<PAGE>
TCW/DW TOTAL RETURN TRUST
Two World Trade Center, New York, New York 10048
LETTER TO THE SHAREHOLDERS January 31, 1998
DEAR SHAREHOLDER:
During the second half of 1997 TCW/DW Total Return Trust remained fully
invested, with 93 percent of net assets invested in common stocks,
6 percent in 30-year U.S. government bonds and 1 percent in cash. The market
correction in October 1997 and concern about Asia's financial problems caused
dramatic swings in stock prices during the fourth quarter. Nevertheless,
reported earnings for U.S. companies remain strong.
PERFORMANCE
For the six-month period ended January 31, 1998, the Fund's Class B shares
posted a total return of 1.43 percent, versus 3.55 percent and
2.37 percent, respectively, for the Standard & Poor's 500 Composite Stock
Price Index (S&P 500) and the Lipper Analytical Services, Inc. Growth and
Income Funds Index. Since their inception on July 28, 1997, through January
31, 1998, the Fund's Class A, C and D shares had total returns of 1.80
percent, 1.43 percent and 1.93 percent, respectively. Performance of the
Fund's four share classes varies because of differing charges and expenses.
MARKET COMMENTARY
Compared to last year the Fund's investment adviser, TCW Funds Management,
Inc. (TCW), expects 1998 to be more difficult for corporate profit growth.
However, U.S. companies are expected to emerge stronger than ever from a
slowdown in worldwide gross domestic product (GDP). From an investment
standpoint, the recent market correction has provided attractive valuations
for many companies with excellent long-term fundamentals.
Industrial commodities, including energy, metals, lumber and cotton are all
down in price. Thus far, the Asian crisis is affecting price levels in the
United States more than the U.S. economy itself. The greatest impact,
according to TCW, may not be felt until later in the year when the flood of
low-priced imports competes for market share in the U.S. An increase in
<PAGE>
TCW/DW TOTAL RETURN TRUST
LETTER TO THE SHAREHOLDERS January 31, 1998, continued
lower-priced imports will be a drag on the economy, thereby reducing GDP and
possibly lowering capital spending and squeezing profit margins.
PORTFOLIO STRUCTURE
Aerospace, financial services, energy, technology, and pharmaceuticals are
the main industries of investment focus. Given the situation in Asia, the
past six months have seen the Fund's portfolio become somewhat more
defensive. Relative to the S&P 500 the portfolio is overweighted in the
aerospace and aircraft industry, where product demand from the emerging Latin
American and Asian markets is strong and TCW expects predictable growth.
Significant holdings in this group include Boeing Co. and Hexcel Corp. The
portfolio is also overweighted relative to the S&P 500 in financial services,
including banking and brokerage. In TCW's opinion, the increasing savings
rate in the United States, improved technology, and lower management and
distribution costs, are bringing rapid growth to this sector. Financial
services holdings as of January 31, 1998 included Wells Fargo & Co.
(banking), Merrill Lynch & Co., Inc. (brokerage) and H.F. Ahmanson & Co.
(saving and loans).
While TCW believes technology stocks are in a period of transition, they also
feel that over the next 24 months this sector is likely to show robust growth.
As of January 31, 1998, the portfolio held the stocks of such leading
technology companies as Intel Corp., Microsoft Corp., Cisco Systems, Inc. and
Hewlett-Packard Co. Strong new products and aging baby boomers remain strong
themes in the pharmaceuticals industry, in which the portfolio currently holds
such stocks as Schering-Plough Corp., Merck & Co., Inc. and Johnson & Johnson.
The energy sector fits well with the portfolio's overall defensive structure.
One stock that was added to the portfolio in the last six months is Questar
Corp., a natural gas company. TCW believes that this company is currently
undervalued, but has attractive growth potential. Other holdings in the energy
area include Exxon Corp. and Royal Dutch Petroleum Co.
LOOKING AHEAD
According to TCW the long-term outlook for U.S. equities is good. The new
year will offer developments that investors have not experienced before. Some
will be good, such as a balanced budget. TCW's biggest concern is earnings
disappointments. The major risk to stock prices in 1998 is that, with slower
revenue growth because of the moderating economy, the absence of price
flexibility and rising wage costs, margins could be squeezed. TCW expects a
glimpse of this scenario to materialize over the next several weeks, when
fourth-quarter 1997 earnings are reported and corporations begin discussing
their future prospects and whether they see an Asian-led drag on their
businesses.
TCW believes that the key for investors is whether price to earnings ratios,
driven higher by falling inflation and lower interest rates, can increase
sufficiently to offset slower corporate profit growth. While
<PAGE>
TCW/DW TOTAL RETURN TRUST
LETTER TO THE SHAREHOLDERS January 31, 1998, continued
TCW remains optimistic, particularly with regard to the profit growth
potential for the companies in the Fund's portfolio vis-a-vis corporate
profits in general, there does not appear to be much room for higher
valuations when the market is already selling at 20 times estimated 1998
earnings. The Fund's strategy for 1998 is to continue to invest in companies
with attractive valuations and improving returns on invested capital.
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 January 31, 1998 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------- --------------
<S> <C> <C>
COMMON STOCKS (93.0%)
Aerospace & Defense (0.1%)
25,000 Hawker Pacific Aerospace* ....................................... $ 204,687
--------------
Aircraft & Aerospace (10.4%)
71,500 Boeing Co. ..................................................... 3,400,719
145,300 Coltec Industries, Inc.* ........................................ 3,396,387
186,000 Hexcel Corp.* ................................................... 4,522,125
60,000 Sundstrand Corp. ................................................ 3,266,250
--------------
14,585,481
--------------
Banking (4.0%)
17,400 BankAmerica Corp. ............................................... 1,236,487
8,500 Citicorp ........................................................ 1,011,500
11,100 Wells Fargo & Co. .............................................. 3,429,900
--------------
5,677,887
--------------
Beverages -Soft Drinks (3.6%)
24,700 Coca Cola Co. ................................................... 1,599,325
95,100 PepsiCo, Inc. .................................................. 3,429,544
--------------
5,028,869
--------------
Brokerage (2.2%)
20,600 Marsh & McLennan Companies, Inc. ................................ 1,521,825
25,800 Merrill Lynch & Co., Inc. ....................................... 1,628,625
--------------
3,150,450
--------------
Building Materials (2.5%)
127,900 Calmat Co. ..................................................... 3,485,275
--------------
Communications -Equipment & Software (2.2%)
49,050 Cisco Systems, Inc.* ............................................ 3,093,216
--------------
Computer Software (1.6%)
15,500 Microsoft Corp.* ................................................ 2,312,406
--------------
Drugs (10.9%)
82,400 Amgen Inc.* ..................................................... 4,114,850
21,200 Johnson & Johnson ............................................... 1,419,075
25,600 Lilly (Eli) & Co. .............................................. 1,728,000
13,100 Merck & Co., Inc. ............................................... 1,535,975
17,000 Pfizer, Inc. .................................................... 1,392,937
37,800 Schering-Plough Corp. ........................................... 2,735,775
15,700 Warner-Lambert Co. ............................................. 2,362,850
--------------
15,289,462
--------------
Electrical Equipment (4.4%)
34,200 Honeywell, Inc. ................................................ 2,396,137
218,300 Wyman-Gordon Co.* ............................................... 3,792,962
--------------
6,189,099
--------------
Electronics -Defense (3.1%)
35,900 Hewlett-Packard Co. ............................................ $ 2,154,000
41,300 Raytheon Co. (Class B) .......................................... 2,152,762
--------------
4,306,762
--------------
Electronics -Semiconductors/ Components (8.9%)
24,800 General Electric Co. ............................................ 1,922,000
53,800 Intel Corp. ..................................................... 4,357,800
23,900 Motorola, Inc. ................................................. 1,420,556
87,200 Texas Instruments, Inc. ......................................... 4,763,300
--------------
12,463,656
--------------
Engineering & Construction (2.1%)
78,700 Fluor Corp. ..................................................... 2,966,006
--------------
Entertainment/Gaming (2.5%)
150,800 Mirage Resorts, Inc.* ........................................... 3,477,825
--------------
Financial (3.4%)
36,600 Ahmanson (H.F.) & Co. .......................................... 2,134,238
20,900 Fannie Mae ...................................................... 1,290,575
32,000 Freddie Mac ..................................................... 1,424,000
--------------
4,848,813
--------------
Household Products (2.0%)
33,800 Fort James Corp. ................................................ 1,451,288
16,800 Procter & Gamble Co. ........................................... 1,316,700
--------------
2,767,988
--------------
Insurance (4.4%)
18,300 American International Group, Inc. .............................. 2,018,719
98,300 Hartford Life, Inc. (Class A) ................................... 4,208,469
--------------
6,227,188
--------------
Leisure Time -Products (0.5%)
23,200 Brunswick Corp. ................................................. 698,900
--------------
Lodging -Hotels (2.7%)
134,100 Hilton Hotels Corp. ............................................. 3,796,706
--------------
Natural Gas (1.9%)
65,100 Questar Corp. ................................................... 2,709,788
--------------
Oil -Exploration & Production (0.8%)
40,000 Mitchell Energy & Development Corp. (Class A) ................... 1,065,000
--------------
Oil -Foreign (2.2%)
13,600 Chevron Corp. .................................................. 1,017,450
35,600 Exxon Corp. .................................................... 2,111,525
--------------
3,128,975
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW TOTAL RETURN TRUST
PORTFOLIO OF INVESTMENTS January 31, 1998 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------- --------------
<S> <C>
Oil Integrated -International (0.9%)
25,600 Royal Dutch Petroleum Co. (ADR)(Netherlands) .................... $ 1,312,000
--------------
Paper & Forest Products (1.0%)
29,500 Weyerhaeuser Co. ................................................ 1,469,469
--------------
Real Estate Investment Trust (6.3%)
5,000 AMB Property Corp. .............................................. 122,500
215,400 INMC Mortgage Holdings, Inc. ................................... 5,708,100
108,800 Kilroy Realty Corp. ............................................. 3,100,800
--------------
8,931,400
--------------
Restaurants (0.5%)
25,910 TRICON Global Restaurants, Inc.* ................................ 706,048
--------------
Retail -Department Stores (1.7%)
59,800 Wal-Mart Stores, Inc. ........................................... 2,384,525
--------------
Retail -General Merchandise (2.2%)
82,920 Fred Meyer, Inc.* ............................................... 3,057,675
--------------
Semiconductor Equipment (2.6%)
112,000 Applied Materials, Inc.* ........................................ 3,668,000
--------------
Tobacco (1.2%)
40,800 Philip Morris Companies, Inc. ................................... 1,693,200
--------------
Wholesale Distributor (0.2%)
6,500 Supervalu, Inc. ................................................. 285,188
--------------
TOTAL COMMON STOCKS
(Identified Cost $110,002,897) .................................. $130,981,944
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- --------------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT OBLIGATION (6.4%)
U.S. Treasury Bond
6.375% due 08/15/27
$8,350 (Identified Cost $8,823,859) .................................... $8,966,230
--------------
SHORT-TERM INVESTMENT (1.1%)
REPURCHASE AGREEMENT
The Bank of New York 5.375% due 02/02/98 (dated 01/30/98;
1,567 proceeds $1,567,348)(a) (Identified Cost $1,566,647) ............ 1,566,647
--------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $120,393,403)
(b)................................ 100.5% 141,514,821
LIABILITIES IN EXCESS OF OTHER
ASSETS............................. (0.5) (727,401)
-------- -------------
NET ASSETS......................... 100.0% $140,787,420
======== =============
</TABLE>
- ------------
ADR American Depository Receipt.
* Non-income producing security.
(a) Collateralized by $1,553,463 U.S. Treasury Note 6.75% due 05/31/99
valued at $1,597,980.
(b) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$24,503,380 and the aggregate gross unrealized depreciation is
$3,381,962, resulting in net unrealized appreciation of $21,121,418.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW TOTAL RETURN TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
January 31, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $120,393,403) ............... $141,514,821
Receivable for:
Shares of beneficial interest sold........... 394,489
Interest..................................... 246,139
Investments sold............................. 220,053
Dividends.................................... 155,682
Deferred organizational expenses............... 55,534
Prepaid expenses and other assets.............. 88,166
--------------
TOTAL ASSETS ................................ 142,674,884
--------------
LIABILITIES:
Payable for:
Investments purchased........................ 1,609,736
Plan of distribution fee..................... 102,587
Management fee............................... 51,381
Shares of beneficial interest repurchased ... 39,392
Investment advisory fee ..................... 35,216
Accrued expenses and other payables ........... 49,152
--------------
TOTAL LIABILITIES ........................... 1,887,464
--------------
NET ASSETS .................................. $140,787,420
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital ............................... $116,528,656
Net unrealized appreciation ................... 21,121,418
Accumulated net investment loss ............... (196,264)
Accumulated undistributed net realized gain .. 3,333,610
--------------
NET ASSETS................................... $140,787,420
==============
CLASS A SHARES:
Net Assets .................................... $121,682
Shares Outstanding (unlimited authorized, $.01
par value) ................................... 7,758
NET ASSET VALUE PER SHARE ................... $15.68
==============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset
value)...................................... $16.55
==============
CLASS B SHARES:
Net Assets .................................... $140,267,015
Shares Outstanding (unlimited authorized, $.01
par value) ................................... 8,972,139
NET ASSET VALUE PER SHARE ................... $15.63
==============
CLASS C SHARES:
Net Assets .................................... $388,183
Shares Outstanding (unlimited authorized, $.01
par value) ................................... 24,840
NET ASSET VALUE PER SHARE ................... $15.63
==============
CLASS D SHARES:
Net Assets .................................... $10,540
Shares Outstanding (unlimited authorized, $.01
par value) ................................... 671
NET ASSET VALUE PER SHARE ................... $15.71
==============
</TABLE>
<PAGE>
STATEMENT OF OPERATIONS
For the six months ended January 31, 1998 (unaudited)
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends ................................. $ 833,632
Interest .................................. 200,424
-------------
TOTAL INCOME ............................ 1,034,056
-------------
EXPENSES
Plan of distribution fee (Class A shares) 93
Plan of distribution fee (Class B shares) 550,455
Plan of distribution fee (Class C shares) 1,316
Management fee ............................ 289,328
Investment advisory fee ................... 192,885
Transfer agent fees and expenses .......... 64,335
Registration fees ......................... 41,610
Professional fees ......................... 27,601
Shareholder reports and notices ........... 23,317
Trustees' fees and expenses ............... 18,653
Organizational expenses ................... 15,282
Other ..................................... 11,417
-------------
TOTAL EXPENSES .......................... 1,236,292
-------------
NET INVESTMENT LOSS ..................... (202,236)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain.......................... 5,397,202
Net change in unrealized appreciation .... (3,068,402)
-------------
NET GAIN................................. 2,328,800
-------------
NET INCREASE............................... $ 2,126,564
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW TOTAL RETURN TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JANUARY 31, 1998 JULY 31, 1997*
- ------------------------------------------------------ ---------------- --------------
<S> <C> <C>
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss) .......................... $ (202,236) $ 202,878
Net realized gain ..................................... 5,397,202 7,872,093
Net change in unrealized appreciation ................. (3,068,402) 23,391,695
---------------- --------------
NET INCREASE ........................................ 2,126,564 31,466,666
---------------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class B shares........................................ -- (243,888)
Net realized gain
Class A shares........................................ (7,061) --
Class B shares........................................ (9,224,023) (5,079,906)
Class C shares........................................ (24,164) --
Class D shares........................................ (712) --
---------------- --------------
TOTAL DIVIDENDS AND DISTRIBUTIONS ................... (9,255,960) (5,323,794)
---------------- --------------
Net increase from transactions in shares of beneficial
interest.............................................. 30,816,987 42,432,561
---------------- --------------
NET INCREASE ........................................ 23,687,591 68,575,433
NET ASSETS:
Beginning of period.................................... 117,099,829 48,524,396
---------------- --------------
END OF PERIOD
(Including a net investment loss of $196,264 and
undistributed net investment income of $5,972,
respectively) ....................................... $140,787,420 $117,099,829
================ ==============
</TABLE>
- ------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW TOTAL RETURN TRUST
NOTES TO FINANCIAL STATEMENTS January 31, 1998 (unaudited)
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 commenced operations on
November 30, 1994. On July 28, 1997, the Fund commenced offering three
additional classes of shares, with the then current shares designated as
Class B shares.
The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase, some
Class A shares, and most Class B shares and Class C shares are subject to a
contingent deferred sales charge imposed on shares redeemed within one year,
six years and one year, respectively. Class D shares are not subject to a
sales charge. Additionally, Class A shares, Class B shares and Class C shares
incur distribution expenses.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures. Actual results could differ
from those estimates.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at
its latest sale price on that exchange prior to the time when assets are
valued; if there were no sales that day, the security is valued at the latest
bid price (in cases where securities are traded on more than one exchange,
the securities are valued on the exchange designated as the primary market
pursuant to procedures adopted by the Trustees); (2) all other portfolio
securities for which over-the-counter market quotations are readily available
are valued at the latest available bid price prior to the time of valuation;
(3) when market quotations are not readily available, including circumstances
under which it is determined by TCW Funds Management, Inc. (the "Adviser")
that sale 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 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.
<PAGE>
TCW/DW TOTAL RETURN TRUST
NOTES TO FINANCIAL STATEMENTS January 31, 1998 (unaudited) continued
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. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are charged
to each class of shares based upon the relative net asset value on the date
such items are recognized. Distribution fees are allocated directly to the
respective class.
D. 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.
E. 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 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.
F. 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 $127,000 of which
approximately $122,000 has 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 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.
<PAGE>
TCW/DW TOTAL RETURN TRUST
NOTES TO FINANCIAL STATEMENTS January 31, 1998 (unaudited) continued
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 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.
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 -up to 0.25% of
the average daily net assets of Class A; (ii) Class B -1.0% of the lesser of:
(a) the average daily aggregate gross sales of the Class B shares since the
inception of the Fund (not including reinvestment of dividend or capital gain
distributions) less the average daily aggregate net asset value of the Class
B shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or waived; or (b) the average daily net assets
of Class B; and (iii) Class C -up to 1.0% of the average daily net assets of
Class C. In the case of Class A shares, amounts paid under the Plan are paid
to the Distributor for services provided. In the case of Class B and Class C
shares, amounts paid under the Plan are paid to the Distributor for services
provided and the expenses borne by it and others in the distribution of the
shares of these Classes, including the payment of commissions for sales of
these Classes and incentive compensation to, and expenses of, the account
executives of Dean Witter Reynolds Inc. ("DWR"), an affiliate of the Manager
and Distributor, and others who engage in or support distribution of the
shares or who service shareholder accounts,
<PAGE>
TCW/DW TOTAL RETURN TRUST
NOTES TO FINANCIAL STATEMENTS January 31, 1998 (unaudited) continued
including overhead and telephone expenses; printing and distribution of
prospectuses and reports used in connection with the offering of these shares
to other than current shareholders; and preparation, printing and
distribution of sales literature and advertising materials. In addition, the
Distributor may utilize fees paid pursuant to the Plan, in the case of Class
B shares, to compensate 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. The Distributor has advised the Fund that such
excess amounts, including carrying charges, totaled $4,665,936 at January 31,
1998.
In the case of Class A shares and Class C shares, expenses incurred pursuant
to the Plan in any calendar year in excess of 0.25% or 1.0% of the average
daily net assets of Class A or Class C, respectively, will not be reimbursed
by the Fund through payments in any subsequent year, except that expenses
representing a gross sales credit to account executives may be reimbursed in
the subsequent calendar year. For the six months ended January 31, 1998, the
distribution fee was accrued for Class A shares and Class C shares at the
annual rate of 0.25% and 1.0%, respectively.
The Distributor has informed the Fund that for the six months ended January
31, 1998, it received contingent deferred sales charges from certain
redemptions of the Fund's Class B shares and Class C shares of $140,850 and
$158, respectively and received $4,348 in front-end sales charges from sales
of the Fund's Class A shares. The respective shareholders pay such charges
which are not an expense of the Fund.
5. SECURITY TRANSACTIONS AND TRANSACTIONS WITH AFFILIATES
The cost of purchases and proceeds from sales of portfolio securities,
excluding short-term investments, for the six months ended January 31, 1998
aggregated $83,690,689 and $62,582,073, respectively. Included in the
aforementioned are purchases and sales of U.S. Government securities of
$12,506,547 and $3,857,594, respectively.
<PAGE>
TCW/DW TOTAL RETURN TRUST
NOTES TO FINANCIAL STATEMENTS January 31, 1998 (unaudited) continued
For the six months ended January 31, 1998, the Fund incurred brokerage
commissions of $5,325 with Morgan Stanley Inc., an affiliate of the Manager,
for portfolio transactions executed on behalf of the Fund.
Dean Witter Trust FSB, an affiliate of the Manager and Distributor, is the
Fund's transfer agent. At January 31, 1998, the Fund had transfer agent fees
and expenses payable of approximately $1,000.
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
JANUARY 31, 1998 JULY 31, 1997*
--------------------------- -----------------------------
(UNAUDITED)
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold ........................................ 6,661 $ 107,942 624 $ 10,020
Reinvestment of distributions ............... 473 7,061 -- --
----------- -------------- ------------- --------------
Net increase - Class A ...................... 7,134 115,003 624 10,020
----------- -------------- ------------- --------------
CLASS B SHARES
Sold ........................................ 2,240,767 36,263,208 3,902,145 54,982,768
Reinvestment of dividends and distributions . 553,040 8,234,769 356,843 4,658,943
Redeemed .................................... (877,524) (14,159,480) (1,245,479) (17,266,663)
----------- -------------- ------------- --------------
Net increase - Class B ...................... 1,916,283 30,338,497 3,013,509 42,375,048
----------- -------------- ------------- --------------
CLASS C SHARES
Sold ........................................ 22,062 357,279 2,311 37,473
Reinvestment of distributions ............... 1,578 23,504 -- --
Redeemed .................................... (1,111) (18,008) -- --
----------- -------------- ------------- --------------
Net increase - Class C ...................... 22,529 362,775 2,311 37,473
----------- -------------- ------------- --------------
CLASS D SHARES
Sold ........................................ -- -- 624 10,020
Reinvestment of distributions ............... 47 712 -- --
----------- -------------- ------------- --------------
Net increase - Class D ...................... 47 712 624 10,020
----------- -------------- ------------- --------------
Net increase in Fund ........................ 1,945,993 $ 30,816,987 3,017,068 $ 42,432,561
=========== ============== ============= ==============
</TABLE>
- ------------
* For Class A, C and D shares, for the period July 28, 1997 (issue date)
through July 31, 1997.
<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 SIX FOR THE PERIOD
MONTHS ENDED FOR THE YEAR FOR THE YEAR NOVEMBER 30, 1994*
JANUARY 31, ENDED ENDED THROUGH
1998++ JULY 31, 1997** JULY 31, 1996 JULY 31, 1995
- ---------------------------------------- ----------------- --------------- --------------- ------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
CLASS B SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ... $16.59 $12.00 $11.75 $10.00
----------------- --------------- --------------- ------------------
Net investment income (loss) ............ (0.03) 0.04 0.15 0.21
Net realized and unrealized gain ....... 0.21 5.81 0.80 1.68
----------------- --------------- --------------- ------------------
Total from investment operations ....... 0.18 5.85 0.95 1.89
----------------- --------------- --------------- ------------------
Less dividends and distributions from:
Net investment income .................. -- (0.06) (0.21) (0.14)
Net realized gain ...................... (1.14) (1.20) (0.49) --
----------------- --------------- --------------- ------------------
Total dividends and distributions ...... (1.14) (1.26) (0.70) (0.14)
----------------- --------------- --------------- ------------------
Net asset value, end of period .......... $15.63 $16.59 $12.00 $11.75
================= =============== =============== ==================
TOTAL INVESTMENT RETURN+................. 1.43 %(1) 51.66% 8.23% 19.04%(1)
RATIOS TO AVERAGE NET ASSETS
Expenses ................................ 1.92 %(2) 2.05% 1.98%(3) 0.94%(2)(3)
Net investment income (loss)............. (0.31)%(2) 0.28% 1.30%(3) 3.19%(2)(3)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $140,267 $117,041 $48,524 $36,018
Portfolio turnover rate ................. 50 %(1) 198% 261% 91%(1)
Average commission rate paid ............ $0.0596 $0.0585 $0.0582 --
</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 have been designated
Class B shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(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 income ratios would have been 2.21% and
1.07%, respectively, for the year ended July 31, 1996 and 2.66% and
1.47%, respectively, for the period ended July 31, 1995.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW TOTAL RETURN TRUST
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED JULY 28, 1997*
JANUARY 31, THROUGH
1998++ JULY 31, 1997
- ------------------------------------------ ----------------- --------------
(UNAUDITED)
<S> <C> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ..... $16.59 $16.07
----------------- --------------
Net investment income ..................... 0.03 0.01
Net realized and unrealized gain .......... 0.20 0.51
----------------- --------------
Total from investment operations .......... 0.23 0.52
----------------- --------------
Less distributions from net realized gain (1.14) --
----------------- --------------
Net asset value, end of period ............ $15.68 $16.59
================= ==============
TOTAL INVESTMENT RETURN+ ................. 1.80%(1) 3.24%(1)
RATIOS TO AVERAGE NET ASSETS
Expenses .................................. 1.35%(2) 1.31%(2)
Net investment income ..................... 0.43%(2) 4.08%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands .. $122 $10
Portfolio turnover rate ................... 50%(1) 198%
Average commission rate paid ............. . $0.0596 $0.0585
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ..... $16.59 $16.07
----------------- --------------
Net investment income (loss) .............. (0.03) 0.01
Net realized and unrealized gain .......... 0.21 0.51
----------------- --------------
Total from investment operations .......... 0.18 0.52
----------------- --------------
Less distributions from net realized gain (1.14) --
----------------- --------------
Net asset value, end of period ............ $15.63 $16.59
================= ==============
TOTAL INVESTMENT RETURN+ .................. 1.43 %(1) 3.24%(1)
RATIOS TO AVERAGE NET ASSETS
Expenses .................................. 2.09 %(2) 2.06%(2)
Net investment income (loss) .............. (0.37)%(2) 2.75%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands .. $388 $38
Portfolio turnover rate ................... 50 %(1) 198%
Average commission rate paid .............. $0.0596 $0.0585
</TABLE>
- ------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the
net asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW TOTAL RETURN TRUST
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED JULY 28, 1997*
JANUARY 31, THROUGH
1998++ JULY 31, 1997
- ------------------------------------------ ----------------- --------------
(UNAUDITED)
<S> <C> <C>
CLASS D SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ..... $16.59 $16.07
----------------- --------------
Net investment income ..................... 0.04 0.01
Net realized and unrealized gain .......... 0.22 0.51
----------------- --------------
Total from investment operations .......... 0.26 0.52
----------------- --------------
Less distributions from net realized gain (1.14) --
----------------- --------------
Net asset value, end of period ............ $15.71 $16.59
================= ==============
TOTAL INVESTMENT RETURN+ .................. 1.93%(1) 3.24%(1)
RATIOS TO AVERAGE NET ASSETS
Expenses .................................. 1.06%(2) 1.06%(2)
Net investment income ..................... 0.53%(2) 4.33%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands .. $11 $10
Portfolio turnover rate ................... 50%(1) 198%
Average commission rate paid .............. $0.0596 $0.0585
</TABLE>
- ------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of
the period.
(1) Not annualized.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
<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
Barry Fink
Vice President, Secretary and
General Counsel
James A. Tilton
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.
TCW/DW
TOTAL RETURN
TRUST
[GRAPHIC]
SEMIANNUAL REPORT
JANUARY 31, 1998
