DEAN WITTER INTERNATIONAL SMALLCAP FUND, N-30D, 1997-01-30

DEAN WITTER INTERNATIONAL SMALLCAP FUND
N-30D, 1997-01-30

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<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
LETTER TO THE SHAREHOLDERS NOVEMBER 30, 1996

DEAR SHAREHOLDER:
The six month period ended November 30, 1996 was marked by weak performance in
the world's small-capitalization stock markets. During this period, the
benchmark NatWest Markets SmallCap Euro-Pacific Index (NatWest Index) declined
3.85 percent, while larger company stocks, as measured by the Morgan Stanley
Capital International EAFE Index (MSCI EAFE), increased 3.51 percent.
MIXED RESULTS IN THE GLOBAL EQUITY MARKETS
Investors saw considerable variation in the returns of non-U.S. equity markets
throughout the period. In Continental Europe, the equity markets were generally
strong, while the Japanese equity market, which declined 5.0 percent in local
currency terms, was by far the weakest performer suffering from reductions in
that country's economic growth forecast. This was further exacerbated by
weakness in the Japanese yen (versus the U.S. dollar). The returns from most
smaller Far Eastern and South American markets were also weak during the period.
These markets were impacted by poor sentiment arising from doubts over the level
and direction of U.S. interest rates.
Historically, small-cap stocks have performed more strongly in circumstances
where economic growth expectations are increased and have suffered, as in this
period, when they decline.
Political uncertainty in the United Kingdom, where a general election looms in
1997, and the growing acceptance that the interest-rate cycle has bottomed, have
made this the worst performing non-U.S. market for small caps relative to large
caps in local currency terms. This, however, was offset by a strengthening
British pound. Thus in absolute U.S.-dollar returns, the U.K. small-cap market
was relatively strong.
Globally, earnings growth expectations for small-cap stocks remained higher than
those of large-cap stocks in all regions outside the United States during the
six-month period. However, small-cap stocks traded on increasing discounts to
large-cap stocks in all investment regions.
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
LETTER TO THE SHAREHOLDERS NOVEMBER 30, 1996, CONTINUED

It is important to bear in mind that it is not unusual, historically, for
small-cap stocks to trade at premiums to large-cap stocks in Europe, while in
the Far Eastern markets, discounts are the norm. In the Far East, however,
discounts have moved toward the top end of historical range and thus small caps
have looked increasingly attractive.
PERFORMANCE AND PORTFOLIO
Against this backdrop, Dean Witter International SmallCap Fund has produced a
total return of -6.81 percent for the six-month period ended November 30, 1996.
During the same period, the Fund's benchmark NatWest Index produced a return of
- -3.85 percent and 1.80 percent for the Lipper International Small Company Funds
Average.
On November 30, 1996, the Fund's net assets exceeded $132 million with 48.0
percent allocated to Pacific markets, 51.1 percent in Europe and .2 percent in
Latin America. On a country level, Japan, with 36.8 percent of net assets,
remained the Fund's largest country allocation, with the United Kingdom (15.9
percent), Germany (9.7 percent) and France rounding out the top country
allocations.
The portfolio is made up of geographically diversified investments in growth
stocks including Compass Group PLC (a U.K.-based world-class contract catering
company), Venture Manufacturing Ltd (a Singapore-based contract manufacturer for
companies in the electronics industry), Oticon Holding AS (a Denmark-based
hearing aid manufacturer), Tomra Systems AS (a Norway-based manufacturer of
systems for automating the return of bottles and cans to retail outlets) and
Circle K Japan Co. Ltd and Ministop Co., Ltd (Japan-based convenience store
chain operators).
LOOKING AHEAD
Morgan Grenfell Investment Services Limited, the Fund's sub-adviser, believes
that against a background of global synchronized economic growth and a
relatively benign inflationary environment non-U.S. small-cap stock markets
should rebound in 1997.
In Japan, however, expectations for an economic recovery will need to be
fulfilled in order for small-cap stocks in that market to outperform large-cap
stocks. Japanese over-the-counter (OTC) stocks have significantly reduced
earnings growth expectations for 1997 and as a result, the price earnings
discount to large-cap stocks has been pushed up to the top end of that market's
historic range. Morgan Grenfell believes that these stocks will benefit from any
upturn in the economic growth expectations in that country.
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
LETTER TO THE SHAREHOLDERS NOVEMBER 30, 1996, CONTINUED

A NOTE REGARDING SOME RECENT PUBLICITY SURROUNDING MORGAN GRENFELL
Recently, some of you may have read, in the press, of an overseas investigation
concerning an individual associated with an affiliate of the Fund's sub-adviser.
We believe that it is important for shareholders to understand the facts behind
this recent attention. The investigation currently underway concerns alleged
trading irregularities on the part of one portfolio manager at the affiliate.
Although this individual was not at any time involved with Dean Witter
International SmallCap Fund, it was deemed advisable that the affiliate purchase
from the Fund two securities whose separate holdings by the affiliate had become
part of the investigation. These securities represented only a very small
percentage of the Fund's portfolio (approximately one-half of one percent) and
were purchased by the affiliate at their cost to the Fund plus interest. Neither
the Fund, nor its shareholders, incurred any loss as a result of the sale of
these securities to the sub-adviser's affiliate.
We appreciate your support of Dean Witter International SmallCap Fund and look
forward to continuing to serve your investment needs and objectives.
Very truly yours,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS, PREFERRED STOCKS
AND BONDS (99.3%)
AUSTRALIA (2.7%)
APPLIANCES & HOUSEHOLD DURABLES
71,730 McPherson's Ltd.*................. $ 198,400
---------------
BUILDING & CONSTRUCTION
700,000 Macmahon Holdings Ltd............. 603,617
---------------
LEISURE
175,000 Aristocrat Leisure Ltd............ 495,421
---------------
MANUFACTURING
230,000 Pacific BBA Ltd................... 823,262
---------------
METALS & MINING
100,000 Capral Aluminium Ltd.............. 300,995
500,000 Highlands Gold Ltd.*.............. 300,995
---------------
601,990
---------------
RECREATION
222,350 Adelaide Brighton Ltd............. 307,499
---------------
RETAIL - FOOD CHAINS
125,000 Foodland Associated Ltd........... 589,788
---------------
TOTAL AUSTRALIA................... 3,619,977
---------------
AUSTRIA (1.3%)
CONSUMER PRODUCTS
12,770 Wolford AG........................ 1,513,385
---------------
ELECTRONIC COMPONENTS
1,920 Austria Mikro Systeme
International AG.................. 144,364
---------------

TOTAL AUSTRIA..................... 1,657,749
---------------

BELGIUM (0.2%)
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
4,050 Quick Restaurants S.A............. 274,555
---------------
BRAZIL (0.2%)
MERCHANDISING
35,000 Makro Atacadista S.A.*............ 310,625
---------------
DENMARK (2.1%)
MANUFACTURING
12,300 Oticon Holding AS................. 2,401,977
---------------

<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
MULTI-INDUSTRY
6,310 Martin Gruppen.................... $ 369,670
---------------

TOTAL DENMARK..................... 2,771,647
---------------

FINLAND (0.6%)
FOOD PROCESSING
12,700 Cultor Oy (Series "1")*........... 606,074
---------------
FOODS & BEVERAGES
4,260 Cultor Oy (Series "2")*........... 203,297
---------------

TOTAL FINLAND..................... 809,371
---------------

FRANCE (6.2%)
AUTO PARTS
81 Bertrand Faure.................... 3,041
---------------
COMPUTER SOFTWARE & SERVICES
2,780 Altran Technologies S.A........... 898,473
1,750 Fininfo S.A....................... 175,804
1,600 Jet Multimedia.................... 209,721
---------------
1,283,998
---------------
COMPUTERS
63,560 PixTech, Inc.*.................... 286,020
---------------
ELECTRONICS
2,911 CIPE France S.A................... 341,455
---------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
2,569 Brioche Pasquier S.A.............. 352,463
---------------
MANUFACTURING
3,000 Stedim S.A.*...................... 219,288
---------------
METALS NON-FERROUS
5,500 Imetal S.A........................ 866,150
---------------
OFFICE EQUIPMENT
7,899 Airfeu S.A........................ 234,280
8,134 Guilbert S.A...................... 1,523,763
---------------
1,758,043
---------------
PHARMACEUTICALS
21,600 Genset (ADR)*..................... 369,900
---------------
RETAIL - SPECIALTY
6,510 Grand Optical Photoservice........ 1,058,840
---------------
TEXTILES
12,157 Deveaux S.A....................... 1,628,377
---------------

TOTAL FRANCE...................... 8,167,575
---------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1996 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
GERMANY (9.7%)
AUTO PARTS - ORIGINAL EQUIPMENT
17,250 Kiekert AG........................ $ 515,762
---------------
BUILDING MATERIALS
1,418 Sto AG (Pref.).................... 643,331
---------------
ELECTRICAL & ALARM SYSTEMS
6,780 Effeff Fritz Fuss GmbH & Co....... 266,617
---------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
27,408 Berentzen-Gruppe AG (Pref.)....... 979,811
---------------
INSURANCE
6,325 Marschollek, Lautenschlaeger und
Partner AG (Pref.)................ 879,786
---------------
MANUFACTURING
5,800 Adidas AG......................... 503,282
---------------
MEDICAL SERVICES
10,368 Rhoen-Klinikum AG (Pref.)......... 1,061,397
---------------
MULTI-INDUSTRY
727 Hugo Boss AG (Pref.).............. 909,636
---------------
PHOTOGRAPHY
2,180 CeWe Color Holdings AG............ 531,362
---------------
RETAIL - SPECIALTY
68,777 Fielmann AG (Pref.)............... 2,458,716
34,961 Moebel Walther AG................. 2,249,684
---------------
4,708,400
---------------
TEXTILES
840 Jil Sander AG (Pref.)............. 518,687
---------------
TEXTILES - APPAREL MANUFACTURERS
38,780 Puma AG*.......................... 1,285,525
---------------
TOTAL GERMANY..................... 12,803,596
---------------
HONG KONG (4.1%)
BANKS - COMMERCIAL
150,000 Liu Chong Hing Bank Ltd........... 250,275
130,000 Wing Hang Bank Ltd................ 581,776
---------------
832,051
---------------
ELECTRONICS & ELECTRICAL
904,000 Gold Peak Industries Holdings
Ltd............................... 619,699
---------------

<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
ENGINEERING
100,000 Hong Kong Aircraft Engineering Co.
Ltd............................... $ 289,077
---------------
HOTELS
200,000 Harbour Centre Development........ 292,311
---------------
HOTELS/MOTELS
700,000 Grand Hotel Holdings Ltd. (Series
A)................................ 312,358
---------------
REAL ESTATE
2,310,000 China Overseas Land &
Investment........................ 881,394
420,000 China Resources Enterprise Ltd.... 602,988
660,000 HKR International Ltd............. 977,430
1,100,000 Hon Kwok Land Investment Ltd...... 458,837
---------------
2,920,649
---------------
WHOLESALE DISTRIBUTOR
275,000 Four Seas Mercantile Holdings
Ltd............................... 136,051
---------------

TOTAL HONG KONG................... 5,402,196
---------------

INDONESIA (0.6%)
BANKING
158,000 PT Pan Indonesia Bank............. 173,571
---------------
CHEMICALS
72,500 PT Trias Sentosa.................. 37,116
145,000 PT Trias Sentosa Idr 500.......... 74,232
---------------
111,348
---------------
DISTRIBUTION
60,000 PT Wicaksana Overseas
International..................... 67,833
---------------
ENGINEERING & CONSTRUCTION
50,000 PT Bukaka Teknik Utama............ 41,062
---------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
70,000 PT Fast Food Indonesia............ 119,454
---------------
PHARMACEUTICALS
144,000 PT Enseval Putera Megatrading..... 75,256
---------------
WHOLESALE DISTRIBUTOR
108,900 PT Tigaraksa Satria............... 171,898
---------------

TOTAL INDONESIA................... 760,422
---------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1996 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
ITALY (3.3%)
ELECTRONICS & ELECTRICAL
76,000 Gewiss SpA........................ $ 962,228
---------------
MACHINERY & MACHINE TOOLS
44,500 Industria Macchine Automatic...... 173,718
---------------
MANUFACTURING
32,672 Industrie Natuzzi SpA (ADR)....... 1,417,148
59,000 SAES Getters Di Risp.............. 612,768
33,000 SAES Getters SpA.................. 500,501
---------------
2,530,417
---------------
MEDICAL PRODUCTS & SUPPLIES
69,490 De Rigo SpA (ADR)*................ 686,214
---------------
TOTAL ITALY....................... 4,352,577
---------------
JAPAN (36.8%)
APPAREL
18,700 Maruco Co., Ltd................... 689,794
---------------
AUTO RELATED
60,000 Mitsuba Electric Mfg Co........... 595,468
---------------
BUILDING & CONSTRUCTION
50,000 Kaneshita Construction............ 518,180
50,000 Kawasho Gecoss Corp............... 505,006
33,000 Oriental Construction Co.......... 455,033
50,000 Takada Kiko....................... 417,179
---------------
1,895,398
---------------
BUILDING MATERIALS
50,000 Juken Sangyo Co................... 394,783
20,000 Maezawa Kaisei Industries......... 672,756
42,500 Nichiha Corp...................... 798,788
105,000 Shin Nikkei Co., Ltd.............. 619,708
95,000 Toyo Shutter...................... 664,149
---------------
3,150,184
---------------
BUSINESS SERVICES
47,000 Chuo Warehouse Co................. 466,450
18,000 Nichii Gakkan Co.................. 853,680
24,000 Nippon Kanzai..................... 621,816
55,000 Tanseisha......................... 550,676
---------------
2,492,622
---------------
CHEMICALS
140,000 Sakai Chemical Industry Co........ 714,386
---------------
COMPUTER SOFTWARE & SERVICES
50,000 Ines Corp.*....................... 799,227
---------------

<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
COMPUTERS
20,000 Enix Corp......................... $ 509,398
45,000 Meitec Corp....................... 940,629
---------------
1,450,027
---------------
COMPUTERS - SYSTEMS
27,000 Daiwabo Information Systems Co.... 505,094
11,000 Mars Engineering Corp............. 420,253
330 TKC Corp.......................... 7,825
---------------
933,172
---------------
ELECTRONIC & ELECTRICAL EQUIPMENT
30,000 Mitsui High-Tec................... 637,625
60,000 Nitto Electric Works.............. 1,101,353
---------------
1,738,978
---------------
ELECTRONIC COMPONENTS
Y 18,000 Forval Corp 1.35% 9/30/03......... 150,184
---------------
ELECTRONICS
110,000 Nissin Electric................... 666,608
27,000 Nitto Kohki Co. Ltd............... 972,247
25,000 Ryoyo Electro Corp................ 454,506
---------------
2,093,361
---------------
ELECTRONICS - SEMICONDUCTORS
40,000 Maspro Denkoh Corp................ 829,088
---------------
ENGINEERING & CONSTRUCTION
25,000 Japan Industrial Land
Development....................... 636,747
---------------
FINANCIAL SERVICES
22,800 Nissin Co. Ltd.................... 634,780
9,000 Sanyo Shinpan Finance Co., Ltd.... 565,958
24,000 Shinki Co. Ltd.................... 590,199
---------------
1,790,937
---------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
20,000 Stamina Foods..................... 158,089
---------------
FOREST PRODUCTS, PAPER & PACKAGING
90,000 Daishowa Paper Manufacturing Co.
Ltd............................... 493,237
---------------
HEALTH & PERSONAL CARE
30,000 Aderans Co. Ltd................... 737,748
---------------
HOME BUILDING
500 Higashi Nihon House............... 6,016
45,000 Mitsui Home Co., Ltd.............. 608,642
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1996 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
50,000 Tohoku Misawa Homes Co., Ltd...... $ 632,356
---------------
1,247,014
---------------
HOUSEHOLD FURNISHINGS & APPLIANCES
45,000 Beltecno Corp..................... 478,219
---------------
LEISURE TIME
12,100 H.I.S. Company Ltd................ 563,236
---------------
MACHINERY
60,000 Fujitec Co. Ltd.*................. 621,816
21,000 Misumi Corp....................... 470,314
---------------
1,092,130
---------------
MACHINERY & MACHINE TOOLS
70,000 Aichi Corp........................ 614,790
30,000 Fuji Machine Manufacturing Co..... 814,158
105,000 Nippon Thompson Co................ 778,324
105,000 OSG Corp.......................... 643,685
45,000 Sansei Yusoki Co., Ltd............ 545,407
75,000 Sintokogio........................ 628,403
60,000 Takuma Co., Ltd................... 685,052
105,000 Tsudakoma......................... 589,276
---------------
5,299,095
---------------
MANUFACTURING
70,000 Bridgestone Metalpha Corp......... 719,304
70,000 Itoki Crebio Corp................. 553,311
65,000 Ricoh Elemex...................... 924,820
---------------
2,197,435
---------------
MEDICAL SERVICES
40,000 Kawasumi Laboratories, Inc........ 495,345
---------------
MEDICAL SUPPLIES
10,000 Paramount Bed Co.................. 698,226
140,000 Shimadzu Corp..................... 831,196
80,000 Terumo............................ 1,053,926
---------------
2,583,348
---------------
MERCHANDISING
20,000 Kojima Co. Ltd.*.................. 491,832
---------------
MISCELLANEOUS MATERIALS & COMMODITIES
160,000 Tokai Carbon Co., Ltd............. 763,042
---------------
MULTI-INDUSTRY
39,600 Trusco Nakayama Corp.............. 817,320
50,000 Yamae Hisano...................... 478,658
---------------
1,295,978
---------------

<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
REAL ESTATE
100,000 Cesar Co.......................... $ 621,816
49,000 Chubu Sekiwa Real Estate, Ltd..... 632,619
50,000 Kansai Sekiwa Real Estate......... 698,226
55,000 Sekiwa Real Estate................ 456,482
---------------
2,409,143
---------------
RETAIL
55,000 Arcland Sakamoto.................. 690,761
35,000 Ministop Co., Ltd................. 916,037
20,000 Xebio Co. Ltd..................... 693,835
---------------
2,300,633
---------------
RETAIL - DRUG STORES
22,000 Seijo Corp........................ 448,270
---------------
RETAIL - GENERAL MERCHANDISE
25,000 Circle K Japan Co. Ltd............ 1,097,839
---------------
RETAIL - SPECIALTY
25,000 Shimachu Co., Ltd................. 652,117
---------------
STEEL & IRON
53,000 Yamato Kogyo Co., Ltd............. 525,997
---------------
TELECOMMUNICATIONS
67,000 Nippon Denwa Shisetsu............. 641,402
---------------
TEXTILES
100,000 Nitto Boseki Co*.................. 303,882
---------------
TRANSPORTATION
25,000 Kanto Seino Transportation........ 724,574
---------------
TRANSPORTATION - SHIPPING
12,000 Sakai Moving Service Co., Ltd.*... 339,364
---------------
WHOLESALE DISTRIBUTOR
24,000 Satori Electric Co. Ltd........... 805,199
45,000 Wakita & Co....................... 549,359
---------------
1,354,558
---------------

TOTAL JAPAN....................... 48,653,100
---------------

MALAYSIA (1.9%)
AUTO PARTS
130,000 MBM Resources Berhad.............. 311,300
---------------
AUTOMOTIVE
35,000 Cycle & Carriage Bintang Berhad... 220,265
---------------
BUILDING & CONSTRUCTION
42,000 Metacorp Berhad................... 129,666
60,000 Muhibbah Engineering Berhad....... 213,734
---------------
343,400
---------------
</TABLE>

TOTAL MALAYSIA.................... 2,524,708
---------------
NETHERLANDS (4.9%)
HARDWARE & TOOLS
6,092 Aalberts Industries NV............ 752,273
---------------
RETAIL
30,960 Gucci Group NV.................... 2,256,173
---------------
TRANSPORTATION - SHIPPING
80,000 Koninklijke Van Ommeren NV*....... 3,478,462
---------------

TOTAL NETHERLANDS................. 6,486,908
---------------

NORWAY (4.0%)
COMMERCIAL SERVICES
80,491 Sysdeco Group AS*................. 222,018
---------------
ELECTRONICS & ELECTRICAL
33,900 Sensonor AS*...................... 324,895
---------------
ENERGY TECHNOLOGY & EQUIPMENT
132,000 Tomra Systems AS.................. 1,954,184
---------------
ENTERTAINMENT
464,001 NCL Holdings Asa*................. 766,466
---------------
OIL DRILLING & SERVICES
128,130 Hitec AS*......................... 529,133
---------------
RETAIL - SPECIALTY
58,510 System Etikettering AS............ 939,151
---------------
TELECOMMUNICATIONS
12,000 Nera AS........................... 491,818
---------------
TOTAL NORWAY...................... 5,227,665
---------------

<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>

PHILIPPINES (0.2%)
BANKS - COMMERCIAL
88,800 Union Bank of Philippines*........ $ 94,597
---------------
BUILDING MATERIALS
14,718 Bacnotan Consolidated
Industries........................ 57,116
---------------
CONGLOMERATES
57,694 First Philippine Holdings Corp. (B
Shares)........................... 121,824
---------------

TOTAL PHILIPPINES................. 273,537
---------------

SINGAPORE (1.5%)
ELECTRONIC COMPONENTS
100,000 GP Batteries International Ltd.... 310,000
---------------
ELECTRONICS & ELECTRICAL
184,000 Venture Manufacturing Ltd......... 409,472
---------------
ENGINEERING
210,000 Amtek Engineering Ltd............. 411,912
---------------
ENGINEERING & CONSTRUCTION
40,000 Jurong Engineering Ltd............ 114,693
---------------
FINANCE
20,000 Hong Leong Finance Ltd............ 69,329
---------------
HOUSEHOLD FURNISHINGS & APPLIANCES
140,000 Courts Ltd........................ 199,715
---------------
MULTI-INDUSTRY
108,000 Haw Par Brothers International
Ltd............................... 246,505
---------------
PHARMACEUTICALS
40,000 Tiger Medicals Ltd................ 59,629
---------------
SHIPBUILDING
125,000 Singapore Technologies
Shipbuilding & Engineering Ltd.... 215,763
---------------

TOTAL SINGAPORE................... 2,037,018
---------------

SPAIN (0.5%)
RETAIL
21,000 Cortefiel S.A..................... 639,997
---------------

SWEDEN (2.0%)
COMMERCIAL SERVICES
61,300 Trio Information Systems AB*...... 269,240
---------------
HEAVY DUTY TRUCKS & PARTS
25,000 Kalmar Industries AB Trio......... 422,467
---------------
</TABLE>

SWITZERLAND (0.4%)
CONGLOMERATES
1,295 Kardex AG......................... 341,495
---------------
ELECTRONICS
90 Kudelski SA*...................... 130,740
---------------
TOTAL SWITZERLAND................. 472,235
---------------

THAILAND (0.2%)
ELECTRONICS
28,000 Hana Microelectronics PCL......... 150,196
---------------
FOODS & BEVERAGES
2,000 Sermsuk Public Co., Ltd........... 61,081
---------------
RETAIL
36,000 Robinson Dept. Store Co........... 43,696
---------------
TRANSPORTATION - SHIPPING
7,000 Regional Container Line PCL....... 72,905
---------------
TOTAL THAILAND.................... 327,878
---------------
UNITED KINGDOM (15.9%)
AUTO PARTS - ORIGINAL EQUIPMENT
105,000 BBA Group PLC..................... 614,164
47,600 Henlys Group PLC.................. 436,033
56,050 Laird Group PLC................... 395,677
---------------
1,445,874
---------------
BROADCAST MEDIA
242,500 General Cable PLC*................ 802,960
---------------
BUILDING & CONSTRUCTION
93,750 Barratt Developments PLC.......... 363,998
---------------
BUILDING MATERIALS
110,000 Hepworth PLC...................... 508,442
566,666 Ibstock PLC....................... 619,094
193,900 Rugby Group PLC................... 312,871

<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
119,100 SIG PLC........................... $ 486,445
---------------
1,926,852
---------------
CHEMICALS
94,500 Albright & Wilson PLC............. 289,081
110,600 Scapa Group....................... 446,152
---------------
735,233
---------------
COMMERCIAL SERVICES
26,550 Capita Group PLC.................. 207,507
---------------
COMPUTER SERVICES
178,500 ISA International PLC............. 630,048
31,700 Misys PLC......................... 530,682
---------------
1,160,730
---------------
CONGLOMERATES
35,000 Charter PLC....................... 435,327
---------------
CONTAINERS
31,264 British Polythene Industries...... 384,393
---------------
CONTAINERS - PAPER
90,700 David S. Smith Holdings PLC....... 478,689
---------------
ELECTRONIC & ELECTRICAL EQUIPMENT
50,000 Fairey Group PLC.................. 526,931
---------------
ENTERTAINMENT
99,800 London Clubs International PLC.... 555,232
---------------
FINANCIAL SERVICES
569,880 Rutland Trust PLC................. 510,057
---------------
FOOD PROCESSING
131,250 Devro International PLC........... 560,337
---------------
HOUSEHOLD FURNISHINGS & APPLIANCES
178,950 MFI Furniture Group PLC........... 580,504
---------------
INDUSTRIALS
120,000 Staveley Industries PLC........... 379,189
---------------
INVESTMENT COMPANIES
38,400 United News & Media PLC........... 435,663
---------------
MACHINERY & MACHINE TOOLS
42,600 Spirax-Sarco Engineering PLC...... 535,584
---------------
MANUFACTURING
112,400 Bunzl PLC......................... 415,628
76,650 Glynwed International PLC......... 451,561
91,100 Trinity Holdings PLC.............. 442,519
121,300 Vickers PLC....................... 554,556
38,100 Vitec Group PLC................... 451,471
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1996 (UNAUDITED) CONTINUED

<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------------------------------------------------------
<C> <S> <C>
29,300 Vosper Thornycroft Holdings PLC... $ 431,408
---------------
2,747,143
---------------
PHARMACEUTICALS
18,900 Amersham International PLC........ 347,850
---------------
PUBLISHING
22,200 Daily Mail & General Trust (Class
A)................................ 490,676
104,600 Mirror Group PLC.................. 404,367
---------------
895,043
---------------
REAL ESTATE
70,000 Bradford Property Trust PLC....... 298,846
126,000 Capital Shopping Centers PLC...... 693,582
81,200 Pillar Property Investments PLC... 256,584
---------------
1,249,012
---------------
RESTAURANTS
22,800 Compass Group PLC................. 232,808
---------------
RETAIL - SPECIALTY
80,000 Christies International PLC....... 336,160
105,733 Cowie Group PLC................... 705,533
48,400 Goldsmiths Group.................. 325,403
---------------
1,367,096
---------------
TELECOMMUNICATIONS
163,455 Securicor PLC..................... 750,027
---------------
TEXTILES
57,500 Courtlaulds Textiles PLC.......... 243,065
---------------
TRANSPORTATION
47,700 Associated British Ports Holdings
PLC............................... 219,677
35,100 Forth Ports PLC................... 373,445
55,151 Stagecoach Holdings PLC........... 584,923
---------------
1,178,045
---------------

TOTAL UNITED KINGDOM.............. 21,035,149
---------------

TOTAL COMMON STOCKS, PREFERRED
STOCKS AND BONDS
(IDENTIFIED COST $127,653,628).... 131,367,769
---------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ------------------------------------------------------------------
<C> <S> <C>

SHORT-TERM INVESTMENT (a) (0.8%)
U.S. GOVERNMENT AGENCY
$ 1,000 Student Loan Marketing Assoc.
5.70% due 12/02/96 (Amortized Cost
$999,842)......................... $ 999,842
---------------

TOTAL INVESTMENTS
(IDENTIFIED COST
$128,653,470) (B)........... 100.1% 132,367,611

LIABILITIES IN EXCESS OF
CASH AND OTHER ASSETS....... (0.1) (198,881)
----- ------------

NET ASSETS.................. 100.0% $132,168,730
----- ------------
----- ------------

<FN>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $19,348,851 and the
aggregate gross unrealized depreciation is $15,634,710, resulting in net
unrealized appreciation of $3,714,141.
</TABLE>

FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT NOVEMBER 30, 1996:

<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO IN DELIVERY APPRECIATION/
DELIVER EXCHANGE FOR DATE (DEPRECIATION)
- -------------------------------------------------------
<S> <C> <C> <C>
Y 26,635,536 $ 233,953 12/03/96 $ 21
SGD 179,187 $ 127,767 12/03/96 (41)
$ 183,679 MYR 464,119 12/06/96 22
$ 226,280 FRF 1,164,662 12/31/96 (3,421)
-------
Net unrealized depreciation............ ($3,419)
-------
-------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
SUMMARY OF INVESTMENTS NOVEMBER 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ------------------------------------------------------------------------------
<S> <C> <C>
Apparel................................... $ 689,794 0.5%
Appliances & Household Durables........... 198,400 0.2
Auto Parts................................ 314,341 0.2
Auto Parts - Original Equipment........... 1,961,636 1.5
Auto Related.............................. 595,468 0.5
Automotive................................ 220,266 0.2
Banking................................... 173,571 0.1
Banks - Commercial........................ 926,648 0.7
Broadcast Media........................... 802,960 0.6
Building & Construction................... 3,206,413 2.4
Building Materials........................ 5,777,483 4.4
Business Services......................... 2,492,622 1.9
Chemicals................................. 1,885,279 1.4
Commercial Services....................... 698,765 0.5
Computer Services......................... 1,160,730 0.9
Computer Software & Services.............. 2,083,224 1.6
Computers................................. 1,736,047 1.3
Computers - Systems....................... 933,172 0.7
Conglomerates............................. 898,646 0.7
Consumer Products......................... 1,513,385 1.1
Containers................................ 384,393 0.3
Containers - Paper........................ 478,689 0.4
Distribution.............................. 67,833 0.1
Electrical & Alarm Systems................ 266,617 0.2
Electronic & Electrical Equipment......... 2,265,909 1.7
Electronic Components..................... 604,548 0.5
Electronics............................... 2,715,752 2.1
Electronics & Electrical.................. 2,316,294 1.8
Electronics - Semiconductors.............. 829,088 0.6
Energy Technology & Equipment............. 1,954,184 1.5
Engineering............................... 700,989 0.5
Engineering & Construction................ 792,502 0.6
Entertainment............................. 1,321,698 1.0
Finance................................... 69,329 0.1
Financial Services........................ 2,630,383 2.0
Food Processing........................... 1,166,411 0.9
Food, Beverage, Tobacco & Household
Products................................ 1,884,372 1.4
Foods & Beverages......................... 264,378 0.2
Forest Products, Paper & Packaging........ 493,237 0.4
Hardware & Tools.......................... 752,273 0.6
Health & Personal Care.................... 737,748 0.6
Heavy Duty Trucks & Parts................. 422,467 0.3
Home Building............................. 1,247,014 0.9
Hotels.................................... 292,311 0.2
Hotels/Motels............................. 312,358 0.2
Household Furnishings & Appliances........ 1,258,438 1.0

<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ------------------------------------------------------------------------------
<S> <C> <C>
Industrials............................... $ 379,189 0.3%
Insurance................................. 879,786 0.7
Investment Companies...................... 435,663 0.3
Leisure................................... 495,421 0.4
Leisure Time.............................. 563,236 0.4
Machinery................................. 1,092,130 0.8
Machinery & Machine Tools................. 6,008,397 4.5
Manufacturing............................. 9,565,516 7.2
Medical Products & Supplies............... 686,214 0.5
Medical Services.......................... 1,556,742 1.2
Medical Supplies.......................... 2,583,348 2.0
Merchandising............................. 3,204,434 2.4
Metals & Mining........................... 1,043,242 0.8
Metals Non-Ferrous........................ 866,150 0.6
Miscellaneous Materials & Commodities..... 763,042 0.6
Multi-Industry............................ 3,236,592 2.5
Office Equipment.......................... 1,758,043 1.3
Oil Drilling & Services................... 529,133 0.4
Pharmaceuticals........................... 1,934,271 1.4
Photography............................... 531,362 0.4
Publishing................................ 895,043 0.7
Real Estate............................... 6,973,025 5.3
Recreation................................ 307,499 0.2
Restaurants............................... 232,808 0.2
Retail.................................... 5,240,499 4.0
Retail - Drug Stores...................... 448,270 0.3
Retail - Food Chains...................... 589,788 0.4
Retail - General Merchandise.............. 1,097,839 0.8
Retail - Specialty........................ 8,725,604 6.6
Shipbuilding.............................. 215,763 0.2
Steel & Iron.............................. 525,997 0.4
Telecommunications........................ 1,883,247 1.4
Textiles.................................. 2,694,011 2.0
Textiles - Apparel Manufacturers.......... 1,285,525 1.0
Tobacco................................... 187,018 0.1
Transportation............................ 1,902,619 1.4
Transportation - Shipping................. 3,890,731 2.8
U.S. Government Agency.................... 999,842 0.8
Wholesale Distributor..................... 1,662,507 1.3
------------------ -----
$ 132,367,611 100.1%
------------------ -----
------------------ -----
</TABLE>

<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
- ------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks............................. $ 123,766,221 93.6%
Convertible Bonds......................... 150,184 0.1
Preferred Stocks.......................... 7,451,364 5.6
Short-Term Investments.................... 999,842 0.8
------------------ -----
$ 132,367,611 100.1%
------------------ -----
------------------ -----
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1996 (UNAUDITED)

<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $128,653,470)............................ $132,367,611
Cash (including $254,973 in foreign currency)............... 448,013
Receivable for:
Investments sold........................................ 615,330
Dividends............................................... 148,728
Shares of beneficial interest sold...................... 106,589
Foreign withholding taxes reclaimed..................... 49,649
Interest................................................ 1,629
Deferred organizational expenses............................ 91,614
Prepaid expenses and other assets........................... 63,669
------------
TOTAL ASSETS........................................... 133,892,832
------------
LIABILITIES:
Payable for:
Investments purchased................................... 1,304,231
Investment management fee............................... 137,690
Plan of distribution fee................................ 110,152
Shares of beneficial interest repurchased............... 35,811
Accrued expenses and other payables......................... 136,218
------------
TOTAL LIABILITIES...................................... 1,724,102
------------
NET ASSETS:
Paid-in-capital............................................. 135,364,796
Net unrealized appreciation................................. 3,719,147
Accumulated undistributed net investment income............. 1,799,713
Accumulated net realized loss............................... (8,714,926)
------------
NET ASSETS............................................. $132,168,730
------------
------------
NET ASSET VALUE PER SHARE,
13,793,687 SHARES OUTSTANDING (UNLIMITED SHARES AUTHORIZED
OF $.01 PAR VALUE)........................................
$9.58
------------
------------
</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, 1996 (UNAUDITED)

<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $126,714 foreign withholding tax)......... $ 940,242
Interest.................................................... 150,534
------------
TOTAL INCOME........................................... 1,090,776
------------
EXPENSES
Investment management fee................................... 881,440
Plan of distribution fee.................................... 705,152
Transfer agent fees and expenses............................ 124,646
Professional fees........................................... 85,571
Custodian fees.............................................. 75,667
Shareholder reports and notices............................. 30,376
Registration fees........................................... 25,099
Organizational expenses..................................... 17,266
Trustees' fees and expenses................................. 10,512
Other....................................................... 102,557
------------
TOTAL EXPENSES......................................... 2,058,286
------------
NET INVESTMENT LOSS.................................... (967,510)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments............................................. 1,090,922
Foreign exchange transactions........................... (19,840)
------------
NET GAIN............................................... 1,071,082
------------
Net change in unrealized appreciation/depreciation on:
Investments............................................. (10,092,696)
Translation of forward foreign currency contracts other
assets and liabilities denominated in foreign
currencies............................................ 7,170
------------
NET DEPRECIATION....................................... (10,085,526)
------------
NET LOSS............................................... (9,014,444)
------------
NET DECREASE................................................ $ (9,981,954)
------------
------------
</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 FOR THE
MONTHS ENDED YEAR ENDED
NOVEMBER 30, 1996 MAY 31,
(UNAUDITED) 1996
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss......................................... $ (967,510) $(1,229,713)
Net realized gain (loss).................................... 1,071,082 (341,909)
Net change in unrealized appreciation/depreciation.......... (10,085,526) 22,898,216
----------------- -----------
NET INCREASE (DECREASE)................................ (9,981,954) 21,326,594
Net increase (decrease) from transactions in shares of
beneficial interest....................................... (3,103,687) 30,198,498
----------------- -----------
NET INCREASE (DECREASE)................................ (13,085,641) 51,525,092
----------------- -----------
NET ASSETS:
Beginning of period......................................... 145,254,371 93,729,279
----------------- -----------
END OF PERIOD
(INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF
$1,799,713 AND $2,767,223, RESPECTIVELY)................ $132,168,730 $145,254,371
----------------- -----------
----------------- -----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1996 (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's investment objective is
long-term growth of capital. The Fund seeks to achieve its objective by
investing primarily in equity securities of "small capitalization" companies
located outside of the United States. The Fund was organized as a Massachusetts
business trust on April 21, 1994 and commenced operations on July 29, 1994.
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 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 (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 (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
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1996 (UNAUDITED) CONTINUED

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. 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
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1996 (UNAUDITED) CONTINUED

exchange gains and losses are included in the Statement of Operations as
unrealized foreign currency 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.
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 -- Dean Witter InterCapital Inc. ("the Investment
Manager") paid the organizational expenses of the Fund in the amount of
approximately $172,000 and was 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 the Investment Manager 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
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1996 (UNAUDITED) CONTINUED

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-Adviser") and the Investment Manager, the Sub-Adviser provides
the Fund with investment advice 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-Adviser 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
broker-dealers who engage in or support distribution of the Fund's shares or who
service shareholder accounts, including overhead and telephone expenses,
printing and distribution of prospectuses and reports used in connection with
the offering of the Fund's shares to other than current shareholders and
preparation, printing and distribution of sales literature and advertising
materials. In addition, the Distributor may be compensated under the Plan for
its opportunity costs in advancing such amounts, which compensation would be in
the form of a carrying charge on any unreimbursed expenses incurred by the
Distributor.
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1996 (UNAUDITED) CONTINUED

Provided that the Plan continues in effect, any cumulative expenses incurred but
not yet recovered, may be recovered through future distribution fees from the
Fund and contingent deferred sales charges from the Fund's shareholders.
Although there is no legal obligation for the Fund to pay expenses incurred in
excess of payments made to the Distributor under the Plan and the proceeds of
contingent deferred sales charges paid by investors upon redemption of shares,
if for any reason the Plan is terminated, the Trustees will consider at that
time the manner in which to treat such expenses. The Distributor has advised the
Fund that such excess amounts, including carrying charges, totaled $8,547,542 at
November 30, 1996.
The Distributor has informed the Fund that for the six months ended November 30,
1996, it received approximately $217,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares.
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, 1996 aggregated
$29,879,430 and $26,631,602, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At November 30, 1996, the Fund had
transfer agent fees and expenses payable of approximately $23,000.
During the six months ended November 30, 1996, foreign regulatory authorities
initiated an investigation involving an individual associated with an affiliate
of the Fund's Sub-Adviser. Although this investigation did not at any time
involve the Fund or the Investment Manager, the Sub-Adviser's affiliate
purchased from the Fund two securities whose separate holdings by the affiliate
had become part of the investigation. These securities represented only a very
small percentage of the Fund's portfolio (approximately one-half of one percent)
and were purchased by the Sub-Adviser's affiliate at cost plus interest.
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1996 (UNAUDITED) CONTINUED

5. SHARES OF BENEFICIAL INTEREST
Transactions in shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
NOVEMBER 30, 1996 FOR THE YEAR
---------------------------- ENDED
MAY 31, 1996
(UNAUDITED) --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 1,578,657 $ 15,746,126 6,640,228 $ 62,312,623
Repurchased...................................................... (1,914,761) (18,849,813) (3,490,725) (32,114,125)
----------- -------------- ----------- ------------
Net increase (decrease).......................................... (336,104) $ (3,103,687) 3,149,502 $ 30,198,498
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>

6. FEDERAL INCOME TAX STATUS
At May 31, 1996, the Fund had a net capital loss carryover of approximately
$7,030,000 which will be available through May 31, 2004 to offset future capital
gains to the extent provided by regulations. To the extent that this carryover
loss is used to offset future capital gains, it is probable that the gains so
offset will not be distributed to shareholders.
Capital 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 losses of
approximately $2,675,000 during fiscal 1996. As of May 31, 1996, the Fund had
temporary book/tax differences primarily attributable to post-October losses and
permanent book/ tax differences primarily attributable to foreign currency
gains.
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.
At November 30, 1996, there were outstanding forward contracts 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, FOR THE YEAR JULY 29, 1994*
1996 ENDED THROUGH
(UNAUDITED) MAY 31, 1996 MAY 31, 1995
- ------------------------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:

Net asset value, beginning of period.................................. $ 10.28 $ 8.54 $ 10.00
------ ------ -------

Net investment loss................................................... (0.07) (0.08) (0.08)

Net realized and unrealized gain (loss)............................... (0.63) 1.82 (1.38)
------ ------ -------

Total from investment operations...................................... (0.70) 1.74 (1.46)
------ ------ -------

Net asset value, end of period........................................ $ 9.58 $ 10.28 $ 8.54
------ ------ -------
------ ------ -------

TOTAL INVESTMENT RETURN+.............................................. (6.81)%(1) 20.37% (14.60)%(1)

RATIOS TO AVERAGE NET ASSETS:

Expenses.............................................................. 2.92%(2) 2.85% 2.90%(2)

Net investment loss................................................... (1.37)%(2) (1.09)% (1.12)%(2)

SUPPLEMENTAL DATA:

Net assets, end of period, in thousands............................... $132,169 $145,254 $93,729

Portfolio turnover rate............................................... 20%(1) 44% 41%(1)

Average commission rate paid.......................................... $0.0061 $0.0069 --
<FN>

- ---------------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>

TRUSTEES

Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
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, 1996