<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND TWO WORLD TRADE CENTER, NEW YORK, NEW
YORK 10048
LETTER TO THE SHAREHOLDERS NOVEMBER 30, 1995
DEAR SHAREHOLDER:
The six-month period ended November 30, 1995 was a volatile one for non-U.S.
equities, in sharp contrast to the steady upward movement experienced in the
U.S. stock market. The Japanese market in particular saw substantial share price
volatility as concerns about poor economic performance, weak government and the
financial system gave way to relief as the yen weakened from its high of 80 yen
to the U.S. $1 reached in April. Having bottomed out very close to the mid-1992
low, the market rebounded sharply in the third quarter of 1995, although the
Daiwa Bank scandal proved a depressant in October. In U.S.-dollar terms, the
weakness of the yen masked this market recovery and, from the perspective of a
U.S. investor, Japan remained the worst performing major market in the world.
The smaller markets of the Far East also remained depressed. Poor sentiment
affected all emerging markets during the period, as a result of economic
concerns stemming from Latin America, particularly Mexico. However, European
stock markets performed well, encouraged by lower interest rates.
SMALL CAPS UNDERPERFORM
Non-U.S. small-capitalization companies continued to underperform during the
period, relative to their larger-capitalization counterparts. This
underperformance remained fairly uniform across all the regions of the non-U.S.
world and, in October, entered its sixth successive calendar quarter.
It remains difficult to explain this poor relative performance on the basis of
investment fundamentals. Small companies typically perform well in periods of
steady economic expansion and, in 1995, global economic growth, although
subdued, was certainly improved from the recessionary period of 1993 to 1994.
Interest rates generally declined during the period. Such enhanced liquidity is
normally supportive of equities in general, and small companies in particular.
In addition, earnings growth generated by small-cap stocks was typically above
the average of larger stocks. The result of superior earnings growth, combined
with share price underperformance, is that small companies in all the major
regions of the non-U.S. world are currently
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
LETTER TO THE SHAREHOLDERS NOVEMBER 30, 1995, CONTINUED
trading at a discount to large-cap stocks in terms of price/earnings valuation.
Historically it is not unusual for small companies to be valued more highly than
large companies, reflecting their premium growth potential.
PERFORMANCE AND PORTFOLIO HOLDINGS
During the six-month period ended November 30, 1995, Dean Witter International
SmallCap Fund produced a total return of 4.92 percent, outperforming its
benchmark index, the NatWest Market Small Cap Euro-Pacific Index, which returned
- -0.36 percent. The Fund also outperformed the large-capitalization Morgan
Stanley Capital International Europe, Australia and Far East Index (EAFE) which
returned 1.54 percent. Stock selection, particularly in Continental Europe,
contributed strongly to the Fund's performance, as did the Fund's strategy of
hedging the portfolio's yen exposure back into the U.S. dollar.
The Fund is made up of a geographically diversified portfolio of growth stocks
such as Saes Getters of Italy (a leader in vacuum technology for personal
computers); Keikert of Germany (a world leader in car locking and security
devices); Circle K and Ministop of Japan (convenience store chains); Wolford of
Austria (contract manufacturer of ladies hosiery); and Venture Manufacturing of
Singapore (manufacturer for companies in the electronics industry).
LOOKING AHEAD
Going forward, Morgan Grenfell, the Fund's sub-advisor, believes non-U.S.
equities should perform better over the balance of the Fund's fiscal year and
over the long term, with Japan continuing to show signs of improvement. In
addition, they currently view the other Far Eastern markets as offering
excellent value and believe emerging markets in general are poised to
recuperate. These factors, in addition to the world-wide downward trend in
interest rates should bode well for global liquidity and the equity markets.
They also believe that non-U.S. small-cap stocks are particularly attractive at
the present time.
We appreciate your support of Dean Witter International SmallCap Fund and look
forward to continuing to serve your investment objectives.
Very truly yours,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS (98.0%)
ARGENTINA (0.5%)
AUTOMOTIVE
53,333 Ciadea S.A.*.................... $ 226,779
---------------
FOOD, BEVERAGE, TOBACCO &
HOUSEHOLD PRODUCTS
65,000 Nobleza Piccardo S.A............ 253,627
---------------
TOTAL ARGENTINA................. 480,406
---------------
AUSTRALIA (1.5%)
BUILDING & CONSTRUCTION
700,000 Macmahon Holdings Ltd........... 343,220
---------------
MANUFACTURING
230,000 Pacific BBA Ltd................. 475,010
---------------
METALS & MINING
350,000 QCT Resources Ltd............... 416,024
---------------
RETAIL - FOOD CHAINS
104,500 Foodland Associated Ltd......... 347,776
---------------
TOTAL AUSTRALIA................. 1,582,030
---------------
AUSTRIA (1.1%)
CONSUMER PRODUCTS
5,385 Wolford AG...................... 856,692
---------------
ELECTRONIC COMPONENTS
1,920 Austria Mikro Systeme
International AG................ 337,315
---------------
TOTAL AUSTRIA................... 1,194,007
---------------
BELGIUM (0.4%)
FOOD, BEVERAGE, TOBACCO &
HOUSEHOLD PRODUCTS
4,050 Quick Restaurants S.A........... 389,842
---------------
DENMARK (1.0%)
MANUFACTURING
7,330 Oticon Holding AS............... 766,840
---------------
MULTI-INDUSTRY
3,430 Martin Gruppen.................. 177,581
2,880 Martin Gruppen (New)............ 149,106
---------------
326,687
---------------
TOTAL DENMARK................... 1,093,527
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
FINLAND (0.3%)
TELECOMMUNICATIONS
11,390 Benefon Oy...................... $ 280,907
---------------
FRANCE (3.6%)
AUTO PARTS
4,000 Bertrand Faure.................. 108,065
3,236 MGI Coutier..................... 128,870
3,983 Sylea........................... 305,281
---------------
542,216
---------------
COMMERCIAL SERVICES
4,860 Assystem........................ 349,644
---------------
CONSUMER PRODUCTS
3,000 Hermes International............ 525,315
---------------
ELECTRONICS
2,700 CIPE France S.A................. 148,535
---------------
FINANCIAL SERVICES
1,250 But S.A......................... 285,171
2,534 Union Financiere de Banque
S.A............................. 211,970
---------------
497,141
---------------
FOOD, BEVERAGE, TOBACCO &
HOUSEHOLD PRODUCTS
2,569 Brioche Pasquier S.A............ 321,318
---------------
OFFICE EQUIPMENT
6,369 Airfeu S.A...................... 262,560
4,965 Guilbert S.A.................... 564,363
---------------
826,923
---------------
PUBLISHING
22 Filipacchi Medias............... 3,214
---------------
RETAIL - SPECIALTY
3,360 Grand Optical Photoservice...... 337,547
---------------
TEXTILES
2,742 Deveaux S.A..................... 211,809
---------------
TOTAL FRANCE.................... 3,763,662
---------------
GERMANY (7.5%)
AUTO PARTS - ORIGINAL EQUIPMENT
17,250 Kiekert AG...................... 1,025,224
---------------
BUILDING MATERIALS
1,418 Sto AG (Pref.).................. 759,468
2,556 Villeroy & Boch AG (Pref.)...... 399,209
---------------
1,158,677
---------------
DISTRIBUTION
720 Hach AG (Pref.)................. 320,940
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
FOOD, BEVERAGE, TOBACCO &
HOUSEHOLD PRODUCTS
22,840 Berentzen-Gruppe AG (Pref.)..... $ 639,267
---------------
INSURANCE BROKERS
445 Marschollek, Lautenschlaeger &
Partner AG...................... 302,920
---------------
MEDICAL SERVICES
10,368 Rhoen-Klinikum AG (Pref.)....... 788,169
---------------
MULTI-INDUSTRY
487 Hugo Boss AG (Pref.)............ 395,456
---------------
PHOTOGRAPHY
2,180 Cewe Color Holding AG........... 662,889
---------------
RETAIL - SPECIALTY
12,500 Fielmann AG (Pref.)............. 650,484
1,408 Moebel Walther AG............... 520,581
---------------
1,171,065
---------------
TEXTILES
936 Jil Sander AG (Pref.)........... 769,758
2,352 Stoehr & Co. AG................. 242,189
---------------
1,011,947
---------------
TEXTILES - APPAREL MANUFACTURERS
1,909 Puma AG (Pref.)*................ 468,345
---------------
TOTAL GERMANY................... 7,944,899
---------------
HONG KONG (2.0%)
AEROSPACE & DEFENSE
40,000 Hong Kong Aircraft Engineering
Co. Ltd......................... 106,793
---------------
BANKS - COMMERCIAL
150,000 Liu Chong Hing Bank Ltd......... 178,419
40,000 Wing Hang Bank Ltd.............. 132,909
---------------
311,328
---------------
ELECTRONICS & ELECTRICAL
101,000 ASM Pacific Technology.......... 86,184
604,000 Gold Peak Industries............ 275,270
---------------
361,454
---------------
HOTELS/MOTELS
300,000 Grand Hotel Holdings Ltd.
(Series A)...................... 111,512
1,050,000 Regal Hotels International...... 232,139
---------------
343,651
---------------
LODGING
200,000 Harbour Centre Development...... 212,034
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
MACHINERY & MACHINE TOOLS
300,000 Chen Hsong Holdings............. $ 157,086
---------------
MULTI-INDUSTRY
372,000 TVE Holdings Ltd................ 107,013
---------------
REAL ESTATE
200,000 China Resources Enterprise
Ltd............................. 87,270
500,000 Hon Kwok Land Investment........ 151,915
---------------
239,185
---------------
TEXTILES
150,000 Winsor Industrial Corp. Ltd..... 133,814
---------------
TRANSPORTATION
50,000 Kowloon Motor Bus Co. Ltd....... 82,099
---------------
WHOLESALE DISTRIBUTOR
275,000 Four Seas Mercantile Holdings
Ltd............................. 83,553
---------------
TOTAL HONG KONG................. 2,138,010
---------------
INDONESIA (0.9%)
BANKS - COMMERCIAL
50,000 PT Bank Niaga................... 89,794
---------------
CHEMICALS
60,000 PT Aneka Kimia Raya............. 141,919
27,500 PT Trias Sentosa................ 53,000
---------------
194,919
---------------
DISTRIBUTION
30,000 PT Wicaksana Overseas
International*.................. 78,844
---------------
ENGINEERING & CONSTRUCTION
50,000 PT Bukaka Teknik Utama.......... 61,323
---------------
FOOD, BEVERAGE, TOBACCO &
HOUSEHOLD PRODUCTS
142,000 PT Fast Food Indonesia.......... 130,618
---------------
MACHINERY & MACHINE TOOLS
80,000 PT United Tractors.............. 145,423
---------------
PHARMACEUTICALS
95,000 PT Enseval Putera Megatrading... 57,216
---------------
WHOLESALE DISTRIBUTOR
60,500 PT Tigaraksa Satria............. 196,102
---------------
TOTAL INDONESIA................. 954,239
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
ITALY (4.3%)
ELECTRONICS & ELECTRICAL
76,000 Gewiss SpA...................... $ 953,119
---------------
MACHINERY & MACHINE TOOLS
84,500 Industria Macchine Automatic.... 569,764
---------------
MANUFACTURING
12,852 Industrie Natuzzi SpA (ADR)..... 555,849
30,000 Saes Getters Di Risp (ADR)...... 233,620
33,000 Saes Getters SpA................ 557,310
---------------
1,346,779
---------------
MEDICAL PRODUCTS & SUPPLIES
35,890 De Rigo SpA (ADR)............... 762,663
---------------
RETAIL
25,000 Gucci Group NV.................. 879,629
---------------
TOTAL ITALY..................... 4,511,954
---------------
JAPAN (41.6%)
AUTO RELATED
60,000 Mitsuba Electric Mfg. Co........ 616,921
---------------
BUILDING & CONSTRUCTION
15,500 Higashi Nihon House............. 209,459
50,000 Ichiken Co., Ltd................ 472,483
40,000 Kaneshita Construction.......... 509,205
50,000 Takada Kiko..................... 467,587
35,000 Tohoku Misawa Homes Co.......... 411,281
---------------
2,070,015
---------------
BUILDING MATERIALS
16,000 Maezawa Kaisei Industries....... 609,479
28,000 Oriental Construction Co........ 600,470
---------------
1,209,949
---------------
BUSINESS SERVICES
25,000 Chuo Warehouse.................. 283,980
20,000 Nippon Kanzai................... 577,752
40,000 Tanseisha....................... 411,281
---------------
1,273,013
---------------
CHEMICALS
13,000 SK Kaken Co., Ltd............... 254,602
---------------
COMMERCIAL SERVICES
15,000 Nichii Gakkan Co................ 663,925
---------------
COMPUTERS
14,000 Enix Corp....................... 526,439
9,000 I-O Data Device, Inc............ 665,394
8,000 Mars Engineering Corp........... 575,793
---------------
1,767,626
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
COMPUTERS - SYSTEMS
20,000 Daiwabo Information Systems
Co.............................. $ 548,374
25,000 Japan Digital Laboratory........ 501,861
25,300 TKC Corp........................ 644,144
---------------
1,694,379
---------------
ELECTRICAL EQUIPMENT
45,000 Alpine Electronics Inc.......... 709,459
40,000 Tokin Corp...................... 599,295
---------------
1,308,754
---------------
ELECTRONIC & ELECTRICAL EQUIPMENT
20,000 Aiwa Co......................... 423,032
30,000 Mitsui High-Tec................. 816,686
45,000 Mitsumi Electric Co. Ltd........ 1,097,238
20,000 Nihon Dempa Kogyo............... 466,118
45,000 Nitto Electric Works............ 656,580
---------------
3,459,654
---------------
ELECTRONICS
25,000 Ryoyo Electro Corp.............. 582,648
14,000 Shinko Electric Industries...... 573,051
---------------
1,155,699
---------------
ELECTRONICS & ELECTRICAL
20,000 Fujitsu Business Systems........ 499,412
---------------
ELECTRONICS - SEMICONDUCTORS
15 Nippon Steel Semiconductor...... 509,694
---------------
ENGINEERING & CONSTRUCTION
20,000 Japan Industrial Land
Development..................... 744,222
---------------
ENTERTAINMENT
15,200 H.I.S. Co. Ltd.................. 641,520
---------------
FINANCIAL SERVICES
13,000 Nissin Co., Ltd................. 598,316
9,000 Sanyo Shinpan Finance Co.,
Ltd............................. 659,224
15,000 Shinki Co. Ltd.................. 521,445
---------------
1,778,985
---------------
FOOD, BEVERAGE, TOBACCO &
HOUSEHOLD PRODUCTS
9,000 Plenus Co., Ltd................. 382,491
40,000 Stamina Foods................... 493,537
16,000 Yonkyu Co., Ltd................. 360,360
45 Yoshinoya D & C Co., Ltd........ 749,119
22,000 Yukiguni Maitake Co., Ltd....... 441,637
---------------
2,427,144
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
FOREST PRODUCTS, PAPER & PACKAGING
65,000 Daishowa Paper Manufacturing Co.
Ltd............................. $ 528,300
---------------
HEALTH & PERSONAL CARE
30,000 Kawasumi Laboratories, Inc...... 349,589
---------------
HOUSEHOLD FURNISHINGS & APPLIANCES
7,000 Beltecno Corp................... 80,200
---------------
LEISURE TIME
21,000 Honma Golf Co. Ltd.............. 487,368
---------------
MACHINERY & MACHINE TOOLS
60,000 Aichi Corp...................... 500,000
23,000 Fuji Machine Manufacturing
Co.............................. 862,612
95,000 Nippon Thompson Co.............. 823,296
85,000 OSG Corp........................ 565,168
6,000 Ricoh Elemex.................... 81,081
33,000 Sansei Yusoki Co., Ltd.......... 403,937
70,000 Sintokogio...................... 521,641
---------------
3,757,735
---------------
MANUFACTURED HOUSING
40,000 Mitsui Home Co., Ltd............ 591,461
---------------
MANUFACTURING
65,000 Bridgestone Metalpha Corp....... 693,792
70,000 Itoki Crebio Corp............... 524,383
40,000 Juken Sangyo.................... 434,783
30,000 Nichiha Corp.................... 534,665
---------------
2,187,623
---------------
MEDICAL SUPPLIES
8,000 Paramount Bed Co................ 571,876
---------------
MISCELLANEOUS
16,300 Maruco Co., Ltd................. 1,000,792
20,000 Misumi Corp..................... 718,762
11,000 Yagi Corp....................... 123,874
---------------
1,843,428
---------------
MULTI-INDUSTRY
28,800 Trusco Nakayama Corp............ 589,424
30,000 Yamae Hisano.................... 311,398
---------------
900,822
---------------
PHARMACEUTICALS
20,000 Santen Pharmaceutical Co........ 440,658
10,000 Towa Pharmaceutical Co., Ltd.... 391,696
---------------
832,354
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
REAL ESTATE
55,000 Cesar Co........................ $ 419,555
45,000 Chubu Sekiwa Real Estate,
Ltd............................. 608,108
34,000 Fuso Lexel, Inc................. 249,706
35,000 Kansai Sekiwa Real Estate....... 596,357
55,000 Sekiwa Real Estate.............. 452,409
---------------
2,326,135
---------------
RETAIL
25,000 Arcland Sakamoto................ 357,423
15,000 Belluna Co., Ltd................ 249,706
12,000 Fast Retailing Co., Ltd......... 611,046
25,000 Izumi Co., Ltd.................. 511,653
25,000 Ministop Co., Ltd............... 616,921
20,000 Shimachu Co., Ltd............... 532,707
20,000 Xebio Co. Ltd................... 693,302
---------------
3,572,758
---------------
RETAIL - DRUG STORES
18,500 Seijo Corp...................... 525,362
---------------
RETAIL - GENERAL MERCHANDISE
18,000 Circle K Japan Co. Ltd.......... 766,745
9,000 Ryohin Keikaku Co. Ltd.......... 652,174
---------------
1,418,919
---------------
RETAIL - SPECIALTY
23,000 Paris Miki Inc.................. 777,027
---------------
TRANSPORTATION
10,000 Kanto Seino Transportation...... 293,772
---------------
WHOLESALE DISTRIBUTOR
10,000 Satori Electric Co. Ltd......... 484,724
35,000 Wakita & Co..................... 462,691
---------------
947,415
---------------
TOTAL JAPAN..................... 44,067,658
---------------
MALAYSIA (1.9%)
AUTOMOTIVE
50,000 Cycle & Carriage Bintang
Berhad.......................... 228,635
---------------
BANKS - COMMERCIAL
100,000 Hock Hua Bank Berhad............ 285,793
---------------
BUILDING & CONSTRUCTION
60,000 Muhibbah Engineering Berhad..... 199,858
---------------
CHEMICALS
95,000 Nylex Berhad.................... 284,611
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES
73,333 Arab Malaysian Finance Berhad... $ 251,497
80,000 Public Finance Berhad........... 146,957
---------------
398,454
---------------
MANUFACTURING
40,000 George Kent Berhad.............. 73,478
---------------
REAL ESTATE
68,000 IOI Properties Berhad........... 148,770
70,000 Shah Alam Properties Berhad..... 165,563
---------------
314,333
---------------
TOBACCO
100,000 RJ Reynolds Berhad.............. 226,664
---------------
TOTAL MALAYSIA.................. 2,011,826
---------------
MEXICO (1.1%)
BANKS - COMMERCIAL
25,000 Grupo Financiero GBM Atlantico
S.A. (GDS)*..................... 81,250
---------------
ENERGY TECHNOLOGY & EQUIPMENT
45,000 Tubos de Acero de Mexico
(ADR)*.......................... 315,000
---------------
INDUSTRIALS
25,000 Grupo Industrial Saltillo S.A.
de C.V. (Series A).............. 325,798
---------------
TRANSPORTATION
60,000 Transportacion Maritima Mexicana
S.A. de C.V. (ADR).............. 457,500
---------------
TOTAL MEXICO.................... 1,179,548
---------------
NETHERLANDS (1.4%)
BUILDING MATERIALS
13,486 Koninklijke Sphinx.............. 248,076
---------------
BUSINESS SERVICES
7,200 Randstad Holdings NV............ 301,778
---------------
ELECTRONICS & ELECTRICAL
2,219 Otra NV......................... 383,531
---------------
HARDWARE & TOOLS
6,000 Aalberts Industries NV.......... 342,593
---------------
PHARMACEUTICALS
9,540 OPG Apotheker Coop UA........... 220,833
---------------
TOTAL NETHERLANDS............... 1,496,811
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
NEW ZEALAND (0.1%)
CHEMICALS
50,000 Fernz Corp. Ltd................. $ 146,858
---------------
NORWAY (4.6%)
COMMERCIAL SERVICES
30,100 Sysdeco Group AS................ 676,011
---------------
ELECTRONICS & ELECTRICAL
77,900 Sensonor AS..................... 581,142
---------------
ENERGY TECHNOLOGY & EQUIPMENT
66,000 Tomra Systems AS................ 491,331
---------------
MISCELLANEOUS
14,810 Hitec AS........................ 281,444
16,750 Multisoft AS.................... 368,294
---------------
649,738
---------------
OIL RELATED
23,000 Transocean Drilling AS.......... 397,349
---------------
RETAIL - SPECIALTY
38,510 System Etikettering AS.......... 749,975
---------------
TELECOMMUNICATION EQUIPMENT
10,000 Tandberg AS..................... 115,435
11,500 Tandberg AS (New)............... 132,751
---------------
248,186
---------------
TELECOMMUNICATIONS
17,427 Nera AS......................... 558,347
---------------
TRANSPORTATION
12,900 Storli AS....................... 202,601
---------------
TRANSPORTATION - SHIPPING
38,325 Awilco AS (Series B)............ 364,157
---------------
TOTAL NORWAY.................... 4,918,837
---------------
PHILIPPINES (0.2%)
BANKS - COMMERCIAL
14,000 Union Bank of Philippines....... 14,982
---------------
BUILDING MATERIALS
10,036 Bacnotan Consolidated
Industries...................... 55,617
---------------
CONGLOMERATES
48,079 First Philippine Holdings Corp.
(B Shares)...................... 95,552
---------------
REAL ESTATE
200,000 Belle Corp...................... 27,518
---------------
TOTAL PHILIPPINES............... 193,669
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
SINGAPORE (1.7%)
COMPUTER SERVICES
130,000 Flextech Holdings Ltd........... $ 101,368
---------------
COMPUTERS
75,000 CSA Holding, Ltd................ 71,241
---------------
ELECTRONICS & ELECTRICAL
110,000 Venture Manufacturing, Ltd...... 336,854
---------------
ENGINEERING & CONSTRUCTION
40,000 Jurong Engineering, Ltd......... 208,407
---------------
FINANCIAL SERVICES
130,000 ST Capital Ltd.................. 159,424
---------------
HOUSEHOLD FURNISHINGS & APPLIANCES
250,000 Courts Ltd...................... 357,978
---------------
METALS & MINING
120,000 Amtek Engineering, Ltd.......... 157,369
100,000 Seksun Precision Engineering
Ltd............................. 80,102
---------------
237,471
---------------
PHARMACEUTICALS
40,000 Tiger Medicals Ltd.............. 60,963
---------------
SHIPBUILDING
100,000 Singapore Technologies
Shipbuilding & Engineering
Ltd............................. 226,838
---------------
TRANSPORTATION
80,000 Comfort Group Ltd............... 64,082
---------------
TOTAL SINGAPORE................. 1,824,626
---------------
SPAIN (0.9%)
BUILDING MATERIALS
25,000 Energia e Industrias Aragonesas
S.A............................. 126,650
---------------
FOREST & PAPER PRODUCTS
12,900 Empresa Nacional de Celulosas
S.A............................. 220,142
---------------
RETAIL
21,000 Cortefiel S.A................... 573,733
---------------
TOTAL SPAIN..................... 920,525
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
SWEDEN (3.7%)
AUTOMOTIVE
370 Opcon - 144A**.................. $ 324,740
---------------
ELECTRICAL EQUIPMENT
12,400 Allgon AB (B Shares)............ 204,414
---------------
ELECTRONIC & ELECTRICAL EQUIPMENT
19,500 Kanthal Hoganas AB (Series B)... 303,599
---------------
MANUFACTURING
21,520 SinterCast AB (A Shares)........ 1,313,917
---------------
METALS & MINING
13,290 Hoganas AB...................... 385,429
---------------
MISCELLANEOUS
30,568 Assa Abloy AB (Series B)........ 235,627
25,000 Kalmar Industries AB............ 396,862
---------------
632,489
---------------
PHARMACEUTICALS
18,000 Elekta Instrument (Series B).... 788,534
---------------
TOTAL SWEDEN.................... 3,953,122
---------------
SWITZERLAND (1.3%)
HOUSEHOLD FURNISHINGS & APPLIANCES
1,604 Fust SA AG...................... 395,208
---------------
MACHINERY & MACHINE TOOLS
172 Bossard Holding AG.............. 312,727
---------------
MISCELLANEOUS
1,295 Kardex AG....................... 330,076
343 Zehnder Holdings................ 174,851
---------------
504,927
---------------
PUBLISHING
850 Edipresse S.A................... 210,153
---------------
TOTAL SWITZERLAND............... 1,423,015
---------------
THAILAND (0.4%)
ELECTRONICS & ELECTRICAL
30,000 KCE Electronics Co., Ltd........ 100,159
---------------
HOUSEHOLD PRODUCTS
20,000 Srithai Superware Co. Ltd....... 135,135
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
RETAIL
36,000 Robinson Department Store....... $ 66,176
---------------
TRANSPORTATION - SHIPPING
7,000 Regional Container Line Public
Co., Ltd........................ 80,684
---------------
TOTAL THAILAND.................. 382,154
---------------
UNITED KINGDOM (15.9%)
ADVERTISING
300,000 Shandwick PLC................... 165,654
---------------
AUTO PARTS - ORIGINAL EQUIPMENT
20,000 Avon Rubber PLC................. 159,380
100,000 BBA Group PLC................... 426,801
33,500 Laird Group PLC................. 206,895
---------------
793,076
---------------
BUILDING & CONSTRUCTION
75,000 Barratt Developments PLC........ 255,161
---------------
BUILDING MATERIALS
110,000 Hepworth PLC.................... 525,111
340,000 Ibstock PLC..................... 343,893
255,000 Rugby Group PLC................. 418,143
60,000 SIG PLC......................... 196,773
---------------
1,483,920
---------------
CHEMICALS
90,000 Albright & Wilson PLC........... 216,542
---------------
COMPUTER SERVICES
170,000 ISA International PLC........... 389,485
---------------
CONTAINERS
11,764 British Polythene Industries.... 117,184
---------------
CONTAINERS - PAPER
60,000 David S. Smith PLC.............. 248,265
---------------
DISTRIBUTION
13,000 Tibbett and Britten Group PLC... 81,085
---------------
ELECTRONIC & ELECTRICAL EQUIPMENT
56,000 Diploma PLC..................... 373,317
50,000 Fairey Group PLC................ 399,216
---------------
772,533
---------------
ENTERTAINMENT
47,500 London Clubs International
PLC............................. 308,646
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES
90,000 MAI PLC......................... $ 466,187
---------------
FOOD PROCESSING
95,000 Devro International PLC......... 343,587
---------------
HEALTH & PERSONAL CARE
35,000 Community Hospitals Group PLC... 134,094
---------------
HOTELS/MOTELS
250,000 Stakis PLC...................... 317,994
---------------
HOUSEHOLD FURNISHINGS & APPLIANCES
145,000 MFI Furniture PLC............... 346,652
188,400 Walker Greenbank PLC............ 243,971
---------------
590,623
---------------
INDUSTRIALS
120,000 Staveley Industries PLC......... 384,351
---------------
INSURANCE
10,000 Domestic & General Group PLC.... 220,680
---------------
LODGING
40,800 Greenalls Group PLC............. 335,139
---------------
MACHINERY & MACHINE TOOLS
50,000 Crabtree Group PLC.............. 293,474
170,500 Metalrax Group PLC.............. 280,888
60,000 Spirax-Sarco Engineering PLC.... 556,298
---------------
1,130,660
---------------
MANUFACTURING
45,000 Bluebird Toys PLC............... 226,197
75,000 Bunzl PLC....................... 204,589
50,000 Glynwed International PLC....... 236,005
66,666 Halma PLC....................... 173,682
54,000 IMI PLC......................... 259,851
103,750 Protean PLC..................... 381,593
165,000 Vickers PLC..................... 683,993
60,000 Vitec Group PLC................. 633,536
---------------
2,799,446
---------------
MISCELLANEOUS
80,000 Christies International PLC..... 247,652
---------------
OIL RELATED
35,000 Charter PLC..................... 423,736
---------------
PHARMACEUTICALS
18,000 Amersham International PLC...... 249,368
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
PUBLISHING
29,800 Daily Mail & General Trust...... $ 529,755
---------------
REAL ESTATE
70,000 Bradford Property Trust PLC..... 197,386
120,000 Capital Shopping Centers PLC.... 380,673
63,000 Great Portland Estates PLC...... 161,234
40,000 Helical Bar PLC................. 196,160
---------------
935,453
---------------
RESTAURANTS
130,000 City Centre Restaurants PLC..... 190,260
---------------
RETAIL
100,000 Goldsmiths Group................ 318,760
---------------
RETAIL - SPECIALTY
117,500 Cowie Group PLC................. 499,691
20,000 Pendragon PLC................... 82,755
---------------
582,446
---------------
TELECOMMUNICATIONS
42,500 Security Services PLC........... 605,069
---------------
TEXTILES
57,500 Courtlaulds Textiles PLC........ 367,015
---------------
TRANSPORTATION
171,207 Firstbus PLC.................... 369,948
---------------
WHOLESALE DISTRIBUTOR
75,000 Chemring Group PLC.............. 431,016
---------------
TOTAL UNITED KINGDOM............ 16,804,790
---------------
UNITED STATES (0.1%)
COMPUTERS
11,990 Pixtech, Inc.................... 118,401
---------------
TOTAL COMMON AND PREFERRED
STOCKS
(IDENTIFIED COST
$107,451,186)................... 103,775,323
---------------
</TABLE>
<TABLE>
<CAPTION>
CURRENCY EXPIRATION DATE/
AMOUNT EXERCISE PRICE VALUE
- -----------------------------------------------------------------
<C> <S> <C>
PURCHASED PUT OPTIONS ON FOREIGN CURRENCY (0.8%)
Y 3,770,625 October 10, 1995/Y 100.55....... $ 757,500
FRF 15,565 May 4, 1996/FRF 4.864........... 113,600
---------------
TOTAL PURCHASED PUT OPTIONS ON
FOREIGN CURRENCY
(IDENTIFIED COST $1,089,890).... 871,100
---------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$108,541,076) (A)........... 98.8% 104,646,423
OTHER ASSETS IN EXCESS OF
LIABILITIES................. 1.2 1,254,661
----- ------------
NET ASSETS.................. 100.0% $105,901,084
----- ------------
----- ------------
<FN>
- ---------------------
ADR American Depository Receipt.
GDS Global Depository Shares.
* Non-income producing security.
** Resale is restricted to qualified institutional investors.
(a) The aggregate cost for federal income tax purposes is $108,821,156; the
aggregate gross unrealized appreciation is $9,279,178 and the aggregate
gross unrealized depreciation is $13,453,911, resulting in net unrealized
depreciation of $4,174,733.
</TABLE>
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT NOVEMBER 30, 1995:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS IN EXCHANGE DELIVERY APPRECIATION/
TO DELIVER FOR DATE (DEPRECIATION)
- -------------------------------------------------------------------
<S> <C> <C> <C>
NZD 274,183 $ 179,590 12/04/95 $ 631
$ 326,755 SEK 2,127,500 12/04/95 (2,015)
-------
Net unrealized depreciation.................. $ (1,384)
-------
-------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
SUMMARY OF INVESTMENTS NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- -------------------------------------------------------------------------------
<S> <C> <C>
Advertising............................... $ 165,654 0.2%
Aerospace & Defense....................... 106,793 0.1
Auto Parts................................ 542,216 0.5
Auto Parts - Original Equipment........... 1,818,300 1.7
Auto Related.............................. 616,921 0.6
Automotive................................ 780,154 0.7
Banks - Commercial........................ 783,147 0.7
Building & Construction................... 2,868,254 2.7
Building Materials........................ 4,282,889 4.0
Business Services......................... 1,574,791 1.5
Chemicals................................. 1,097,532 1.0
Commercial Services....................... 1,689,580 1.6
Computer Services......................... 490,853 0.5
Computers................................. 1,957,268 1.8
Computers - Systems....................... 1,694,379 1.6
Conglomerates............................. 95,552 0.1
Consumer Products......................... 1,382,007 1.3
Containers................................ 117,184 0.1
Containers - Paper........................ 248,265 0.2
Distribution.............................. 480,869 0.5
Electrical Equipment...................... 1,513,168 1.4
Electronic & Electrical Equipment......... 4,535,786 4.3
Electronic Components..................... 337,315 0.3
Electronics............................... 1,304,234 1.2
Electronics & Electrical.................. 3,215,671 3.0
Electronics - Semiconductors.............. 509,694 0.5
Energy Technology & Equipment............. 806,331 0.8
Engineering & Construction................ 1,013,952 1.0
Entertainment............................. 950,166 0.9
Financial Services........................ 3,300,191 3.2
Food Processing........................... 343,587 0.3
Food, Beverage, Tobacco & Household
Products................................ 4,161,816 3.9
Foreign Currency Put Options.............. 871,100 0.8
Forest & Paper Products................... 220,142 0.2
Forest Products, Paper & Packaging........ 528,300 0.5
Hardware & Tools.......................... 342,593 0.3
Health & Personal Care.................... 483,683 0.5
Hotels/Motels............................. 661,645 0.6
Household Furnishings & Appliances........ 1,424,009 1.4
Household Products........................ 135,135 0.1
Industrials............................... 710,149 0.7
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- -------------------------------------------------------------------------------
<S> <C> <C>
Insurance................................. $ 220,680 0.2%
Insurance Brokers......................... 302,920 0.3
Leisure Time.............................. 487,368 0.5
Lodging................................... 547,173 0.5
Machinery & Machine Tools................. 6,073,395 5.7
Manufactured Housing...................... 591,461 0.6
Manufacturing............................. 8,963,093 8.5
Medical Products & Supplies............... 762,663 0.7
Medical Services.......................... 788,169 0.7
Medical Supplies.......................... 571,876 0.5
Metals & Mining........................... 1,038,924 1.0
Miscellaneous............................. 3,878,234 3.7
Multi-Industry............................ 1,729,978 1.7
Office Equipment.......................... 826,923 0.8
Oil Related............................... 821,085 0.8
Pharmaceuticals........................... 2,209,268 2.1
Photography............................... 662,889 0.6
Publishing................................ 743,122 0.7
Real Estate............................... 3,842,624 3.6
Restaurants............................... 190,260 0.2
Retail.................................... 5,411,056 5.2
Retail - Drug Stores...................... 525,362 0.5
Retail - Food Chains...................... 347,776 0.3
Retail - General Merchandise.............. 1,418,919 1.3
Retail - Specialty........................ 3,618,060 3.4
Shipbuilding.............................. 226,838 0.2
Telecommunication Equipment............... 248,186 0.2
Telecommunications........................ 1,444,323 1.4
Textiles.................................. 1,724,585 1.6
Textiles - Apparel Manufacturers.......... 468,345 0.4
Tobacco................................... 226,664 0.2
Transportation............................ 1,470,002 1.4
Transportation - Shipping................. 444,841 0.4
Wholesale Distributor..................... 1,658,086 1.6
------------------ ---
$ 104,646,423 98.8%
------------------ ---
------------------ ---
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
- -------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks............................. $ 98,584,227 93.1%
Foreign Currency Put Options.............. 871,100 0.8
Preferred Stocks.......................... 5,191,096 4.9
------------------ ---
$ 104,646,423 98.8%
------------------ ---
------------------ ---
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $108,541,076)............................ $104,646,423
Receivable for:
Investments sold........................................ 1,915,148
Shares of beneficial interest sold...................... 470,795
Dividends............................................... 110,535
Foreign withholding taxes reclaimed..................... 53,717
Interest................................................ 3,078
Deferred organizational expenses............................ 126,146
Prepaid expenses and other assets........................... 162,356
------------
TOTAL ASSETS........................................... 107,488,198
------------
LIABILITIES:
Payable for:
Investments purchased................................... 1,072,841
Shares of beneficial interest repurchased............... 138,182
Investment management fee............................... 109,307
Plan of distribution fee................................ 87,445
Accrued expenses and other payables......................... 179,339
------------
TOTAL LIABILITIES...................................... 1,587,114
------------
NET ASSETS:
Paid-in-capital............................................. 115,719,644
Net unrealized depreciation................................. (3,909,883)
Accumulated net investment loss............................. (733,881)
Accumulated net realized loss............................... (5,174,796)
------------
NET ASSETS............................................. $105,901,084
------------
------------
NET ASSET VALUE PER SHARE,
11,808,425 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$8.97
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $108,971 foreign withholding tax)......... $ 826,858
Interest.................................................... 117,924
-----------
TOTAL INCOME........................................... 944,782
-----------
EXPENSES
Investment management fee................................... 636,892
Plan of distribution fee.................................... 509,513
Transfer agent fees and expenses............................ 103,970
Professional fees........................................... 43,548
Shareholder reports and notices............................. 37,700
Custodian fees.............................................. 29,071
Registration fees........................................... 26,438
Organizational expenses..................................... 17,329
Trustees' fees and expenses................................. 10,685
Other....................................................... 3,560
-----------
TOTAL EXPENSES......................................... 1,418,706
-----------
NET INVESTMENT LOSS.................................... (473,924)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments............................................. (4,204,287)
Foreign exchange transactions........................... 4,216,697
-----------
TOTAL GAIN............................................. 12,410
-----------
Net change in unrealized depreciation on:
Investments............................................. 5,200,645
Translation of forward foreign currency contracts, other
assets and liabilities denominated in foreign
currencies............................................ (16,985)
-----------
TOTAL APPRECIATION..................................... 5,183,660
-----------
NET GAIN............................................... 5,196,070
-----------
NET INCREASE................................................ $ 4,722,146
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE PERIOD
NOVEMBER 30, 1995 JULY 29, 1994* THROUGH
(UNAUDITED) MAY 31, 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss......................................... $ (473,924) $ (879,196)
Net realized gain (loss).................................... 12,410 (5,262,428)
Net change in unrealized depreciation....................... 5,183,660 (9,093,543)
----------------- ----------------------
NET INCREASE (DECREASE)................................ 4,722,146 (15,235,167)
Net increase from transactions in shares of beneficial
interest.................................................. 7,449,659 108,864,446
----------------- ----------------------
TOTAL INCREASE......................................... 12,171,805 93,629,279
NET ASSETS:
Beginning of period......................................... 93,729,279 100,000
----------------- ----------------------
END OF PERIOD
(INCLUDING ACCUMULATED NET INVESTMENT LOSSES OF $733,881
AND $259,957, RESPECTIVELY)............................. $105,901,084 $ 93,729,279
----------------- ----------------------
----------------- ----------------------
<FN>
- ---------------------
* Commencement of operations.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1995 (UNAUDITED)
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter International SmallCap Fund (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a non-diversified,
open-end management investment company. The Fund was organized as a
Massachusetts business trust on April 21, 1994 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. (the
"Investment Manager") to effect the Fund's initial capitalization. The Fund
commenced operations on July 29, 1994.
The following is a summary of significant accounting policies:
A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price (in
cases where securities are traded on more than one exchange, the securities are
valued on the exchange designated as the primary market by the Trustees); (2)
listed options are valued at the latest sale price on the exchange on which they
are listed unless no sales of such options have taken place that day, in which
case they will be valued at the mean between their latest bid and asked price;
(3) 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; (4) when market quotations are not readily available,
including circumstances under which it is determined by the Investment Manager
that sale and bid prices are not reflective of a security's market value,
portfolio securities are valued at their fair value as determined in good faith
under procedures established by and under the general supervision of the
Trustees; and (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 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>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1995 (UNAUDITED) CONTINUED
C. OPTION ACCOUNTING PRINCIPLES -- When the Fund writes a call option, an amount
equal to the premium received is included in the Fund's Statement of Assets and
Liabilities as a liability which is subsequently marked-to-market to reflect the
current market value of the option written. If a written option either expires
or the Fund enters into a closing purchase transaction, the Fund realizes a gain
or loss without regard to any unrealized gain or loss on the underlying security
or currency and the liability related to such option is extinguished. If a
written call option is exercised, the Fund realizes a gain or loss from the sale
of the underlying security or currency and the proceeds from such sale are
increased by the premium originally received.
When the Fund purchases a call or put option, the premium paid is recorded as an
investment which is subsequently marked-to-market to reflect the current market
value. If a purchased option expires, the Fund will realize a loss to the extent
of the premium paid. If the Fund enters into a closing sale transaction, a gain
or loss is realized for the difference between the proceeds from the sale and
the cost of the option. If a put option is exercised, the cost of the security
or currency sold upon exercise will be increased by the premium originally paid.
If a call option is exercised, the cost of the security purchased upon exercise
will be increased by the premium originally paid.
D. FOREIGN CURRENCY TRANSLATION -- The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities, other assets and liabilities and forward contracts are
translated at the exchange rates prevailing at the end of the period; and (2)
purchases, sales, income and expenses are translated at the exchange rates
prevailing on the respective dates of such transactions. The resultant exchange
gains and losses are included in the Statement of Operations as realized and
unrealized gain/loss on foreign exchange transactions. Pursuant to U.S. Federal
income tax regulations, certain foreign exchange gains/losses included in
realized and unrealized gain/loss are included in or are a reduction of ordinary
income for federal income tax purposes. The Fund does not isolate that portion
of the results of operations arising as a result of changes in the foreign
exchange rates from the changes in the market prices of the securities.
E. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward foreign
currency contracts which are valued daily at the appropriate exchange rates. The
resultant unrealized exchange gains and losses are included in the Statement of
Operations as unrealized foreign currencies gain or loss. The Fund records
realized gains or losses on delivery of the currency or at the time the forward
contract is extinguished (compensated) by entering into a closing transaction
prior to delivery.
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1995 (UNAUDITED) CONTINUED
F. 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.
G. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the ex-dividend 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.
H. ORGANIZATIONAL EXPENSES -- The Investment Manager paid the organizational
expenses of the Fund in the amount of approximately $172,000 which have been
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. INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS
Pursuant to an Investment Management Agreement with the Investment Manager, the
Fund pays a management fee, accrued daily and payable monthly, by applying the
annual rate of 1.25% to the net assets of the Fund determined as of the close of
each business day.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment 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 Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
Under a Sub-Advisory Agreement between Morgan Grenfell Investment Services
Limited (the "Sub-Advisor") and the Investment Manager, the Sub-Advisor provides
the Fund with investment advice
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1995 (UNAUDITED) CONTINUED
and portfolio management relating to the Fund's investments in securities,
subject to the overall supervision of the Investment Manager. As compensation
for its services provided pursuant to the Sub-Advisory Agreement, the Investment
Manager pays the Sub-Advisor monthly compensation equal to 40% of its monthly
compensation.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment 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
Investment Manager and Distributor, and other employees or selected 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.
The Distributor has informed the Fund that for the six months ended November 30,
1995, it received approximately $311,174 in contingent deferred sales charges
from certain redemptions of the Fund's shares. The Fund's shareholders pay such
charges which are not an expense of the Fund.
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1995 (UNAUDITED) CONTINUED
4. 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 November 30, 1995 aggregated
$42,161,085 and $24,413,438, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At November 30, 1995, the Fund had
transfer agent fees and expenses payable of approximately $22,855.
5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED JULY 29, 1994*
NOVEMBER 30, 1995 THROUGH MAY 31, 1995
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 2,860,942 $ 25,541,278 12,935,998 $126,064,242
Repurchased...................................................... (2,032,805) (18,091,619) (1,965,709) (17,199,796)
----------- -------------- ----------- ------------
Net increase..................................................... 828,137 $ 7,449,659 10,970,289 $108,864,446
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
- ---------------------
* Commencement of operations.
6. FEDERAL INCOME TAX STATUS
Capital and foreign currency losses incurred after October 31 ("post-October
losses") within the taxable year are deemed to arise on the first business day
of the Fund's next taxable year. The Fund incurred and will elect to defer net
capital and foreign currency losses of approximately $3,935,000 and $1,232,000,
respectively, during fiscal 1995. As of May 31, 1995, the Fund had temporary
book/ tax differences primarily attributable to post-October losses and
permanent book/tax differences primarily attributable to foreign currency losses
and a net operating loss.
7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS
The Fund may enter into forward foreign currency contracts ("forward contracts")
to facilitate settlement of foreign currency denominated portfolio transactions
or to manage foreign currency exposure associated with foreign currency
denominated securities. The Fund may also purchase put options on foreign
currencies in which the securities are denominated to hedge against adverse
foreign currency and market risk.
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1995 (UNAUDITED) CONTINUED
At November 30, 1995, there were no outstanding forward contracts other than
those used to facilitate settlement of foreign currency denominated portfolio
transactions.
Forward contracts and purchased put options on foreign currency involve elements
of market risk in excess of the amounts reflected in the Statement of Assets and
Liabilities. The Fund bears the risk of an unfavorable change in the foreign
exchange rates underlying the forward contracts. Risks may also arise upon
entering into these contracts and over-the-counter purchased put options from
the potential inability of the counterparties to meet the terms of their
contracts.
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of beneficial interest
outstanding throughout each period:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE PERIOD
NOVEMBER 30, JULY 29, 1994*
1995 THROUGH
(UNAUDITED) MAY 31, 1995
- ------------------------------------------------------------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of
period............................ $ 8.54 $ 10.00
------ ------
Net investment loss................ (0.04) (0.08)
Net realized and unrealized gain
(loss)............................ 0.47 (1.38)
------ ------
Total from investment operations... 0.43 (1.46)
------ ------
Net asset value, end of period..... $ 8.97 $ 8.54
------ ------
------ ------
TOTAL INVESTMENT RETURN+........... 4.92% (1) (14.60)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... 2.78% (2) 2.90% (2)
Net investment loss................ (0.93)%(2) (1.12)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $105,901 $93,729
Portfolio turnover rate............ 22% (1) 41% (1)
<FN>
- ---------------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge.
(1) Not annualized.
(2) Annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
TRUSTEES
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
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
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
SUB-ADVISOR
Morgan Grenfell Investment Services Limited
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.
DEAN WITTER INTERNATIONAL SMALLCAP FUND
[Graphic]
SEMIANNUAL REPORT
NOVEMBER 30, 1995
