<PAGE>
TCW/DW TOTAL RETURN TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- -----------------------------------------------------------------------------
The U.S. stock market has effectively been on cruise control throughout
much of this year, rising 10 percent as of June 30, 1996. However, a sharp,
broadly based sell-off in stock prices occurred in the first half of July
which brought forth fears of a secular bear market. Several factors, some
actually in conflict with one another, acted as triggers for the sell-off.
These included frustration that the Federal Reserve Board did not tighten
policy in early July in an effort to hold inflation at bay. This led to
anxiety in the bond market which, in turn, affected equities. Also, earnings
disappointments among several top-tier technology companies prompted fears
that corporate profitability had peaked. These announcements accelerated the
bursting of the speculative bubble in small technology companies. Finally,
prompted by a slowdown in mutual fund sales in June relative to the torrid
pace of the first five months of 1996, concern grew regarding the possibility
of mass redemptions in response to a falling stock market.
While the pace of the July correction was among the steepest on record, a
collateral benefit has been the piercing of the aforementioned speculative
bubble, which brought investor expectations back to reality. Once this
volatility subsides, which may take a few months, many analysts expect a more
gradual and sustainable rise in stock prices to resume, at a pace in line
with earnings growth rates.
TCW/DW Total Return Trust's investment adviser, TCW Funds Management,
Inc., believes that the U.S. economy is not in any immediate danger of
overheating. The investment adviser continues to believe that the threat of
rising inflation is remote, given massive global excess capacity, fiscal
downsizing and privatizations, a rising U.S. dollar, restrained money-supply
growth and top-heavy consumer balance sheets. Furthermore, the investment
adviser anticipates a moderation of growth in the second half of the year and
an extension of the current business cycle well into 1997 and perhaps beyond.
Nascent recoveries in Europe and Japan, as well as in the developing markets
of Latin America and eastern Europe are expected to support further profit
growth for top American companies, which are well represented in the Fund's
portfolio.
Although many market observers would have welcomed a modest tightening by
the Federal Reserve Board, it is not clear that such a move is called for at
this time, even recognizing the lags involved in monetary policy changes.
According to the investment adviser, there is little pricing power in the
economy, and intense global competition. Clearly, some resources are in short
supply and their prices firm, but many others that are in more-than-adequate
supply are suffering pricing pressures. In the investment adviser's view, the
strong productivity gains achieved through the deployment of technology,
especially in the service sector, have undoubtedly pushed the threshold
unemployment rate to below the level at which inflation would accelerate.
What's more, a firmer dollar cuts import prices and the trade gap itself
provides another safety valve, as does the downsizing of both government and
private industry.
Despite signs that growth is moderating from its rapid second-quarter
pace, there are no serious imbalances that should be regarded as harbingers
of recession. Employment and personal income growth are both vigorous,
consumer confidence high, the personal savings rate understated, and both
capital spending and exports are still in solid upward trends. The latter
will benefit more as Europe, Japan and the world's emerging economies
recover. The relatively few disappointments in corporate profits,
particularly among technology companies, were related principally to
inventory and product cycles rather than representing an overall economic
deterioration. Second-half profits are likely to make for more pleasant
reading, particularly in relation to the recently deflated expectations of
investors.
<PAGE>
PERFORMANCE AND PORTFOLIO STRUCTURE
For the fiscal year ended July 31, 1996, the Fund produced a total return
of 8.23 percent, versus 16.51 percent for the Standard & Poor's 500 Composite
Stock Price Index (S&P 500) and 5.31 percent for the Lehman Brothers
Government/Corporate Bond Index. The Fund's current income yield at the end
of the fiscal year was 3 percent. This figure is slightly lower than 12
months ago but is still above the S&P 500's overall dividend yield, which was
slightly above 2 percent. While the investment adviser believes that capital
appreciation is the key to building wealth, the Fund is committed to
maintaining a high level of current income.
The accompanying chart illustrates the growth of a $10,000 investment in
the Fund since inception (November 30, 1994) through the fiscal year ended
July 31, 1996, versus a similar hypothetical investment in the issues that
comprise the S&P 500.
As of July 31, 1996, 82 percent of the Fund's assets was invested in U.S.
common and preferred stocks, 15 percent was invested in U.S. Government
Securities, with the remaining 3 percent invested in repurchase agreements.
For growth, the investment adviser's stock-selection process concentrates on
companies with earnings growth potential well above that of the overall
market. For current income, the portfolio features investment-grade
fixed-income securities and high-quality Real Estate Investment Trusts
(REITs). Specific sectors of focus are technology, aerospace and defense, and
financial services.
Technology stocks held in the Fund include Intel, Motorola,
Hewlett-Packard Co., Ascend Communications, Inc., Cascade Communications
Corp. and Storage Technology Corp. The investment adviser has identified
three factors that are expected to stimulate rapid worldwide revenue and
profit growth for these industry leaders: (1) the extremely rapid growth of
online and Internet services; (2) an imminent corporate personal computer
upgrade cycle following the expected late-summer introduction of Windows NT
and Intel's Pentium Pro microprocessor; and (3) the impact of
telecommunications deregulation in the United States and continuing
privatizations abroad.
Notable aerospace and defense stocks held in the Fund include Boeing Co.,
Coltec Industries, Inc., and United Technologies Corp. Orders for commercial
aircraft are increasing as a result of the need to replace old airplanes with
more fuel-efficient, safer models. Demand is also strong in the emerging
economies of Latin America and Asia.
In the financial services arena, the Fund holds such names as Citicorp,
CWM Mortgage Holdings, Inc., Federal Home Loan Mortgage Corp., Morgan (J.P.)
& Co., Inc., Merrill Lynch & Co., Inc., and Marsh & McLennan Companies, Inc.
This sector is benefiting from several trends. For one, the increasing
savings rate in the United States is stimulating demand for insurance and
investment products. Also, technology is
<PAGE>
TCW/DW TOTAL RETURN TRUST
GROWTH OF $10,000
DATE TOTAL S&P 500
==============================================================================
November 30, 1994 $10,000 $10,000
- ------------------------------------------------------------------------------
July 31, 1995 $11,904 $12,610
- ------------------------------------------------------------------------------
July 31, 1996 $12,483 (3) $14,693
==============================================================================
AVERAGE ANNUAL TOTAL RETURN
ONE YEAR LIFE OF FUND
===========================
8.23 (1) 16.41 (1)
---------------------------
3.23 (2) 14.23 (2)
===========================
===========================
Fund S&P 500 (4)
===========================
Past performance is not predictive of future returns.
- ---------------------------------------
(1) Figure shown assumes reinvestment of all distributions and does not reflect
the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction of
the maximum applicable contingent deferred sales charge (CDSC) (1 year-
5%, since inception-4%). See the Fund's current prospectus for complete
details on fees and sales charges.
(3) Closing value after the deduction of a 4% CDSC assuming a complete
redemption on July 31, 1996.
(4) The Standard and Poors 500 Composite Stock Price Index (S&P 500) is a
broad-based index, the performance of which is based on the average
performance of 500 widely held common stocks. The index does not include
any expenses, fees or charges. Past performance is not predictive of future
returns. The index is unmanaged and should not be considered an investment.
<PAGE>
bringing down the cost of managing and distributing consumer financial
products such as credit cards and home mortgage loans. As a result, the
consumer is able to benefit from better services at lower cost, which causes
more rapid industry growth. In addition, international growth is strong and
just beginning to gain momentum. Basic financial services such as credit
cards and insurance--long taken for granted in the developed world--are
considered to be new products in the emerging economies of Asia, Latin
America and eastern Europe. As a result, the investment adviser expects
demand to be particularly strong in those markets.
LOOKING AHEAD
The investment adviser's outlook is for low inflation, stable interest
rates and moderate worldwide economic growth. They believe that the Fund's
portfolio is structured to benefit from these trends. The long-term history
of the cash-buying public offers little precedent to suggest an imminent "run
on the bank" by mutual fund investors, particularly participants in the large
and growing 401(k) market, who have tended to adopt a long-term outlook. All
in all, the stressful month of July notwithstanding, the investment adviser
believes that the long-term outlook for the stock and bond markets remains
positive.
We appreciate your support of TCW/DW Total Return Trust and look forward
to continuing to serve your investment needs and objectives.
Very truly yours,
/s/ Charles A. Fiumefreddo
--------------------------
Charles A. Fiumefreddo
Chairman of the Board
<PAGE>
TCW/DW TOTAL RETURN TRUST
Portfolio of Investments July 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -------------
<C> <S> <C>
COMMON STOCKS (82.9%)
AIRCRAFT & AEROSPACE (11.1%)
17,000 Boeing Co. ........................... $ 1,504,500
107,600 Coltec Industries, Inc.* ............. 1,519,850
50,600 Continental Airlines, Inc. (Class B)* 1,277,650
9,500 United Technologies Corp. ............ 1,069,937
-------------
5,371,937
-------------
AUTOMOTIVE (6.2%)
40,000 Chrysler Corp. ....................... 1,135,000
36,000 Ford Motor Co. ....................... 1,170,000
14,600 General Motors Corp. ................. 711,750
-------------
3,016,750
-------------
BANKING (2.0%)
11,100 Morgan (J.P.) & Co., Inc. ............ 954,600
-------------
BANKS -INTERNATIONAL (2.0%)
11,600 Citicorp ............................. 949,750
-------------
BROKERAGE (4.6%)
15,200 Marsh & McLennan Companies, Inc. .... 1,377,500
14,600 Merrill Lynch & Co., Inc. ............ 881,475
-------------
2,258,975
-------------
COMMERCIAL SERVICES (5.6%)
40,200 America Online, Inc.* ................ 1,226,100
48,000 Corrections Corp. of America* ....... 1,488,000
-------------
2,714,100
-------------
COMMUNICATIONS -
EQUIPMENT & SOFTWARE (3.1%)
7,700 Ascend Communications, Inc.* ......... 372,487
6,800 Cascade Communications Corp.* ....... 417,350
13,400 Cisco Systems, Inc.* ................. 693,450
-------------
1,483,287
-------------
COMPUTER EQUIPMENT (2.9%)
42,000 Storage Technology Corp.* ............ 1,422,750
-------------
CONSUMER PRODUCTS (2.7%)
17,300 Kimberly-Clark Corp. ................. 1,314,800
-------------
ELECTRONICS -DEFENSE (2.8%)
30,800 Hewlett-Packard Co. .................. 1,355,200
-------------
ELECTRONICS -SEMICONDUCTORS/
COMPONENTS (6.0%)
20,100 Intel Corp. .......................... 1,507,500
25,900 Motorola, Inc. ....................... 1,398,600
-------------
2,906,100
-------------
ENTERTAINMENT (2.2%)
34,600 Circus Circus Enterprises, Inc.* .... 1,063,950
-------------
FINANCIAL (2.0%)
11,500 Federal Home Loan Mortgage Corp. .... 968,875
-------------
HEALTHCARE -DRUGS (2.8%)
21,400 Merck & Co., Inc. .................... $ 1,374,950
-------------
HOUSEHOLD PRODUCTS (2.0%)
23,200 Tupperware Corp.* .................... 991,800
-------------
METALS (2.8%)
57,200 Titanium Metals Corp.* ............... 1,365,650
-------------
OIL -FOREIGN (2.5%)
20,800 Chevron Corp. ........................ 1,203,800
-------------
OIL WELL -MACHINERY (1.9%)
11,600 Schlumberger, Ltd. ................... 928,000
-------------
REAL ESTATE INVESTMENT TRUST (11.6%)
88,700 CWM Mortgage Holdings, Inc. .......... 1,530,075
24,800 Developers Diversified Realty Corp. . 778,100
50,700 General Growth Properties, Inc. ..... 1,248,488
47,900 Security Capital Pacific Trust ...... 993,925
38,100 Spieker Properties, Inc. ............. 1,085,850
-------------
5,636,438
-------------
RETAIL -SPECIALTY (6.1%)
40,900 Corporate Express, Inc.* ............. 1,528,638
41,100 CUC International, Inc.* ............. 1,428,225
-------------
2,956,863
-------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $39,336,045) ...... 40,238,575
-------------
CONVERTIBLE PREFERRED STOCK (3.0%)
INDUSTRIALS
59,700 James River Corp. of Virginia (Series
P) $1.55 (Identified Cost
$1,567,578) ......................... 1,447,725
-------------
U.S. GOVERNMENT AGENCY MORTGAGE
PASS-THROUGH CERTIFICATE (2.2%)
$1,091 Federal Home Loan Mortgage Corp. PC
Gold 6.50% due 05/01/11
(Identified Cost $1,063,492) ...... 1,053,432
-------------
U.S. GOVERNMENT OBLIGATION (8.9%)
4,300 U.S. Treasury Note 6.875% due
05/15/06 (Identified Cost
$4,293,976) ........................ 4,319,484
-------------
SHORT-TERM INVESTMENTS (7.7%)
U.S. GOVERNMENT AGENCY (a) (4.1%)
2,000 Federal Home Loan Banks 5.18% due
08/01/96 ........................... 2,000,000
-------------
<PAGE>
TCW/DW TOTAL RETURN TRUST
Portfolio of Investments July 31, 1996 (continued)
- -----------------------------------------------------------------------------
PRINCIPAL
AMOUNT (IN
THOUSANDS) VALUE
- ----------- -------------
REPURCHASE AGREEMENT (3.6%)
$1,753 The Bank of New York 5.75% due
08/01/96 (dated 07/31/96; proceeds
$1,753,731; collateralized by
$2,079,191 Federal Mortgage
Acceptance Corp. 7.00% due
04/01/24 valued at $1,788,520)
(Identified Cost $1,753,451) ...... $1,753,451
-------------
TOTAL SHORT-TERM INVESTMENTS
(IDENTIFIED COST $3,753,451) ...... 3,753,451
-------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
-------------
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $50,014,542) (B) 104.7% $50,812,667
LIABILITIES IN EXCESS
OF OTHER ASSETS .................. (4.7) (2,288,271)
-------------
NET ASSETS ........................ 100.0% $48,524,396
=============
</TABLE>
- ------------
* Non-income producing security.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $50,017,407. The
aggregate gross unrealized appreciation is $2,879,301 and the aggregate
gross unrealized depreciation is $2,084,041, resulting in net
unrealized appreciation of $795,260.
See Notes to Financial Statements
<PAGE>
TCW/DW TOTAL RETURN TRUST
Financial Statements
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
July 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $50,014,542) ............. $50,812,667
Receivable for:
Investments sold .......................... 492,840
Shares of beneficial interest sold ....... 78,224
Dividends ................................. 69,444
Interest .................................. 68,954
Deferred organizational expenses ........... 101,129
Prepaid expenses ........................... 24,385
-------------
TOTAL ASSETS ............................. 51,647,643
-------------
LIABILITIES:
Payable for:
Investments purchased ..................... 2,994,773
Plan of distribution fee .................. 39,219
Management fee ............................ 15,520
Investment advisory fee ................... 13,274
Shares of beneficial interest repurchased 2,148
Accrued expenses ........................... 58,313
-------------
TOTAL LIABILITIES ........................ 3,123,247
-------------
NET ASSETS:
Paid-in-capital ............................ 43,279,108
Net unrealized appreciation ................ 798,125
Accumulated undistributed net investment
income .................................... 46,982
Accumulated undistributed net realized gain 4,400,181
-------------
NET ASSETS ............................... $48,524,396
=============
NET ASSET VALUE PER SHARE, 4,042,347 shares
outstanding (unlimited shares authorized
of $.01 par value) ........................ $ 12.00
=============
</TABLE>
STATEMENT OF OPERATIONS
For the year ended July 31, 1996
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $6,304 foreign
withholding tax) .................. $ 916,695
Interest ........................... 576,438
-------------
TOTAL INCOME ...................... 1,493,133
-------------
EXPENSES
Plan of distribution fee ........... 394,800
Management fee ..................... 204,371
Investment advisory fee ............ 136,247
Professional fees .................. 83,759
Transfer agent fees and expenses .. 51,034
Shareholder reports and notices ... 48,482
Trustees' fees and expenses ....... 31,410
Organizational expenses ............ 30,396
Custodian fees ..................... 14,604
Registration fees .................. 8,968
Other .............................. 2,231
-------------
TOTAL EXPENSES BEFORE AMOUNTS
WAIVED/REIMBURSED ................ 1,006,302
LESS: AMOUNTS WAIVED/REIMBURSED .. (105,262)
-------------
TOTAL EXPENSES AFTER AMOUNTS
WAIVED/REIMBURSED ................ 901,040
-------------
NET INVESTMENT INCOME ............. 592,093
-------------
NET REALIZED AND UNREALIZED GAIN
(LOSS):
Net realized gain .................. 4,933,040
Net change in unrealized
appreciation ...................... (2,291,729)
-------------
NET GAIN .......................... 2,641,311
-------------
NET INCREASE ...................... $ 3,233,404
=============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED JULY 31, NOVEMBER 30, 1994*
1996 THROUGH JULY 31, 1995
----------------- ---------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income ....................................... $ 592,093 $ 564,613
Net realized gain ........................................... 4,933,040 1,236,101
Net change in unrealized appreciation ....................... (2,291,729) 3,089,854
--------------- -----------------
Net increase ............................................... 3,233,404 4,890,568
--------------- -----------------
Dividends and distributions from:
Net investment income ....................................... (762,557) (347,167)
Net realized gain ........................................... (1,768,960) --
--------------- -----------------
Total ...................................................... (2,531,517) (347,167)
--------------- -----------------
FOR THE YEAR FOR THE PERIOD
ENDED JULY 31, NOVEMBER 30, 1994*
1996 THROUGH JULY 31, 1995
----------------- ---------------------
Net increase from transactions in shares of beneficial
interest .................................................... 11,804,931 31,374,177
--------------- -----------------
Total increase ............................................. 12,506,818 35,917,578
NET ASSETS:
Beginning of period .......................................... 36,017,578 100,000
--------------- -----------------
END OF PERIOD (including undistributed net investment income
of $46,982 and $217,446, respectively) ...................... $48,524,396 $36,017,578
=============== =================
</TABLE>
- ------------
* Commencement of operations.
See Notes to Financial Statements
<PAGE>
TCW/DW TOTAL RETURN TRUST
Notes to Financial Statements July 31, 1996
- -----------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES--TCW/DW Total Return Trust (the
"Fund") is registered under the Investment Company Act of 1940, as amended
(the "Act"), as a non-diversified, open-end management investment company.
The Fund's investment objective is high total return from capital growth and
income. The Fund seeks to achieve its objective by investing primarily in
equity and equity-related securities issued by domestic and foreign
companies. The Fund was organized as a Massachusetts business trust on June
29, 1994 and on August 22, 1994 the Fund issued 10,000 shares of beneficial
interest to Dean Witter InterCapital Inc. ("InterCapital"), an affiliate of
Dean Witter Services Company Inc. (the "Manager"), for $100,000 to effect the
Fund's initial capitalization. The Fund commenced operations on November 30,
1994.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual results
could differ from those estimates. The following is a summary of significant
accounting policies:
A. Valuation of Investments--(1) an equity security listed or traded on
the New York, American or other domestic or foreign stock exchange is
valued at its latest sale price on that exchange prior to the time when
assets are valued; if there were no sales that day, the security is
valued at the latest bid price (in cases where securities are traded on
more than one exchange, the securities are valued on the exchange
designated as the primary market by the Trustees); (2) all other
portfolio securities for which over-the-counter market quotations are
readily available are valued at the latest available bid price prior to
the time of valuation; (3) when market quotations are not readily
available, including circumstances under which it is determined by 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; and (4) short-term debt securities
having a maturity date of more than sixty days at the 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 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.
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 record 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
<PAGE>
TCW/DW TOTAL RETURN TRUST
Notes to Financial Statements July 31, 1996 (continued)
- -----------------------------------------------------------------------------
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--InterCapital paid the organizational
expenses of the Fund in the amount of approximately $127,000 which was
reimbursed exclusive of $4,817 which has been absorbed by InterCapital.
Such expenses have been deferred and are being amortized on the
straight-line method over a period not to exceed five years from the
commencement of operations.
2. MANAGEMENT AGREEMENT--Pursuant to a Management Agreement, the Fund pays
the Manager a management fee, accrued daily and payable monthly, by applying
the annual rate of 0.45% to the net assets of the Fund determined as of the
close of each business day.
Under the terms of the Management Agreement, the Manager maintains certain
of the Fund's books and records and furnishes, at its own expense, office
space, facilities, equipment, clerical, bookkeeping and certain legal
services and pays the salaries of all personnel, including officers of the
Fund who are employees of the Manager. The Manager also bears the cost of
telephone services, heat, light, power and other utilities provided to the
Fund.
3. INVESTMENT ADVISORY AGREEMENT--Pursuant to an Investment Advisory
Agreement 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 Investment Advisory Agreement, the Fund has
retained the Adviser to invest the Fund's assets, including placing orders
for the purchase and sale of portfolio securities. The Adviser obtains and
evaluates such information and advice relating to the economy, securities
markets, and specific securities as it considers necessary or useful to
continuously manage the assets of the Fund in a manner consistent with its
investment objective. In addition, the Adviser pays the salaries of all
personnel, including officers of the Fund, who are employees of the Adviser.
InterCapital assumed all operating expenses (except for any 12b-1 and/or
brokerage fees), the Manager waived the compensation provided for in its
Management Agreement and the Adviser waived the compensation provided for in
its Advisory Agreement until September 27, 1995.
4. PLAN OF DISTRIBUTION--Shares of the Fund are distributed by Dean Witter
Distributors Inc. (the "Distributor"), an affiliate of the Manager. The Fund
has adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under
the Act pursuant to which the Fund pays the Distributor compensation, accrued
daily and payable monthly, at an annual rate of 1.0% of the lesser of: (a)
the average daily aggregate gross sales of the Fund's shares since the Fund's
inception (not including reinvestment of dividend or capital gains
distributions) less the average daily aggregate net asset value of the Fund's
shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or upon which such charge has been waived; or
(b) the Fund's average daily net assets. Amounts paid under the Plan are paid
to the Distributor to compensate it for the services provided and the
expenses borne by it and others in the distribution of the Fund's shares,
including the payment of commissions for sales of the Fund's shares and
incentive compensation to, and expenses of, account executives of Dean Witter
Reynolds Inc. ("DWR"), an affiliate of the Manager and Distributor, and other
employees and selected broker-dealers who engage in or support distribution
of the Fund's shares or who service shareholder accounts, including overhead
and
<PAGE>
TCW/DW TOTAL RETURN TRUST
Notes to Financial Statements July 31, 1996 (continued)
- -----------------------------------------------------------------------------
telephone expenses, printing and distribution of prospectuses and reports
used in connection with the offering of the Fund's shares to other than
current shareholders and the preparation,printing and distribution of sales
literature and advertising materials. In addition, the Distributor may be
compensated under the Plan for its opportunity costs in advancing such
amounts, which compensation would be in the form of a carrying charge on any
unreimbursed expenses by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses
incurred but not yet recovered may be recovered through future distribution
fees from the Fund and contingent deferred sales charges from the Fund's
shareholders.
Although there is no legal obligation for the Fund to pay expenses
incurred in excess of payments made to the Distributor under the Plan and the
proceeds of contingent deferred sales charges paid by investors upon
redemption of shares, if for any reason the Plan is terminated, the Trustees
will consider at that time the manner in which to treat such expenses. The
Distributor has advised the Fund that such excess amounts, included carrying
charges, totaled $2,360,033 at July 31, 1996.
The Distributor has informed the Fund that for the year ended July 31,
1996, it received approximately $215,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares. The Fund's shareholders pay
such charges which are not an expense of the Fund.
5. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES--The cost of
purchases and proceeds from sales of portfolio securities, excluding
short-term investments, for the year ended July 31, 1996 aggregated
$124,790,261 and $116,022,724, respectively. Included in the aforementioned
are purchases and sales of U.S. Government securities of $31,329,713 and
$30,264,376, respectively.
For the year ended July 31, 1996, the Fund incurred brokerage commissions
of $36,391 with DWR for portfolio transactions executed on behalf of the
Fund. At July 31, 1996, the Fund's payable for investments purchased included
unsettled trades with DWR of $217,555.
Dean Witter Trust Company, an affiliate of the Manager and Distributor, is
the Fund's transfer agent. At July 31, 1996, the Fund had transfer agent fees
and expenses payable of approximately $5,100.
6. SHARES OF BENEFICIAL INTEREST--Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR ENDED NOVEMBER 30, 1994*
JULY 31, 1996 THROUGH JULY 31, 1995
SHARES AMOUNT SHARES AMOUNT
------------------ --------------------- ----------- -------------
<S> <C> <C> <C> <C>
Sold ........................................ 1,659,330 $ 20,294,836 3,312,310 $34,211,447
Reinvestment of dividends and distributions 190,676 2,261,482 28,873 312,496
-------------- ----------------- ----------- -------------
1,850,006 22,556,318 3,341,183 34,523,943
Repurchased ................................. (872,725) (10,751,387) (286,117) (3,149,766)
-------------- ----------------- ----------- -------------
Net increase ................................ 977,281 $ 11,804,931 3,055,066 $31,374,177
============== ================= =========== =============
</TABLE>
- ------------
*Commencement of operations.
<PAGE>
TCW/DW TOTAL RETURN TRUST
Financial Highlights
- -----------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE PERIOD
ENDED JULY 31, NOVEMBER 30, 1994*
1996 THROUGH JULY 31, 1995
--------------- ---------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .. $11.75 $ 10.00
----------- -------------
Net investment income .................. 0.15 0.21
Net realized and unrealized gain ...... 0.80 1.68
----------- -------------
Total from investment operations ...... 0.95 1.89
----------- -------------
Less dividends and distributions from:
Net investment income ................. (0.21) (0.14)
Net realized gain ..................... (0.49) --
----------- -------------
Total dividends and distributions ..... (0.70) (0.14)
----------- -------------
Net asset value, end of period ......... $12.00 $ 11.75
=========== =============
TOTAL INVESTMENT RETURN+ ............... 8.23% 19.04%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................... 1.98%(4) 0.94%(2)(3)
Net investment income .................. 1.30%(4) 3.19%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $48,524 $36,018
Portfolio turnover rate ................ 261% 91%(1)
Average commission rate paid ........... $0.0582 --
</TABLE>
- ------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) If the Fund had borne all of its expenses that were reimbursed or
waived by the Manager and Investment Adviser, the above annualized
expense and net investment ratios would have been 2.66% and 1.47%,
respectively.
(4) If the Fund had borne all of its expenses that were reimbursed or
waived by the Manager and Adviser, the above annualized expense and net
investment ratios would have been 2.21% and 1.07%, respectively.
See Notes to Financial Statements
<PAGE>
TCW/DW TOTAL RETURN TRUST
Report of Independent Accountants
- -----------------------------------------------------------------------------
To the Shareholders and Trustees of TCW/DW Total Return Trust
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of TCW/DW Total
Return Trust (the "Fund") at July 31, 1996, the results of its operations for
the year then ended, and the changes in its net assets and the financial
highlights for the year then ended and for the period November 30, 1994
(commencement of operations) through July 31, 1995, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at July
31, 1996 by correspondence with the custodian and brokers and the application
of alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
September 13, 1996
1996 FEDERAL TAX NOTICE (unaudited)
For the year ended July 31, 1996, 8% of ordinary income dividends
(including short-term capital gain distributions) paid to shareholders
qualified for the dividends received deduction available to corporations.
<PAGE>
TRUSTEES
John C. Argue
Richard M. DeMartini
Charles A. Fiumefreddo
John R. Haire
Dr. Manuel H. Johnson
Thomas E. Larkin, Jr.
Michael E. Nugent
John L. Schroeder
Marc I. Stern
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Thomas E. Larkin, Jr.
President
Sheldon Curtis
Vice President, Secretary and
General Counsel
James A. Tilton
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center --Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
MANAGER
Dean Witter Services Company Inc.
ADVISER
TCW Funds Management, Inc.
This report is submitted for the general information of shareholders of the
Trust. For more detailed information about the Trust, its officers and
trustees, fees, expenses and other
pertinent information, please see the prospectus of the Trust.
This report is not authorized for distribution to prospective
investors in the Trust unless preceded or accompanied by an
effective prospectus.
TCW/DW
TOTAL RETURN
TRUST
Annual Report
July 31, 1996
