01/11 1,626,800
1,993 Federal Home Loan Mortgage Corp............................................ 7.00 08/01/25 1,946,384
1,711 Federal Home Loan Mortgage Corp............................................ 7.00 01/01/26 1,670,705
1,606 Federal Home Loan Mortgage Corp............................................ 6.50 03/01/26 1,529,118
1,749 Government National Mortgage Assoc......................................... 6.00 08/20/25 1,742,416
2,815 Government National Mortgage Assoc......................................... 7.50 02/15/26 2,814,561
------------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE PASS-THROUGH CERTIFICATES (IDENTIFIED COST $12,833,882)....
12,647,352
------------

</TABLE>

<PAGE>
TCW/DW BALANCED FUND
PORTFOLIO OF INVESTMENTS MARCH 31, 1996 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (IN COUPON MATURITY
THOUSANDS) RATE DATE VALUE
- ----------- --------- --------- ------------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT OBLIGATIONS (12.5%)
$ 1,000 U.S. Treasury Bond......................................................... 12.00% 08/15/13 $ 1,444,375
4,220 U.S. Treasury Note......................................................... 5.00 01/31/98 4,163,953
430 U.S. Treasury Note......................................................... 7.875 11/15/04 471,858
3,410 U.S. Treasury Note......................................................... 7.50 02/15/05 3,660,955
655 U.S. Treasury Note......................................................... 5.875 11/15/05 631,768
2,935 U.S. Treasury Note Principal Strip......................................... 0.00 05/15/02 2,017,539
------------
TOTAL U.S. GOVERNMENT OBLIGATIONS (IDENTIFIED COST $12,560,508).................................. 12,390,448
------------
</TABLE>

<TABLE>
<CAPTION>
<C> <S> <C> <C> <C>
ASSET-BACKED SECURITIES (2.9%)
435 First Alliance Mortgage Loan Trust 94 A-1.................................. 5.85 04/25/25 418,929
614 First Alliance Mortgage Loan Trust 94 A-2.................................. 7.625 07/25/25 620,504
1,398 The Money Stores Home Equity Trust 93 D.................................... 5.675 02/15/09 1,347,282
446 UCFC Home Equity Loan 93 D................................................. 5.45 07/10/13 431,981
------------
TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $2,877,389)....................................... 2,818,696
------------
</TABLE>

<TABLE>
<CAPTION>
<C> <S> <C> <C> <C>
SHORT-TERM INVESTMENT (1.9%)
REPURCHASE AGREEMENT
1,864 The Bank of New York (dated 03/29/96; proceeds $1,864,434; collateralized
by $1,778,432 U.S. Treasury Bond 7.25% due 05/15/16 valued at $1,901,010)
(Identified Cost $1,863,735)............................................. 4.50 04/01/96 1,863,735
------------
TOTAL INVESTMENTS (IDENTIFIED COST $89,520,520)(A).................................................... 99.9% 98,895,896
OTHER ASSETS IN EXCESS OF LIABILITIES................................................................. 0.1 148,528
------ -----------
NET ASSETS............................................................................................ 100.0% $99,044,424
------ -----------
------ -----------
<FN>
- ----------------
ADR AMERICAN DEPOSITORY RECEIPT.
* NON-INCOME PRODUCING SECURITY.
(A) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES APPROXIMATES IDENTIFIED
COST. THE AGGREGATE GROSS UNREALIZED APPRECIATION WAS $10,418,343 AND THE
AGGREGATE GROSS UNREALIZED DEPRECIATION WAS $1,243,398, RESULTING IN NET
UNREALIZED APPRECIATION OF $9,174,945.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW BALANCED FUND
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $89,520,520)....... $98,895,896
Receivable for:
Interest............................ 285,351
Dividends........................... 97,336
Shares of beneficial interest
sold.............................. 80,800
Deferred organizational expenses...... 92,003
Prepaid expenses...................... 63,100
----------
TOTAL ASSETS.................. 99,514,486
----------
LIABILITIES:
Payable for:
Shares of beneficial interest
repurchased....................... 259,100
Plan of distribution fee............ 84,185
Management fee...................... 37,883
Investment advisory fee............. 25,255
Dividends to shareholders........... 3,477
Accrued expenses...................... 60,162
----------
TOTAL LIABILITIES............. 470,062
----------
NET ASSETS:
Paid-in-capital....................... 92,999,342
Net unrealized appreciation........... 9,375,376
Accumulated undistributed net
investment income................... 906,470
Accumulated net realized loss......... (4,236,764)
----------
NET ASSETS.................... $99,044,424
----------
----------
NET ASSET VALUE PER SHARE, 9,026,129
shares outstanding (unlimited shares
authorized of $.01 par value).......
$10.97
----------
----------
</TABLE>

Statement of Operations
FOR THE SIX MONTHS ENDED MARCH 31, 1996 (UNAUDITED)

<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Interest............................. $1,234,399
Dividends (net of $149 foreign
withholding tax)................... 492,555
---------
TOTAL INCOME....................... 1,726,954
---------
EXPENSES
Plan of distribution fee........... 499,929
Management fee..................... 230,694
Investment advisory fee............ 153,796
Transfer agent fees and expenses... 60,444
Professional fees.................. 41,789
Shareholder reports and notices.... 25,139
Registration fees.................. 20,605
Organizational expenses............ 17,872
Trustees' fees and expenses........ 15,603
Custodian fees..................... 9,355
Other.............................. 10,074
---------
TOTAL EXPENSES................... 1,085,300
---------
NET INVESTMENT INCOME............ 641,654
---------
NET REALIZED AND UNREALIZED GAIN
(LOSS):
Net realized gain.................. 5,325,266
Net change in unrealized
appreciation..................... (571,028)
---------
NET GAIN......................... 4,754,238
---------
NET INCREASE..................... $5,395,892
---------
---------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS

<PAGE>
TCW/DW BALANCED FUND
FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

Statement of Changes in Net Assets
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR THE YEAR
FOR THE SIX MONTHS ENDED
ENDED SEPTEMBER 30,
MARCH 31, 1996 1995
------------------- ----------------
<S> <C> <C>
(UNAUDITED)
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income..................................... $ 641,654 $ 2,266,144
Net realized gain (loss).................................. 5,325,266 (5,631,997)
Net change in unrealized appreciation/depreciation........ (571,028) 14,919,841
------------------- ----------------
Net increase.......................................... 5,395,892 11,553,988
Dividends from net investment income...................... (464,874) (1,210,475)
Net decrease from transactions in shares of beneficial
interest................................................ (12,603,032) (52,984,026)
------------------- ----------------
Total decrease........................................ (7,672,014) (42,640,513)
NET ASSETS:
Beginning of period......................................... 106,716,438 149,356,951
------------------- ----------------
END OF PERIOD (including undistributed net investment income
of $906,470 and $729,690, respectively).................... $ 99,044,424 $106,716,438
------------------- ----------------
------------------- ----------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW BALANCED FUND
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------

1. ORGANIZATION AND ACCOUNTING POLICIES--TCW/DW Balanced Fund (the "Fund") is
registered under the Investment Company Act of 1940, as amended (the "Act"), as
a diversified, open-end management investment company. The Fund was organized as
a Massachusetts business trust on March 2, 1993 and commenced operations on
October 29, 1993.

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, other domestic or foreign stock exchange is valued at
its latest sale price on that exchange prior to the time when assets are
valued; if there were no sales that day, the security is valued at the
latest bid price (in cases where securities are traded on more than one
exchange; the securities are valued on the exchange designated as the
primary market by the Adviser); (2) all other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (3) when market
quotations are not readily available, including circumstances under which it
is determined by the Adviser that sale and 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 utilizes a matrix system incorporating
security quality, maturity and coupon as the evaluation model parameters,
and/or research and evaluation by its staff, including review of
broker-dealer market price quotations, if available, in determining what it
believes is the fair valuation of the portfolio securities valued by such
pricing service; and (5) short-term debt securities having a maturity date
of more than sixty days at time of purchase are valued on a mark-to-market
basis until sixty days prior to maturity and thereafter at amortized cost
based on their value on the 61st day. Short-term debt securities having a
maturity date of sixty days or less at the time of purchase are valued at
amortized cost.

B. ACCOUNTING FOR INVESTMENTS--Security transactions are accounted for on
the trade date (date the order to buy or sell is executed). Realized gains
and losses on security transactions are determined by the identified cost
method. Dividend income and other distributions are recorded on the
ex-dividend date except for certain dividends on foreign securities which
are recorded as soon as the Fund is informed after the ex-dividend date.
Discounts are accreted over the life of the respective securties. Interest
income is accrued daily.

C. FOREIGN CURRENCY TRANSLATION--The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value
of investment securities, other assets and liabilities and forward contracts
are translated at the exchange rates prevailing at the end of the period;
and (2) purchases, sales, income and expenses are translated at the exchange
rates prevailing on the respective dates of such transactions. The resultant
exchange gains and losses are included in the Statement of Operations as
realized and unrealized gain/loss on foreign exchange transactions. Pursuant
to U.S. Federal income tax regulations, certain foreign exchange
gains/losses included in realized and unrealized gain/loss are included in
or are a reduction of ordinary income for federal income tax purposes. The
Fund does not isolate that portion of the results of operations arising as a
result of changes in the foreign exchange rates from the changes in the
market prices of the securities.
<PAGE>
TCW/DW BALANCED FUND
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------

D. FORWARD FOREIGN CURRENCY CONTRACTS--The Fund may enter into forward
foreign currency contracts which are valued daily at the appropriate
exchange rates. The resultant exchange gains and losses are included in the
Statement of Operations as unrealized gain/loss on foreign exchange
transactions. The Fund records realized gains or losses on delivery of the
currency or at the time the forward contract is extinguished (compensated)
by entering into a closing transaction prior to delivery.

E. FEDERAL INCOME TAX STATUS--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.

F. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS--The Fund records dividends
and distributions to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized
capital gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such
amounts are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions which exceed net investment income and net
realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or
distributions in excess of net realized capital gains. To the extent they
exceed net investment income and net realized capital gains for tax
purposes, they are reported as distributions of paid-in-capital.

G. ORGANIZATIONAL EXPENSES--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 $180,493 which have been reimbursed
for the full amount thereof. Such expenses have been deferred and are being
amortized on the straight-line method over a period not to exceed five years
from the commencement of operations.

2. MANAGEMENT AGREEMENT--Pursuant to a Management Agreement, the Fund pays a
management fee, accrued daily and payable monthly, by applying the annual rate
of 0.45% to the net assets of the Fund determined as of the close of each
business day.

Under the terms of the Agreement, the Manager maintains certain of the
Fund's books and records and furnishes, at its own expense, office space,
facilities, equipment, clerical, bookkeeping and certain legal services and pays
the salaries of all personnel, including officers of the Fund who are employees
of the Manager. The Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.

3. INVESTMENT ADVISORY AGREEMENT--Pursuant to an Investment Advisory Agreement
with TCW Funds Management, Inc. (the "Adviser"), the Fund pays an advisory fee,
accrued daily and payable monthly, by applying the annual rate of 0.30% to the
net assets of the Fund determined as of the close of each business day.

Under the terms of the Agreement, the Fund has retained the Adviser to
invest the Fund's assets, including placing orders for the purchase and sale of
portfolio securities. The Adviser obtains and evaluates such information and
advice relating to the economy, securities markets, and specific securities as
it considers necessary or useful to continuously manage the assets of the Fund
in a manner consistent with its investment objective. In addition, the Adviser
pays the salaries of all personnel, including officers of the Fund, who are
employees of the Adviser.
<PAGE>
TCW/DW BALANCED FUND
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------

4. PLAN OF DISTRIBUTION--Dean Witter Distributors Inc. (the "Distributor"), an
affiliate of the Manager, is the distributor of the Fund's shares and, in
accordance with a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under
the Act, finances certain expenses in connection therewith.

Under the Plan, the Distributor bears the expense of all promotional and
distribution related activities on behalf of the Fund, except for expenses that
the Trustees determine to reimburse, as described below. The following
activities and services may be provided by the Distributor, Dean Witter Reynolds
Inc. ("DWR"), an affiliate of the Manager and Distributor, its affiliates and
other dealers who have entered into selected dealer agreements with the
Distributor under the Plan: (1) compensation to, and expenses of, account
executives of DWR and other selected broker-dealers and others including
overhead and telephone expenses; (2) sales incentives and bonuses to sales
representatives and to marketing personnel in connection with promoting sales of
the Fund's shares; (3) expenses incurred in connection with promoting sales of
the Fund's shares; (4) preparing and distributing sales literature; and (5)
providing advertising and promotional activities, including direct mail
solicitation and television, radio, newspaper, magazine and other media
advertisements.

The amount of each monthly reimbursement may in no event exceed an amount
equal to a payment at the annual rate of 1.0% of the Fund's average daily net
assets. Expenses incurred pursuant to the Plan in any fiscal year in excess of
1.0% of the Fund's average daily net assets will not be reimbursed by the Fund
through payments accrued in any subsequent fiscal year. For the six months ended
March 31, 1996, the distribution fee accrued was at the annual rate of 0.98%.

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 March 31, 1996 aggregated $69,645,487 and
$80,250,210, respectively. Included in the aforementioned are purchases and
sales of U.S. Government securities of $30,027,387 and $27,413,523,
respectively.

For the six months ended March 31, 1996, the Fund incurred $5,005 in
brokerage commissions with DWR for portfolio transactions executed on behalf of
the Fund.

Dean Witter Trust Company, an affiliate of the Manager and Distributor, is
the Fund's transfer agent. At March 31, 1996, the Fund had transfer agent fees
and expenses payable of approximately $19,000.

6. SHARES OF BENEFICIAL INTEREST--Transactions in shares of beneficial interest
were as follows:

<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
MARCH 31, 1996
--------------------------- FOR THE YEAR ENDED
SEPTEMBER 30, 1995
(UNAUDITED) ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- --------------
<S> <C> <C> <C> <C>
Sold................................................ 825,486 $ 8,891,340 1,576,172 $ 14,889,309
Reinvestment of dividends........................... 39,267 424,781 114,844 1,094,653
----------- -------------- ----------- --------------
864,753 9,316,121 1,691,016 15,983,962
Repurchased......................................... (2,040,768) (21,919,153) (7,332,918) (68,967,988)
----------- -------------- ----------- --------------
Net decrease........................................ (1,176,015) $ (12,603,032) (5,641,902) $ (52,984,026)
----------- -------------- ----------- --------------
----------- -------------- ----------- --------------
</TABLE>

7. FEDERAL INCOME TAX STATUS--At September 30, 1995, the Fund had a net capital
loss carryover of approximately $4,030,000 which will be available through
September 30, 2003 to offset future capital gains to the extent provided by
regulations.
<PAGE>
TCW/DW BALANCED FUND
NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------

Capital and 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
capital and foreign currency losses of approximately $3,532,000 and $1,799,000,
respectively, during fiscal 1995. At September 30, 1995, the Fund had temporary
book/tax differences primarily attributable to post-October losses and capital
loss deferrals on wash sales and permanent book/tax differences due to foreign
currency losses.

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 the foreign exchange rates underlying the forward
contracts. Risks may also arise upon entering into these contracts from the
potential inability of the counterparties to meet the terms of their contracts.
<PAGE>
TCW/DW BALANCED 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 FOR THE YEAR FOR THE PERIOD
ENDED ENDED OCTOBER 29, 1993*
MARCH 31, 1996 SEPTEMBER 30, 1995 THROUGH
------------------ -------------------- SEPTEMBER 30, 1994
(UNAUDITED) --------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................. $ 10.46 $ 9.43 $ 10.00
------ ------ ------
Net investment income................................ 0.08 0.20 0.10
Net realized and unrealized gain (loss).............. 0.48 0.93 (0.58)
------ ------ ------
Total from investment operations..................... 0.56 1.13 (0.48)
Less dividends from net investment income............ (0.05) (0.10) (0.09)
------ ------ ------
Net asset value, end of period....................... $ 10.97 $ 10.46 $ 9.43
------ ------ ------
------ ------ ------

TOTAL INVESTMENT RETURN+............................. 5.46%(1) 11.97% (4.80)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses............................................. 2.11%(2) 2.11% 2.06%(2)
Net investment income................................ 1.25%(2) 1.88% 1.22%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands.............. $99,044 $106,716 $149,357
Portfolio turnover rate.............................. 70%(1) 123% 113%(1)
Average commission rate paid......................... $0.0190 -- --
</TABLE>

- --------------
* COMMENCEMENT OF OPERATIONS.
+ 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>
(This page has been left blank intentionally.)
<PAGE>

TRUSTEES

John C. Argue
Richard M. DeMartini TCW/DW
Charles A. Fiumefreddo
John R. Haire BALANCED FUND
Dr. Manuel H. Johnson
Paul Kolton
Thomas E. Larkin, Jr. [GRAPHIC]
Michael E. Nugent
John L. Schroeder
Marc I. Stern SEMIANNUAL REPORT

OFFICERS MARCH 31, 1996

Charles A. Fiumefreddo
Chairman and Chief Executive Officer

Thomas E. Larkin, Jr.
President

Sheldon Curtis
Vice President, Secretary and General Counsel

James A. Tilton
Vice President

James M. Goldberg
Vice President

Thomas F. Caloia
Treasurer

TRANSFER AGENT

Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036

MANAGER

Dean Witter Services Company Inc.

ADVISER

TCW Funds Management, Inc.

The financial statements included herein have been taken from the records of the
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.