<PAGE>
TCW/DW MID-CAP EQUITY TRUST Two World Trade Center, New York, New York 10048
LETTER TO THE SHAREHOLDERS November 30, 1997
DEAR SHAREHOLDER:
We are pleased to present the annual report of TCW/DW Mid-Cap Equity Trust
for the fiscal year ended November 30, 1997.
The 12-month bear market in small-and mid-cap growth stocks, which began in
May 1996, finally ended in April 1997. However, it is difficult to forecast
with precision when mid-cap growth stocks will regain relative favor with
domestic equity investors. There are still several factors that may attract
investors to this sector. Foremost is the valuation gap. From almost all
standard financial measurements (price to book, price to earnings, price to
growth) mid-cap growth stock valuations relative to the larger stocks of the
Standard & Poor's 500 Composite Stock Price Index (S&P 500) are at historical
lows. This scenario has remained in place since the mid-cap recovery began in
April. Since the onset of the Asian crisis there has been a relative decline
in the mid-cap sector, but any significant fallout is less likely to be felt
because mid-caps generally do very little business in Asia. Finally, periods
of market turbulence frequently create buying opportunities in mid-cap growth
companies, which are often unfairly penalized over the short-term.
THE MARKETPLACE
The situation in Asia has generated significant fears of deflation and
declining growth for 1998. Over the short-term, bonds and large-cap stocks
have benefited relative to small-and mid-cap growth stocks. As concerns about
deflation mount, the expectation of lower interest rates have buoyed bond
prices. Meanwhile, a flight to liquidity in equities supports the S&P 500's
25 largest and most stable growers at the expense of all the other stocks not
represented on the index. The Fund's investment adviser, TCW Funds
Management, Inc., (TCW), questions the deflation argument, but does believe
that the benefits of lower inflation will offset lower earnings growth. In
any event, TCW believes that it is too early to make definitive statements
about the impact of Asian economies on U.S. markets.
However, over the next six to nine months TCW anticipates great uncertainty
with respect to corporate earnings. TCW further expects good
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
LETTER TO THE SHAREHOLDERS November 30, 1997, continued
companies to adjust to the potential onset of decreased demand, with lower
spending and work-force reductions. Given the recent level of economic
growth, however, this scenario is unlikely to happen in advance of declining
demand. If these fears were to actually materialize, profitability could
suffer in the short-term. As a result, TCW expects that top-tier companies
will seek to exploit their weaker competitors during this period of
retrenchment. Recent initial or increased investment in Asia by GE Capital,
AIG Insurance, Citibank and Coca-Cola are strong evidence of this trend. Once
the uncertainty of the next several months is behind us, the Fund's
management anticipates a more positive outlook for small-and mid-cap growth
funds. Over the intermediate and long-term, TCW expects that small-and
mid-cap growth stocks, which have little if any exposure to Asia, to
outperform the large multinational companies that dominate the S&P 500.
PERFORMANCE
[GRAPHIC OMITTED]
TCW/DW Mid-Cap Equity Trust's Class B shares registered a total return of
- -0.64 percent for the fiscal year ended November 30, 1997, lagging its
comparative benchmarks, the Standard & Poor's Mid-Cap 400 Index and the
Lipper Analytical Services Mid-Cap Funds Index, which posted total returns of
27.45 percent and 16.01 percent, respectively. The Fund's underperformance
was a direct result of poor performance by technology-related companies such
as Ascend Communications, Inc., Cascade Communications Corp. and Premisys
Communications, Inc. Also, the Fund was underweighted in the financial and
energy sectors during the fiscal year, which have been market leaders.
However, TCW believes that careful selection of high-quality, high-growth
companies with earning-power growth, which are underappreciated by Wall
Street consensus, should enable the Fund to recover somewhat as mid-caps
continue to gain strength. The accompanying chart illustrates the growth of a
$10,000 investment in the Class B shares of the Fund from its inception
(February 27, 1996) through November 30, 1997, versus similar hypothetical
investments in the issues that comprise the Standard & Poor's Mid-Cap 400
Index and the Lipper Mid-Cap Funds Index, respectively.
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
LETTER TO THE SHAREHOLDERS November 30, 1997, continued
THE PORTFOLIO
At the end of the fiscal year, the Fund had net assets in excess of $174
million. The portfolio's largest industry groups at that time were computer
software and services (16.5 percent of total net assets), commercial services
(15.3 percent), broadcast media (9.5 percent), retail specialty (4.8 percent)
and medical products (4.4 percent). TCW avoids sectors that are cyclical,
fragmented, have modest or mature growth rates and are commodity like in
nature.
As a bottom-up investor, the Fund does not target particular industries.
Changes in assets allocated to specific sectors merely reflect the impact of
individual stock selection, not any particular macroeconomic forecast. TCW's
primary goal is to ensure that the Fund has strong positions in mid-cap
companies that it believes appear to have the capability of exceeding
expectations in both the short and long term. Under normal market conditions,
the Fund does not deviate from its discipline of trying to identify
high-quality, high-growth companies whose earning power and growth rates
appear to be underestimated by Wall Street consensus.
In order to minimize the impact of a slowing economy on the Fund, TCW invests
in companies that appear to be insulated from macroeconomic trends. These
investments include such companies as Yahoo! Inc. and E*Trade Group, Inc.,
which benefit from growth in Internet usage; Siebel Systems, Inc. and Maxim
Integrated Products, Inc., which are involved in the trend toward
client/server computing; Clear Channel Communications, Inc. and Outdoor
Systems, Inc., whose businesses involve deregulated environments through
consolidation; and Romac International, Inc. and Robert Half International,
Inc., which may benefit from the growing trend toward outsourcing.
In response to the Asian uncertainty, the Fund's technology weighting has
been lowered modestly by paring down positions which depend heavily on that
region. The Fund remains fully invested and uses market declines to seek to
upgrade the quality of its holdings. An existing holding is occasionally sold
if it is deemed to have relatively slow growth or less predictable earnings
than other holdings.
OUTLOOK
As a new year begins, the Fund continues to adhere strictly to a philosophy
of investing in high-quality pure-growth companies and focuses exclusively on
the fundamentals of its existing portfolio holdings. Going forward, TCW
expects to focus on emerging and restructuring industries. There is no
attempt made to time the market, but rather efforts are concentrated on
company-specific investment issues such as pricing flexibility, market-share
gains and improved efficiencies. Investors should bear in mind that this
investment approach can and does lead to short-term volatility. For long-term
investors, however, short-term declines may provide additional buying
opportunities.
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
LETTER TO THE SHAREHOLDERS November 30, 1997, continued
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>
TCW/DW MID-CAP EQUITY TRUST
PORTFOLIO OF INVESTMENTS November 30, 1997
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (99.6%)
Advertising (2.7%)
150,650 Outdoor Systems, Inc.* .......................................... $ 4,651,319
--------------
Auto Parts -Original Equipment (0.1%)
10,850 Miller Industries, Inc.* ........................................ 105,787
--------------
Biotechnology (1.5%)
73,500 Biogen, Inc.* ................................................... 2,572,500
--------------
Broadcast Media (9.5%)
68,800 Cablevision Systems Corp.
(Class A)* .................................................... 5,637,300
118,300 Clear Channel Communications, Inc.* ............................. 8,014,825
102,500 Westwood One, Inc.* ............................................. 3,010,937
--------------
16,663,062
--------------
Commercial Services (15.3%)
90,525 Apollo Group, Inc. (Class A)* ................................... 3,858,628
117,900 Corrections Corp. of America* ................................... 4,082,287
92,400 Paychex, Inc. ................................................... 3,788,400
153,700 Robert Half International, Inc.* ................................ 6,003,906
467,900 Romac International, Inc.* ...................................... 9,007,075
--------------
26,740,296
--------------
Computer Services (3.5%)
64,900 Computer Horizons Corp.* ........................................ 2,141,700
132,600 National Techteam, Inc.* ........................................ 1,425,450
67,100 Transaction Systems Architects, Inc. (Class A)* ................. 2,600,125
--------------
6,167,275
--------------
Computer Software (3.1%)
70,000 Cerner Corp.* ................................................... 1,671,250
137,900 Cognex Corp.* ................................................... 3,654,350
--------------
5,325,600
--------------
Computer Software & Services (16.5%)
106,400 Avid Technology, Inc.* .......................................... 3,112,200
35,600 Baan Company, NV (Netherlands)* ................................. 2,534,275
188,900 FORE Systems, Inc.* ............................................. 3,258,525
92,700 PeopleSoft, Inc.* ............................................... 6,060,262
153,600 Security Dynamics Technologies, Inc. ............................ 5,203,200
208,400 Siebel Systems, Inc.* ........................................... 8,674,650
--------------
28,843,112
--------------
Consumer Business Services (1.4%)
35,600 CBT Group PLC (ADR)(Ireland)* ................................... 2,514,250
--------------
Electronics -Semiconductors/
Components (3.3%)
84,200 Maxim Integrated Products, Inc.* ................................ 5,815,062
--------------
Entertainment (2.5%)
110,100 Mirage Resorts, Inc.* ........................................... 2,614,875
68,850 Regal Cinemas, Inc.* ............................................ 1,751,372
--------------
4,366,247
--------------
Environmental Control (0.6%)
54,800 Newpark Resources, Inc.* ........................................ 1,092,575
--------------
Financial Services (2.7%)
42,700 C.I.T. Group, Inc. -(Class A)* .................................. 1,297,013
53,400 Price (T. Rowe) Associates, Inc. ................................ 3,471,000
--------------
4,768,013
--------------
Hospital Management (2.7%)
195,025 Health Management Associates, Inc. (Class A)* ................... 4,778,112
--------------
Hotels/Motels (0.7%)
17,200 HFS, Inc.* ...................................................... 1,180,350
--------------
Insurance (2.2%)
99,700 Hartford Life, Inc. (Class A) ................................... 3,825,988
--------------
Internet (6.3%)
130,900 E*TRADE Group, Inc.* ............................................ 3,272,500
88,600 Netscape Communications Corp.* .................................. 2,525,100
102,100 Yahoo! Inc.* .................................................... 5,207,100
--------------
11,004,700
--------------
<PAGE>
Medical Products (4.4%)
163,400 Safeskin Corp.* ................................................. 7,679,800
--------------
Medical Services (3.5%)
186,600 Coventry Corp.* ................................................. 2,787,338
133,000 PhyCor, Inc.* ................................................... 3,275,125
--------------
6,062,463
--------------
Oil & Gas Drilling (2.3%)
46,900 Patterson Energy, Inc.* ......................................... 1,705,988
86,700 Precision Drilling Corp. (Canada)* .............................. 2,232,525
--------------
3,938,513
--------------
Pharmaceuticals (2.0%)
80,500 Dura Pharmaceuticals, Inc.* ..................................... 3,511,813
--------------
Publishing (0.4%)
44,900 Playboy Enterprises, Inc.
(Class B)* .................................................... 614,569
--------------
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
PORTFOLIO OF INVESTMENTS November 30, 1997, continued
NUMBER OF
SHARES VALUE
- --------------------------------------------------------------------------------------------
Real Estate (1.1%)
55,000 CB Commercial Real Estate Services Group, Inc.* ................. $1,835,625
--------------
Recreation (2.6%)
170,750 Signature Resorts, Inc.* ........................................ 4,588,906
--------------
Restaurants (1.3%)
64,100 Starbucks Corp.* ................................................ 2,227,475
--------------
Retail -Specialty (4.8%)
110,300 Bed Bath & Beyond, Inc.* ........................................ 3,681,263
160,900 Best Buy Co., Inc.* ............................................. 4,686,213
--------------
8,367,476
--------------
Telecommunications Equipment (2.6%)
68,400 Advanced Fibre Communications, Inc.* ............................ 1,752,750
121,200 Pairgain Technologies, Inc.* .................................... 2,855,775
--------------
4,608,525
--------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $125,013,734)(a) . 99.6% 173,849,413
OTHER ASSETS IN EXCESS OF
LIABILITIES........................ 0.4 713,946
-------- -------------
NET ASSETS......................... 100.0% $174,563,359
======== =============
</TABLE>
[FN]
- ------------
ADR American Depository Receipt.
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes approximates
identified cost. The aggregate gross unrealized appreciation is
$55,724,076 and the aggregate gross unrealized depreciation is
$6,888,397, resulting in net unrealized appreciation of $48,835,679.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
November 30, 1997
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value (identified cost $125,013,734) $173,849,413
Receivable for:
Investments sold ................................................ 988,019
Shares of beneficial interest sold .............................. 27,950
Dividends ....................................................... 9,027
Deferred organizational expenses .................................. 107,147
Prepaid expenses .................................................. 63,740
--------------
TOTAL ASSETS .................................................... 175,045,296
--------------
LIABILITIES:
Payable for:
Plan of distribution fee ........................................ 147,946
Management fee .................................................. 88,794
Shares of beneficial interest repurchased ....................... 69,647
Investment advisory fee ......................................... 59,196
Payable to bank ................................................... 68,552
Accrued expenses .................................................. 47,802
--------------
TOTAL LIABILITIES ............................................... 481,937
--------------
NET ASSETS ...................................................... $174,563,359
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital ................................................... $160,266,228
Net unrealized appreciation ....................................... 48,835,679
Accumulated net realized loss ..................................... (34,538,548)
--------------
NET ASSETS ...................................................... $174,563,359
==============
CLASS A SHARES:
Net Assets ........................................................ $58,168
Shares Outstanding (unlimited authorized, $.01 par value) ........ 5,348
NET ASSET VALUE PER SHARE ....................................... $10.88
==============
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset value) ................ $11.48
==============
CLASS B SHARES:
Net Assets ........................................................ $174,411,901
Shares Outstanding (unlimited authorized, $.01 par value) ........ 16,074,010
NET ASSET VALUE PER SHARE ....................................... $10.85
==============
CLASS C SHARES:
Net Assets ........................................................ $83,239
Shares Outstanding (unlimited authorized, $.01 par value) ........ 7,669
NET ASSET VALUE PER SHARE ....................................... $10.85
==============
CLASS D SHARES:
Net Assets ........................................................ $10,051
Shares Outstanding (unlimited authorized, $.01 par value) ........ 923
NET ASSET VALUE PER SHARE ....................................... $10.89
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF OPERATIONS
For the year ended November 30, 1997*
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Interest .................................. $ 125,918
Dividends ................................. 109,807
--------------
TOTAL INCOME ............................ 235,725
--------------
EXPENSES
Plan of distribution fee (Class A shares) 46
Plan of distribution fee (Class B shares) 1,802,459
Plan of distribution fee (Class C shares) 178
Management fee ............................ 1,081,715
Investment advisory fee ................... 721,143
Transfer agent fees and expenses .......... 271,344
Professional fees ......................... 54,795
Registration fees ......................... 52,573
Shareholder reports and notices ........... 45,992
Organizational expenses ................... 33,099
Trustees' fees and expenses ............... 26,156
Custodian fees ............................ 20,886
Other ..................................... 16,572
--------------
TOTAL EXPENSES .......................... 4,126,958
--------------
NET INVESTMENT LOSS ..................... (3,891,233)
--------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized loss ......................... (22,962,571)
Net change in unrealized appreciation .... 23,258,457
--------------
NET GAIN ................................ 295,886
--------------
NET DECREASE .............................. $ (3,595,347)
==============
</TABLE>
- ------------
* Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE YEAR FEBRUARY 27, 1996*
ENDED THROUGH
NOVEMBER 30, 1997** NOVEMBER 30, 1996
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss ................................... $ (3,891,233) $ (2,370,756)
Net realized loss ..................................... (22,962,571) (11,575,977)
Net change in unrealized appreciation ................. 23,258,457 25,577,222
------------------- ------------------
NET INCREASE (DECREASE) ............................ (3,595,347) 11,630,489
Net increase (decrease) from transactions in shares of
beneficial interest .................................. (27,115,386) 193,543,603
------------------- ------------------
NET INCREASE (DECREASE) ............................ (30,710,733) 205,174,092
NET ASSETS:
Beginning of period ................................... 205,274,092 100,000
------------------- ------------------
END OF PERIOD ....................................... $174,563,359 $205,274,092
=================== ==================
</TABLE>
- ------------
* Commencement of operations.
** Class A, Class C and Class D shares were issued July 28, 1997.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
Notes to Financial Statements November 30, 1997
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. 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 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
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1997, continued
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.
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. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are
allocated to each class of shares based upon the relative net asset value on
the date such items are recognized. Distribution fees are charged 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 is 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 Co. Inc., paid the organizational expenses of the Fund
in the amount of approximately $165,000, which have been
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1997, continued
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, 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. 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
inception of the Fund (not including reinvestment of dividend or capital gain
distributions) less the average 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
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1997, continued
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 Investment Manager and Distributor, and others who engage in
or support distribution of the 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 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 $9,313,194 at November
30, 1997.
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 period ended November 30, 1997, 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 year ended November 30,
1997, it received contingent deferred sales charges from certain redemptions
of the Fund's Class B shares of $946,099 and received approximately $3,000 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.
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
NOTES TO FINANCIAL STATEMENTS November 30, 1997, continued
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, 1997
aggregated $86,977,350 and $112,947,894, respectively.
For the period May 31, 1997 through November 30, 1997, the Fund incurred
brokerage commissions of $1,235 with Morgan Stanley & Co., an affiliate of
the Investment Manager since May 31, 1997, 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 November 30, 1997, 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 PERIOD
FOR THE YEAR FEBRUARY 27, 1996*
ENDED THROUGH
NOVEMBER 30, 1997 NOVEMBER 30, 1996
------------------------------ -----------------------------
SHARES AMOUNT SHARES AMOUNT
------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
CLASS A SHARES**
Sold .............................. 6,748 $ 74,233 -- --
Repurchased ....................... (1,400) (15,778) -- --
------------- --------------- ------------- --------------
Net increase -Class A ............. 5,348 58,455 -- --
------------- --------------- ------------- --------------
CLASS B SHARES
Sold .............................. 2,893,121 29,335,443 20,260,721 $209,433,376
Repurchased ....................... (5,621,922) (56,605,744) (1,467,910) (15,889,773)
------------- --------------- ------------- --------------
Net increase (decrease) -Class B . (2,728,801) (27,270,301) 18,792,811 193,543,603
------------- --------------- ------------- --------------
CLASS C SHARES**
Sold .............................. 7,669 86,447 -- --
------------- --------------- ------------- --------------
CLASS D SHARES**
Sold .............................. 923 10,013 -- --
------------- --------------- ------------- --------------
Net increase (decrease) in Fund .. (2,714,861) $(27,115,386) 18,792,811 $193,543,603
============= =============== ============= ==============
</TABLE>
- ------------
* Commencement of operations.
** For the period July, 28, 1997 (issue date) through November 30, 1997.
7. FEDERAL INCOME TAX STATUS
At November 30, 1997, the Fund had a net capital loss carryover of
approximately $34,462,000 of which $11,576,000 will be available through
November 30, 2004 and $22,886,000 will be available through November 30, 2005
to offset future capital gains to the extent provided by regulations.
As of November 30, 1997, the Fund had permanent book/tax differences
primarily attributable to a net operating loss. To reflect reclassifications
arising from these differences, paid-in-capital was charged and net
investment loss was credited $3,891,233.
<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 YEAR FOR THE PERIOD
ENDED FEBRUARY 27, 1996*
NOVEMBER 30, THROUGH
1997**++ NOVEMBER 30, 1996
- ---------------------------------------- -------------------- ------------------
<S> <C> <C>
CLASS B SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ... $10.92 $10.00
-------------------- ------------------
Net investment loss ..................... (0.22) (0.13)
Net realized and unrealized gain ....... 0.15 1.05
-------------------- ------------------
Total from investment operations ....... (0.07) 0.92
-------------------- ------------------
Net asset value, end of period .......... $10.85 $10.92
==================== ==================
TOTAL INVESTMENT RETURN+ ................ (0.64)% 9.20%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ................................ 2.29% 2.28%(2)
Net investment loss ..................... (2.16)% (1.79)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $174,412 $205,274
Portfolio turnover rate ................. 49% 25%(1)
Average commission rate paid ............ $0.0569 $0.0577
</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.
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TCW/DW MID-CAP EQUITY TRUST
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
NOVEMBER 30,
1997++
- ---------------------------------------- ------------------
<S> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ... $10.85
------------------
Net investment loss ..................... (0.06)
Net realized and unrealized gain ....... 0.09
------------------
Total from investment operations ....... 0.03
------------------
Net asset value, end of period .......... $10.88
==================
TOTAL INVESTMENT RETURN+ ................ 0.28%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ................................ 1.55%(2)
Net investment loss ..................... (1.46)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $58
Portfolio turnover rate ................. 49%
Average commission rate paid ............ $0.0569
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ... $10.85
------------------
Net investment loss ..................... (0.08)
Net realized and unrealized gain ....... 0.08
------------------
Total from investment operations ....... --
------------------
Net asset value, end of period .......... $10.85
==================
TOTAL INVESTMENT RETURN+ ................ 0.09%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ................................ 2.32 %(2)
Net investment loss ..................... (2.22)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $83
Portfolio turnover rate ................. 49%
Average commission rate paid ............ $0.0569
</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 MID-CAP EQUITY TRUST
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
NOVEMBER 30,
1997++
- ---------------------------------------- ------------------
<S> <C>
CLASS D SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period ... $10.85
------------------
Net investment loss ..................... (0.05)
Net realized and unrealized gain ....... 0.09
------------------
Total from investment operations ....... 0.04
------------------
Net asset value, end of period .......... $10.89
==================
TOTAL INVESTMENT RETURN+ ................ 0.37%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ................................ 1.30%(2)
Net investment loss ..................... (1.19)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands $10
Portfolio turnover rate ................. 49%
Average commission rate paid ............ $0.0569
</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>
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, 1997, the results of its operations
for the year then ended, the changes in its net assets for the year then
ended and for the period February 27, 1996 (commenecment of operations)
through November 30, 1996 and the financial highlights for each of the
periods presented, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe that our audits,
which included confirmation of securities at November 30, 1997 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
January 9, 1998
<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
Douglas S. Foreman
Vice President
Christopher J. Ainley
Vice President
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 Aemricas
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 use 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
[GRAPHIC OMITTED]
ANNUAL REPORT
NOVEMBER 30, 1997
