<PAGE>
TCW/DW MID-CAP EQUITY TRUST
Two World Trade Center
New York, New York 10048
DEAR SHAREHOLDER:
- -----------------------------------------------------------------------------
Since its inception on February 27, 1996, through November 30, 1996,
TCW/DW Mid-Cap Equity Trust produced a total return of 9.20 percent. Over the
same period, the Standard & Poor's Mid-Cap 400 Index registered a total
return of 13.51 percent. Despite a poor showing in the last quarter of the
fiscal year, technology stocks were one of the Fund's best-performing
industry groups. This strength offset weakness in the consumer and healthcare
sectors.
TCW/DW MID-CAP EQUITY TRUST
GROWTH OF $10,000
DATE TOTAL S&P MIDCAP IX LIPPER IX
===============================================================================
February 27, 1996 $10000 $10000 $10000
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February 29, 1996 $ 9980 $10000 $10000
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March 31, 1996 $10350 $10120 $10199
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April 30, 1996 $11280 $10429 $10767
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May 31, 1996 $11700 $10569 $11117
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June 30, 1996 $11220 $10411 $10747
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July 31, 1996 $ 9760 $ 9706 $ 9794
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August 31, 1996 $10420 $10266 $10367
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September 30, 1996 $11280 $10714 $11013
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October 31, 1996 $10850 $10745 $10779
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November 30, 1996 $10420 (3) $11351 $11190
===============================================================================
CUMULATIVE TOTAL RETURNS
LIFE OF FUND
==============================
9.20 (1)
------------------------------
4.20 (2)
==============================
============================================================
___ Fund ___ S&P Midcap Index (4) ___ Lipper Ix.(5)
============================================================
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) (since
inception 5%). See the Fund's current prospectus for complete details on
fees and sales charges.
(3) Closing value after the deduction of a 5% CDSC, assuming a complete
redemption on November 30, 1996.
(4) The S&P Midcap Index is a market-value weighted index, the performance of
which is based on the average performance of 400 domestic stocks chosen
for market size, liquidity, and industry group representation. The index
does not include any expenses, fees or charges. The Index is unmanaged
and should not be considered an investment.
(5) The Lipper Mid Cap Funds Index is an equally-weighted performance index
of the largest qualifying funds (based on net assets) in the Lipper
Mid-Cap Funds objective. The Index, which is adjusted for capital gains
distributions and income dividends, is unmanaged and should not be
considered an investment. There are currently 30 funds represented in
this Index.
The accompanying chart illustrates the growth of a $10,000 investment in
the Fund from inception (February 27, 1996) through the fiscal year ended
November 30, 1996, versus similar hypothetical investments in the issues that
comprise the Standard & Poor's Mid-Cap 400 Index and the funds that comprise
the Lipper Analytical Services, Inc. Mid-Cap Funds Index.
THE MARKETPLACE
For the second consecutive year the total return performance of the
Standard & Poor's 500 Composite Stock Price Index (S&P 500) substantially
exceeded the rise in its operating profits. In part, this reflects the
capitalization-weighted nature of the Index and the outstanding profit
performance of many of its most highly valued sectors. Even more so, however,
the Index's strong performance reflected growing investor conviction in the
prospects for continued moderate economic growth, benign inflation,
suppressed credit demands and stable interest rates. This feeling comes amid
post-election optimism that further fiscal reform could occur in 1997. In
such an environment, it is logical to expect investors to discount earnings
growth further into the future, but as Federal Reserve Board Chairman Alan
Greenspan said recently, who knows when logic gives way to "irrational
exuberance?"
After rebounding in August, small-and mid-cap stocks underperformed
large-caps dramatically. Year-to-date through November, the S&P 500 had
appreciated 25.42 percent versus 19.07 percent for the S&P Mid-Cap 400 and
16.90 percent for the Lipper Analytical Services, Inc. Mid-Cap Fund Average.
Flows of cash into index funds, foreign buying of well-recognized stocks and
share buy-backs have all led to a decidedly more positive supply/demand
advantage for large-cap stocks. In addition, recent months have seen
heightened investor anxiety regarding the pace of economic growth. During
these periods investors favor reputedly "safer" blue chips. This exacerbated
the performance differential between small- and mid-caps and
large-capitalization stocks.
<PAGE>
THE PORTFOLIO
At the end of the Fund's first fiscal year, the portfolio had net assets
in excess of $205 million. Although a number of portfolio changes were made
over the last nine months, there was little change in the weightings of broad
industry sectors. Industry sectors that were increased include business
services, healthcare, telecommunications and retail. Groups where
representation was reduced include semiconductors and leisure. The
portfolio's largest industry groups on November 30, 1996 were technology (31
percent of total net assets), healthcare related (18 percent), consumer (16
percent), and consumer and business services (27 percent).
The Fund is invested in rapidly growing companies where earnings power and
growth rates are considered underestimated by Wall Street consensus. In order
to minimize the impact of a slowing economy, the Fund's investment adviser,
TCW Funds Management, Inc. (TCW), is emphasizing companies that focus on a
specific market niche that is insulated from macroeconomic trends. These
include healthcare companies (Medic Computer Systems, Inc. and Dura
Pharmaceuticals, Inc. for example), which benefit from the intense pressure
to lower costs; technology companies such as Siebel Systems, Inc. and Remedy
Corp., which are exploiting the trend to client/server computing; service
companies like Corporate Express, Inc. and Corrections Corp. of America,
which are taking advantage of the move to outsourcing; and numerous companies
that are well positioned demographically, such as Omnicare, Inc. and Gulf
South Medical Supply Inc., whose growth is tied to our aging population.
The Fund also holds stock in a number of companies that are benefiting
from strong new-product cycles, which TCW believes can lead to accelerated
earnings. Such new-product cycles that are driving the growth of many small
companies include the development of the Internet, the creation of new drugs
or medical devices, and new retail concepts that capture the attention of
consumers with rising discretionary income.
OPPORTUNITIES IN MID-CAP STOCKS
TCW believes that the dramatic growth of large-cap stocks is unjustified
given the faster growth, higher profitability, better return on equity, lower
leverage and better valuation of the mid-cap sector. In that connection, TCW
sees one of two future outcomes becoming reality. Either large-caps will give
up their relative gains or mid-caps will rise in line with their large-cap
counterparts. Because many analysts hold bullish outlooks for an economy
marked by continued modest growth with low inflation, TCW expects the latter
scenario to occur. Further, TCW believes that stock picking success at this
stage of the business expansion will depend principally upon company-specific
profit dynamics, not on a rising economic tide.
GOING FORWARD
Looking into 1997, TCW expects a year of moderate (two to three percent)
economic growth, which could translate into a five to ten percent rise in S&P
500 profits. If interest rates remain relatively stable, the gain in stock
prices should rise with earnings progress. If the economic and political
stars line up favorably, enabling lower real interest rates to emerge, then
the equity valuations could still increase proportionately. The reverse could
also occur, however, if economic growth accelerates beyond current
expectations and prompts a tightening of monetary policy by the Federal
Reserve Board.
On the basis of this outlook, TCW doubts that passive investment
management strategies, relying on a broadly based expansion of values, will
succeed in outperforming active management in 1997. Moreover, since the
number of companies able to achieve exceptional earnings progress late in an
economic cycle will be far fewer than in an earlier phase, the coming year
will see the most successful stock pickers return to the forefront of
performance.
<PAGE>
TCW continues to focus exclusively on the fundamentals of the companies
held in the Fund's portfolio. As mentioned earlier, the Fund targets
companies in emerging industries as well as those that are fundamentally
reshaping established industries. There is no attempt to time the market, but
rather, a concentration on company-specific investment issues such as pricing
flexibility, market share gains and improved efficiencies. While this
investment approach can and does lead to short-term volatility, for the
longer-term investor these inevitable short-term declines represent
additional buying opportunities. In the adviser's opinion, as long as the
companies held in the Fund's portfolio are growing profitably, the market
will ultimately reward the company's stock price.
We appreciate your ongoing support of TCW/DW Mid-Cap Equity Trust and look
forward to continuing to serve your investment needs.
Very truly yours,
/s/ Charles A. Fiumefreddo
--------------------------
Charles A. Fiumefreddo
Chairman of the Board
<PAGE>
<TABLE>
<CAPTION>
TCW/DW MID-CAP EQUITY TRUST
PORTFOLIO OF INVESTMENTS November 30, 1996
- --------------------------------------------------------------------------------------------
Number of
Shares Value
---------- --------------
<S> <C> <C>
COMMON STOCKS (97.2%)
ADVERTISING (1.4%)
114,900 Outdoor Systems, Inc.* ......................................... $ 2,915,587
--------------
AUTO PARTS - ORIGINAL EQUIPMENT (2.4%)
182,300 Miller Industries, Inc.* ....................................... 5,058,825
--------------
BROADCAST MEDIA (5.8%)
69,700 Clear Channel Communications, Inc.* ............................ 4,809,300
116,550 Infinity Broadcasting Corp. (Class A)* ......................... 3,744,169
38,600 Lin Television Corp.* .......................................... 1,544,000
106,300 Westwood One, Inc.* ............................................ 1,753,950
--------------
11,851,419
--------------
COMMERCIAL SERVICES (14.8%)
99,800 AccuStaff, Inc.* ............................................... 2,020,950
93,825 Apollo Group, Inc. (Class A)* .................................. 2,427,722
122,300 Corrections Corp. of America* .................................. 3,042,212
167,400 CUC International, Inc.* ....................................... 4,415,175
167,900 Gartner Group, Inc. (Class A)* ................................. 6,128,350
52,500 Paychex, Inc. .................................................. 2,808,750
88,800 Robert Half International, Inc.* ............................... 3,307,800
222,000 Romac International, Inc.* ..................................... 5,217,000
32,900 TeleTech Holdings, Inc.* ....................................... 1,036,350
--------------
30,404,309
--------------
COMMUNICATIONS - EQUIPMENT & SOFTWARE (8.5%)
134,900 Ascend Communications, Inc.* ................................... 9,594,762
113,600 Cascade Communications Corp.* .................................. 7,810,000
--------------
17,404,762
--------------
COMPUTER SOFTWARE & SERVICES (19.1%)
75,200 Baan Company, NV (Netherlands) ................................. 2,669,600
41,900 Citrix Systems, Inc.* .......................................... 1,864,550
61,200 DST Systems, Inc.* ............................................. 1,981,350
42,900 I2 Technologies, Inc.* ......................................... 1,630,200
41,500 Inso Corp.* .................................................... 1,768,937
63,400 Medic Computer Systems, Inc.* .................................. 2,123,900
94,500 National Techteam, Inc.* ....................................... 2,043,562
50,100 Netscape Communications Corp.* ................................. 2,799,336
56,100 Peoplesoft, Inc.* .............................................. 5,133,150
53,600 Rational Software Corp.* ....................................... 1,849,200
77,900 Remedy Corp.* .................................................. 3,486,025
151,000 Security Dynamics Technologies, Inc.* .......................... 6,209,875
47,300 Siebel Systems, Inc.* .......................................... 2,093,025
59,400 Sykes Enterprises, Inc.* ....................................... 2,531,925
29,700 Xylan Corp.* ................................................... 1,091,475
--------------
39,276,110
--------------
DRUGS (1.4%)
76,200 Biogen, Inc.* .................................................. 2,914,650
--------------
ELECTRONICS - SEMICONDUCTORS/COMPONENTS (2.3%)
103,300 Maxim Integrated Products, Inc.* ............................... 4,777,625
--------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TCW/DW MID-CAP EQUITY TRUST
PORTFOLIO OF INVESTMENTS November 30, 1996 (continued)
- --------------------------------------------------------------------------------------------
Number of
Shares Value
---------- --------------
<S> <C> <C>
ENTERTAINMENT (2.5%)
114,000 Mirage Resorts, Inc.* .......................................... $ 2,750,250
71,450 Regal Cinemas, Inc.* ........................................... 2,313,194
--------------
5,063,444
--------------
FINANCIAL SERVICES (1.1%)
86,300 Credit Acceptance Corp.* ....................................... 2,233,012
--------------
HOSPITAL MANAGEMENT (1.1%)
99,750 Health Management Associates, Inc. (Class A)* .................. 2,206,969
--------------
HOTELS/MOTELS (1.9%)
59,400 HFS, Incorporated* ............................................. 3,846,150
--------------
INSURANCE (1.9%)
55,200 Progressive Corp. .............................................. 3,850,200
--------------
MANUFACTURING (0.7%)
110,000 Oakley, Inc.* .................................................. 1,526,250
--------------
MEDICAL PRODUCTS & SUPPLIES (4.7%)
85,000 Omnicare, Inc. ................................................. 2,592,500
94,800 Physician Sales & Service, Inc.* ............................... 1,872,300
64,700 Safeskin Corp.* ................................................ 3,315,875
52,850 Thermo Cardiosystems, Inc.* .................................... 1,829,931
--------------
9,610,606
--------------
MEDICAL SERVICES (5.6%)
91,000 Gulf South Medical Supply Inc.* ................................ 2,616,250
96,100 MedPartners, Inc.* ............................................. 2,186,275
38,500 Oxford Health Plans, Inc.* ..................................... 2,228,188
137,900 PhyCor, Inc.* .................................................. 4,447,275
--------------
11,477,988
--------------
OFFICE EQUIPMENT & SUPPLIES (4.8%)
168,100 Corporate Express, Inc.* ....................................... 4,706,800
48,000 Global DirectMail Corp.* ....................................... 2,160,000
96,300 Viking Office Products, Inc.* .................................. 3,009,375
--------------
9,876,175
--------------
PHARMACEUTICALS (2.0%)
108,900 Dura Pharmaceuticals, Inc.* .................................... 4,029,300
--------------
RESTAURANTS (3.8%)
141,500 Boston Chicken, Inc.* .......................................... 5,483,125
66,500 Starbucks Corp.* ............................................... 2,302,563
--------------
7,785,688
--------------
RETAIL - SPECIALTY (6.0%)
98,800 Bed Bath & Beyond, Inc.* ....................................... 2,568,800
19,100 Blyth Industries, Inc.* ........................................ 828,463
106,500 Just For Feet, Inc.* ........................................... 2,502,750
22,100 MSC Industrial Direct Co., Inc.* ............................... 825,988
219,200 PetSmart, Inc.* ................................................ 5,589,600
--------------
12,315,601
--------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TCW/DW MID-CAP EQUITY TRUST
PORTFOLIO OF INVESTMENTS November 30, 1996 (continued)
--------------------------------------------------------------------------------------------
Number of
Shares Value
---------- --------------
<S> <C> <C>
TELECOMMUNICATION EQUIPMENT (3.6%)
41,500 Advanced Fibre Communications, Inc.* ........................... $ 2,023,125
83,300 Premisys Communications, Inc.* ................................. 4,269,125
48,900 Westell Technologies, Inc. (Class A)* .......................... 1,204,163
--------------
7,496,413
--------------
TELECOMMUNICATIONS (1.4%)
86,700 LCI International, Inc.* ....................................... 2,828,588
--------------
TEXTILES (0.4%)
51,200 Mossimo, Inc.* ................................................. 774,400
--------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $173,946,849) ................................. 199,524,071
--------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount (in
thousands)
- -----------
<S> <C> <C>
SHORT-TERM INVESTMENT (3.0%)
REPURCHASE AGREEMENT
$6,214 The Bank of New York 5.125% due 12/02/96 (dated 11/29/96;
proceeds $6,216,435, collateralized by $10,532,020 Federal
National Mortgage Association 0.00% due 04/25/19 valued at
$2,938,585, and $4,388,782 Federal National Mortgage
Association 0.00% due 09/25/23 valued at $3,399,472)
(Identified Cost $6,213,782) .................................. 6,213,782
------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
TOTAL INVESTMENTS (IDENTIFIED COST $180,160,631) (a) 100.2% 205,737,853
LIABILITIES IN EXCESS OF OTHER ASSETS .............. (0.2) (463,761)
---------- ----------------
NET ASSETS ......................................... 100.0% $205,274,092
========== ================
</TABLE>
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* Non-income producing security.
(a) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$34,993,023 and the aggregate gross unrealized depreciation is
$9,415,801, resulting in net unrealized appreciation of $25,577,222.
See Notes to Financial Statements
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1996
- -----------------------------------------------------------------------------
ASSETS:
Investments in securities, at value
(identified cost $180,160,631) ........... $205,737,853
Receivable for:
Investments sold ......................... 622,624
Shares of beneficial interest sold ...... 421,775
Interest ................................. 1,769
Dividends ................................ 1,275
Deferred organizational expenses .......... 139,799
Prepaid expenses .......................... 32,281
--------------
TOTAL ASSETS ............................ 206,957,376
--------------
LIABILITIES:
Payable for:
Investments purchased .................... 1,178,260
Plan of distribution fee ................. 160,191
Management fee ........................... 100,553
Investment advisory fee .................. 67,035
Shares of beneficial interest repurchased 34,346
Organizational expenses ................... 3,000
Accrued expenses and other payables ...... 139,899
--------------
TOTAL LIABILITIES ....................... 1,683,284
--------------
NET ASSETS:
Paid-in-capital ........................... 191,272,847
Net unrealized appreciation ............... 25,577,222
Net realized loss ......................... (11,575,977)
--------------
NET ASSETS .............................. $205,274,092
==============
NET ASSET VALUE PER SHARE, 18,802,811
shares outstanding (unlimited shares
authorized of $.01 par value) ............ $ 10.92
==============
STATEMENT OF OPERATIONS For the period
February 27, 1996* through November 30, 1996
- -----------------------------------------------------------------------------
NET INVESTMENT INCOME:
INCOME
Interest ........................ $ 564,850
Dividends (net of $3,527 foreign
withholding tax) ............... 85,353
--------------
TOTAL INCOME .................... 650,203
--------------
EXPENSES
Plan of distribution fee ........ 1,268,227
Management fee .................. 793,626
Investment advisory fee ......... 529,084
Transfer agent fees and expenses 190,530
Professional fees ............... 66,358
Registration fees ............... 58,779
Shareholder reports and notices 34,251
Trustees' fees and expenses .... 31,995
Organizational expenses ......... 25,090
Custodian fees .................. 20,422
Other ........................... 2,597
--------------
TOTAL EXPENSES ................. 3,020,959
--------------
NET INVESTMENT LOSS ............ (2,370,756)
--------------
NET REALIZED AND UNREALIZED
GAIN (LOSS):
Net realized loss ............... (11,575,977)
Net unrealized appreciation .... 25,577,222
--------------
NET GAIN ....................... 14,001,245
--------------
NET INCREASE ................... $ 11,630,489
==============
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
February 27, 1996*
through November 30, 1996
-------------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment loss .......................................... $ (2,370,756)
Net realized loss ............................................ (11,575,977)
Net unrealized appreciation .................................. 25,577,222
-------------------------
Net increase ................................................ 11,630,489
Net increase from transactions in shares of beneficial
interest ...................................................... 193,543,603
-------------------------
Net increase ................................................ 205,174,092
NET ASSETS:
Beginning of period ........................................... 100,000
-------------------------
END OF PERIOD ................................................. $205,274,092
=========================
</TABLE>
- ------------
* Commencement of operations.
See Notes to Financial Statements
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1996
- -----------------------------------------------------------------------------
1. ORGANIZATION AND ACCOUNTING POLICIES -- TCW/DW Mid-Cap Equity Trust (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's investment objective is to seek long-term capital appreciation. The
Fund seeks to achieve its objective by investing primarily in equity
securities, including common stocks and securities convertible into common
stock, issued by medium-sized companies. The Fund was organized as a
Massachusetts business trust on October 17, 1995 and had no operations other
than those relating to organizational matters and the issuance of 10,000
shares of beneficial interest for $100,000 to Dean Witter InterCapital Inc.
("InterCapital"), an affiliate of Dean Witter Services Company Inc. (the
"Manager"), to effect the Fund's initial capitalization. The Fund commenced
operations on February 27, 1996.
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 the 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
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; (4) certain portfolio securities may
be valued by an outside pricing service approved by the Trustees. The
pricing service may utilize a matrix system incorporating security
quality, maturity and coupon as the evaluation model parameters, and/or
research and evaluations by its staff, including review of broker-dealer
market price quotations, if available, in determining what it believes is
the fair valuation of the 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 from foreign securities
which are recorded as soon as the Fund is informed after the ex-dividend
date. Discounts are accreted over the life of the respective securities.
Interest income is accrued daily.
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1996 (continued)
- -----------------------------------------------------------
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 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 $165,000 which will be
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
the Manager a management fee, accrued daily and payable monthly, by applying
the annual rate of 0.60% 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 0.40% 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 pursuant to which the Fund pays the Distributor compensation,
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1996 (continued)
- ----------------------------------------------------------
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 gain
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, the account executives of Dean
Witter Reynolds Inc. ("DWR"), an affiliate of the Manager and Distributor,
and other employees or selected broker-dealers who engage in or support
distribution of the Fund's shares or who service shareholder accounts,
including overhead and telephone expenses, printing and distribution of
prospectuses and reports used in connection with the offering of the Fund's
shares to other than current shareholders and 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 incurred 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, including carrying
charges, total $9,625,354 at November 30, 1996.
The Distributor has informed the Fund that for the year ended November 30,
1996, it received approximately $280,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares.
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 November 30, 1996 aggregated
$225,209,991 and $39,687,497, respectively.
For the year ended November 30, 1996, the Fund incurred $150 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 November 30, 1996, the Fund had transfer agent
fees and expenses payable of approximately $25,000.
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1996 (continued)
- -----------------------------------------------------------
6. SHARES OF BENEFICIAL INTEREST -- Transactions in shares of beneficial
interest were as follows:
<TABLE>
<CAPTION>
For the period
February 27, 1996*
through November 30, 1996
-----------------------------
Shares Amount
------------- --------------
<S> <C> <C>
Sold ........... 20,260,721 $209,433,376
Repurchased ... (1,467,910) (15,889,773)
------------- --------------
Net increase .. 18,792,811 $193,543,603
============= ==============
</TABLE>
- ------------
* Commencement of operations.
7. FEDERAL INCOME TAX STATUS -- At November 30, 1996, the Fund had a net
capital loss carryover of approximately $11,576,000 which will be available
through November 30, 2004 to offset future capital gains to the extent
provided by regulations. As of November 30, 1996, the Fund had permanent
book/tax differences primarily attributable to a net operating loss. To
reflect reclassifications arising from permanent book/tax differences for the
period ended November 30, 1996, paid-in-capital was charged and net
investment loss was credited $2,370,756.
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------
Selected ratios and per share data for a share of beneficial interest
outstanding throughout the period:
<TABLE>
<CAPTION>
For the period
February 27, 1996*
through
November 30, 1996
------------------
<S> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period .. $10.00
---------
Net investment loss .................... (0.13)
Net realized and unrealized gain ...... 1.05
---------
Total from investment operations ...... 0.92
---------
Net asset value, end of period ......... $10.92
=========
TOTAL INVESTMENT RETURN+ ............... 9.20 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................... 2.28 %(2)
Net investment loss .................... (1.79)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $205,274
Portfolio turnover rate ................ 25 %(1)
Average commission rate paid ........... $0.0577
</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.
See Notes to Financial Statements
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
REPORT OF INDEPENDENT ACCOUNTANTS
- -----------------------------------------------------------------------------
To the Shareholders and Trustees of TCW/DW Mid-Cap Equity 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 Mid-Cap
Equity Trust (the "Fund") at November 30, 1996, and the results of its
operations, the changes in its net assets and the financial highlights for
the period February 27, 1996 (commencement of operations) through November
30, 1996, 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 audit. We conducted our audit 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 audit, which included
confirmation of securities at November 30, 1996 by correspondence with the
custodian and brokers, provides a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
January 10, 1997
<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 L. Stern
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Thomas E. Larkin, Jr.
President
Sheldon Curtis
Vice President, Secretary and
General Counsel
Douglas S. Foreman
Vice President
Christopher J. Ainley
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 Fund. For more detailed information about the Fund, its officers
and trustees, fees, expenses and other pertinent information, please see
the prospectus of the Fund.
This report is not authorized for distribution to prospective investors
in the Fund unless preceded or accompanied by an effective prospectus.
T C W / D W
MID-CAP
EQUITY TRUST
[GRAPHIC OMITTED]
ANNUAL REPORT
NOVEMBER 30, 1996
