<PAGE> 1
TCW/DW MID-CAP EQUITY TRUST Two World Trade Center, New York,
LETTER TO THE SHAREHOLDERS May 31, 1997 New York 10048
DEAR SHAREHOLDER:
In May 1997, TCW/DW Mid-Cap Equity Trust rose 16.13 percent -- its strongest
monthly gain since its inception in February 1996 -- as the rally for growth
stocks, which began in mid-April, continued. However, despite this remarkable
performance in May, the Fund is still down 6.45 percent for the calendar
year-to-date compared to a gain of 9.91 percent for the Standard & Poor's
Mid-Cap 400 Composite Stock Price Index (S&P 400) and 4.67 percent for the
Lipper Mid-Cap Funds Index.
THE MARKETPLACE
The continued strength of the major market indexes has been based on an
increasingly smaller number of stocks. For the period from December 31, 1995,
through May 31, 1997, the top 21 best-performing stocks in the Standard & Poor's
500 Composite Stock Price Index (S&P 500) were responsible for two-thirds of the
index's price appreciation.
Over the twelve months ended April 30, 1997, the S&P 500 gained 25.11 percent,
while the Russell 2000 Index of smaller-cap stocks was essentially flat. This is
the widest differential in performance since the Russell 2000 was created in
1979, and researchers have concluded that this period had the worst relative
performance for small stocks since 1937. Within this universe, value stocks
dramatically outperformed growth stocks.
However, in April, investor sentiment toward small- and mid-cap growth stocks
improved so that these stocks rallied sharply, beginning in late April. This
shift could very well mark the turning point of both the relative and absolute
performance of these stocks.
There are numerous reasons why mid-cap growth stocks are doing better. The
Fund's Investment Adviser, TCW Funds Management, Inc. (TCW), believes the most
compelling argument in favor of these stocks is that the popularity of indexing
has driven many large-cap stocks to levels that cannot be justified by their
growth rates. In addition, the sharp decline in many mid-cap growth stocks since
last May has made them
<PAGE> 2
TCW/DW MID-CAP EQUITY TRUST
LETTER TO THE SHAREHOLDERS May 31, 1997, continued
extremely attractive relative to large caps. And the renewed strength of the
dollar, resulting from uncertainty regarding a common European currency, should
also help these stocks, as would a cut in the capital gains tax rate.
Signs of moderating economic growth have led to lower interest rates, while
investor optimism for double-digit profit growth continues unabated. As long as
interest rates do not increase and corporate profit growth remains satisfactory,
the overall market outlook remains positive.
THE PORTFOLIO
TCW/DW Mid-Cap Equity Trust invests in sectors of the economy that have
historically demonstrated the highest long-term growth rates. Specifically, the
Fund is concentrated in technology (33 percent of the portfolio), health care
(15 percent), consumer/retail (14 percent) and business service sectors (29
percent). TCW seeks to avoid sectors that are cyclical, fragmented as a result
of barriers to entry, have modest to mature growth rates or are a commodity by
their nature.
Three sectors with some or all of these characteristics command a significant
weight in the S&P Mid-Cap 400 benchmark. Financial, energy and capital goods
represent 16 percent, 12 percent and 9 percent of the index, respectively. The
trailing twelve-month gains in these sectors are 32 percent, 32 percent and 18
percent, respectively. Although the Fund has modest exposure to specialty
financials, it has almost none in energy and capital goods. This dramatic
underweighting has substantially hurt performance relative to the benchmark. In
addition, because of the malaise hanging over growth stocks generally, several
of the Fund's core long-term holdings have not contributed positively to
performance, despite continuing to deliver results in excess of Wall Street's
expectations.
Over the last three months, TCW believes it has positioned the Fund to
participate fully in the recovery of mid-caps in two ways. First, it modestly
reduced the number of companies held by the Fund, to ensure that the most
promising companies represent relatively large positions in the Fund. In
addition, TCW eliminated several positions with declining fundamentals and
replaced them with stocks that are believed to be poised to beat Wall Street's
expectations over both the short and the long-term.
OUTLOOK
TCW's optimism for the Fund is rooted in the quality of the Fund's portfolio
holdings. With an average price-to-earnings (p/e) ratio of 30 times 1997
estimates, the portfolio in total commands a p/e-to-growth ratio of 0.75. Given
the high quality of the portfolio's holdings in terms of profitability, balance
sheet strength and positive cash flow dynamics, TCW believes the portfolio
should command a p/e-to-growth ratio of 1.0.
<PAGE> 3
TCW/DW MID-CAP EQUITY TRUST
LETTER TO THE SHAREHOLDERS May 31, 1997, continued
Over any reasonable period of time, stock prices tend to track sustainable
earnings growth. For this reason, TCW continues to focus exclusively on the
fundamentals of the Fund's portfolio holdings. TCW does not attempt to time the
market but remains focused on company-specific investment issues such as pricing
flexibility, market share gains and improved efficiencies. TCW is confident that
the Fund's holdings have solid fundamentals and that, as long as these companies
continue to grow profitably, the market will ultimately reward their stock
prices.
On June 30, 1997, the Trust's Board of Trustees approved a proposal to adopt a
multiple class share structure. Through this arrangement, the Trust will offer
four classes of shares with various sales charges, ongoing fees and other
features. This conversion is scheduled to take place on July 28, 1997. A revised
prospectus, which includes complete details regarding this change, will be
mailed to shareholders in the coming weeks.
We appreciate your support of TCW/DW Mid-Cap Equity 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> 4
TCW/DW MID-CAP EQUITY TRUST
PORTFOLIO OF INVESTMENTS May 31 1997 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (99.6%)
Advertising (4.5%)
138,700 Outdoor Systems, Inc.*....... $ 4,577,100
111,100 Snyder Communications,
Inc.*....................... 3,055,250
------------
7,632,350
------------
Auto Parts - Original
Equipment (2.6%)
273,450 Miller Industries, Inc.*..... 4,477,744
------------
Broadcast Media (5.5%)
122,700 Clear Channel Communications,
Inc.*....................... 6,487,762
106,300 Westwood One, Inc.*.......... 2,870,100
------------
9,357,862
------------
Chemicals (0.9%)
24,600 BetzDearborn, Inc............ 1,568,250
------------
Commercial Services (16.4%)
93,825 Apollo Group, Inc. (Class
A)*......................... 3,283,875
122,300 Corrections Corp. of
America*.................... 4,433,375
99,400 CUC International, Inc.*..... 2,286,200
95,700 Paychex, Inc................. 3,516,975
106,200 Robert Half International,
Inc.*....................... 4,553,325
259,400 Romac International, Inc.*... 7,328,050
98,800 TeleTech Holdings, Inc.*..... 2,284,750
------------
27,686,550
------------
Communications - Equipment &
Software (4.4%)
134,900 Ascend Communications,
Inc.*....................... 7,520,675
------------
Computer Services (6.1%)
34,700 Computer Horizons Corp.*..... 1,899,825
135,200 National Techteam, Inc.*..... 3,295,500
89,100 Sykes Enterprises, Inc.*..... 2,205,225
69,700 Transaction Systems
Architects, Inc.*........... 2,883,837
------------
10,284,387
------------
Computer Software (0.9%)
74,600 Pairgain Technologies,
Inc.*....................... 1,557,275
------------
Computer Software &
Services (16.3%)
72,700 Avid Technology, Inc......... 1,699,362
61,500 Baan Company, NV
(Netherlands)*.............. 3,697,687
24,100 I2 Technologies, Inc.*....... 1,030,275
112,200 Peoplesoft, Inc.*............ 5,792,325
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<C> <S> <C>
30,100 Remedy Corp.*................ $ 1,207,762
159,200 Security Dynamics
Technologies, Inc.*......... 5,850,600
216,100 Siebel Systems, Inc.*........ 5,699,638
82,000 Yahoo! Inc.*................. 2,644,500
------------
27,622,149
------------
Consumer Business Services (1.2%)
36,900 CBT Group PLC (ADR)
(Ireland)*.................. 2,011,050
------------
Drugs (1.5%)
76,200 Biogen, Inc.*................ 2,524,125
------------
Electronics - Semiconductors/
Components (2.8%)
87,300 Maxim Integrated Products,
Inc.*....................... 4,692,375
------------
Entertainment (3.0%)
114,000 Mirage Resorts, Inc.*........ 2,721,750
71,450 Regal Cinemas, Inc.*......... 2,331,056
------------
5,052,806
------------
Financial Services (2.1%)
115,300 Credit Acceptance Corp.*..... 1,614,200
38,000 Price (T.) Rowe Associates,
Inc......................... 1,871,500
------------
3,485,700
------------
Hospital Management (2.3%)
134,750 Health Management Associates,
Inc. (Class A)*............. 3,941,438
------------
Hotels/Motels (1.5%)
46,200 HFS, Inc.*................... 2,489,025
------------
Insurance (2.0%)
103,500 Hartford Life, Inc. (Class
A)*......................... 3,467,250
------------
Internet (2.3%)
92,700 E*TRADE Group, Inc.*......... 1,622,250
74,700 Netscape Communications
Corp.*...................... 2,203,650
------------
3,825,900
------------
Machinery - Diversified
(0.9%)
60,000 Stewart & Stevenson
Services, Inc............... 1,575,000
------------
Manufacturing (1.7%)
111,500 Cognex Corp.*................ 2,899,000
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
TCW/DW MID-CAP EQUITY TRUST
PORTFOLIO OF INVESTMENTS May 31 1997 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------
<C> <S>
Media Group (1.0%)
38,600 Lin Television Corp.*........ $ 1,664,625
------------
Medical Products & Supplies
(3.4%)
85,000 Omnicare, Inc................ 2,433,125
131,600 Safeskin Corp.*.............. 3,306,450
------------
5,739,575
------------
Medical Services (5.6%)
193,400 Coventry Corp.*.............. 2,804,300
38,500 Oxford Health Plans, Inc.*... 2,704,625
137,900 PhyCor, Inc.*................ 3,930,150
------------
9,439,075
------------
Pharmaceuticals (2.0%)
83,500 Dura Pharmaceuticals,
Inc.*....................... 3,329,563
------------
Publishing (0.3%)
46,700 Playboy Enterprises, Inc.
(Class B)*.................. 548,725
------------
Recreation (2.0%)
118,100 Signature Resorts, Inc.*..... 3,439,663
------------
Restaurants (1.2%)
66,500 Starbucks Corp.*............. 2,094,750
------------
Retail - Specialty (4.0%)
114,200 Bed Bath & Beyond, Inc.*..... 3,240,425
181,200 Just For Feet, Inc.*......... 3,556,050
------------
6,796,475
------------
Telecommunications Equipment (1.2%)
35,500 Advanced Fibre
Communications, Inc.*....... 1,948,063
------------
TOTAL COMMON STOCKS
(Identified Cost
$140,264,146)............... 168,671,425
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT (1.0%)
REPURCHASE AGREEMENT
$ 1,689 The Bank of New York 5.4375%
due 06/02/97 (dated
05/30/97; proceeds
$1,690,247; collateralized
by $859,029 Federal Home
Loan Banks 5.49% due
02/02/01 valued at $843,705,
and $895,833 Federal
National Mortgage Assoc.
5.44% due 01/24/97 valued at
$879,566) (Identified Cost
$1,689,481)................. $ 1,689,481
============
TOTAL INVESTMENTS
(Identified Cost $141,953,627)
(a)................................ 100.6% 170,360,906
LIABILITIES IN EXCESS OF
OTHER ASSETS...................... (0.6) (1,008,160)
---- ------------
NET ASSETS......................... 100.0% $169,352,746
===== ============
</TABLE>
- ---------------------
<TABLE>
<C> <S>
ADR American Depository Receipt.
* Non-income producing security.
(a) The aggregate cost for federal income tax
purposes approximates identified cost. The
aggregate gross unrealized appreciation is
$32,127,570 and the aggregate gross unrealized
depreciation is $3,720,291, resulting in net
unrealized appreciation of $28,407,279.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
TCW/DW MID-CAP EQUITY TRUST
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1997 (unaudited)
ASSETS:
Investments in securities, at value
(identified cost $141,953,627)....................................... $170,360,906
Receivable for:
Investments sold.................................................. 2,469,534
Shares of beneficial interest sold................................ 223,612
Dividends......................................................... 1,488
Deferred organizational expenses...................................... 123,820
Prepaid expenses...................................................... 54,923
------------
TOTAL ASSETS...................................................... 173,234,283
------------
LIABILITIES:
Payable for:
Investments purchased............................................. 3,498,580
Plan of distribution fee.......................................... 137,027
Management fee.................................................... 82,216
Investment advisory fee........................................... 54,811
Shares of beneficial interest repurchased......................... 45,886
Organizational expenses............................................... 3,446
Accrued expenses...................................................... 59,571
------------
TOTAL LIABILITIES................................................. 3,881,537
------------
NET ASSETS:
Paid-in-capital....................................................... 178,476,425
Net unrealized appreciation........................................... 28,407,279
Net investment loss................................................... (1,864,884)
Accumulated net realized loss......................................... (35,666,074)
------------
NET ASSETS........................................................ $169,352,746
============
NET ASSET VALUE PER SHARE,
17,422,091 shares outstanding
(unlimited shares authorized of $.01 par value)...................... $9.72
=====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
TCW/DW MID-CAP EQUITY TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
STATEMENT OF OPERATIONS
For the six months ended May 31, 1997 (unaudited)
NET INVESTMENT INCOME:
INCOME
Interest.............................................................. $ 104,843
Dividends............................................................. 45,373
------------
TOTAL INCOME...................................................... 150,216
------------
EXPENSES
Plan of distribution fee.............................................. 878,613
Management fee........................................................ 527,168
Investment advisory fee............................................... 351,445
Transfer agent fees and expenses...................................... 146,424
Shareholder reports and notices....................................... 20,285
Professional fees..................................................... 19,843
Registration fees..................................................... 18,670
Organizational expenses............................................... 16,425
Trustees' fees and expenses........................................... 14,281
Custodian fees........................................................ 9,583
Other................................................................. 12,363
------------
TOTAL EXPENSES.................................................... 2,015,100
------------
NET INVESTMENT LOSS............................................... (1,864,884)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss..................................................... (24,090,097)
Net change in unrealized appreciation................................. 2,830,057
------------
NET LOSS.......................................................... (21,260,040)
------------
NET DECREASE.......................................................... $(23,124,924)
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 8
TCW/DW MID-CAP EQUITY TRUST
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD
FOR THE SIX FEBRUARY 27, 1996*
MONTHS ENDED THROUGH
MAY 31, 1997 NOVEMBER 30, 1996
- -------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss................................. $ (1,864,884) $ (2,370,756)
Net realized loss................................... (24,090,097) (11,575,977)
Net change in unrealized appreciation............... 2,830,057 25,577,222
------------ -------------
NET INCREASE (DECREASE)......................... (23,124,924) 11,630,489
Net increase (decrease) from transactions in shares
of beneficial interest............................. (12,796,422) 193,543,603
------------ -------------
NET INCREASE (DECREASE)......................... (35,921,346) 205,174,092
NET ASSETS:
Beginning of period................................. 205,274,092 100,000
------------ -------------
END OF PERIOD
(Including a net investment loss of $1,864,884
and 0, respectively)............................ $169,352,746 $ 205,274,092
============ =============
</TABLE>
- ---------------------
* Commencement of operations.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE> 9
TCW/DW MID-CAP EQUITY TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1997 (unaudited)
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 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 or bid prices
are not reflective of a security's market value, portfolio securities are valued
at their fair value as determined in good faith under procedures established by
and under the general supervision of the Trustees (valuation of debt securities
for which market quotations are not readily available may be based upon current
market prices of securities which are comparable in coupon, rating and maturity
or an appropriate matrix utilizing similar factors); 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> 10
TCW/DW MID-CAP EQUITY TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1997 (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.
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.
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.
<PAGE> 11
TCW/DW MID-CAP EQUITY TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1997 (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, 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, 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 others who engage in or support distribution of the Fund's shares or who
service shareholder accounts, including overhead and
<PAGE> 12
TCW/DW MID-CAP EQUITY TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1997 (unaudited) 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 preparation, printing and distribution of sales literature and
advertising materials. In addition, the Distributor may utilize fees paid
pursuant to the Plan 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 distribution expenses.
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 $9,640,254 at
May 31, 1997.
The Distributor has informed the Fund that for the six months ended May 31,
1997, it received approximately $450,000 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 six months ended May 31, 1997 aggregated
$52,791,707 and $62,384,313, respectively.
Dean Witter Trust Company, an affiliate of the Manager and Distributor, is the
Fund's transfer agent. At May 31, 1997, the Fund had transfer agent fees and
expenses payable of approximately $30,000.
<PAGE> 13
TCW/DW MID-CAP EQUITY TRUST
NOTES TO FINANCIAL STATEMENTS May 31, 1997 (unaudited) continued
6. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED FEBRUARY 27, 1996*
MAY 31, 1997 THROUGH
--------------------------- NOVEMBER 30, 1996
(unaudited) ---------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold.......................................................... 1,871,156 $ 18,162,376 20,260,721 $209,433,376
Repurchased................................................... (3,251,876) (30,958,798) (1,467,910) (15,889,773)
---------- ------------ ---------- ------------
Net increase (decrease)....................................... (1,380,720) $(12,796,422) 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.
8. SUBSEQUENT EVENT
On June 30, 1997, the Fund's Board of Trustees approved a proposal to adopt a
multiple class share structure. Through this arrangement, the Fund will offer
four classes of shares with various sales charges, ongoing fees and other
features. This conversion is scheduled to take place on July 28, 1997.
<PAGE> 14
TCW/DW MID-CAP EQUITY TRUST
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FEBRUARY 27, 1996*
MONTHS ENDED THROUGH
MAY 31, 1997 NOVEMBER 30, 1996
- ---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period................................................ $ 10.92 $ 10.00
-------- --------
Net investment loss................................................................. (0.11) (0.13)
Net realized and unrealized gain (loss)............................................. (1.09) 1.05
-------- --------
Total from investment operations.................................................... (1.20) 0.92
-------- --------
Net asset value, end of period...................................................... $ 9.72 $ 10.92
======== ========
TOTAL INVESTMENT RETURN+............................................................ (10.99)%(1) 9.20% (1)
RATIOS TO AVERAGE NET ASSETS:
Expenses............................................................................ 2.29%(2) 2.28% (2)
Net investment loss................................................................. (2.12)%(2) (1.79)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................................. $169,353 $205,274
Portfolio turnover rate............................................................. 31%(1) 25% (1)
Average commission rate paid........................................................ $0.0554 $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
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<PAGE> 16
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
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.
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
MID-CAP
EQUITY TRUST
[PHOTO]
Semiannual Report
May 31, 1997
