DEAN WITTER INTERNATIONAL SMALLCAP FUND, N-30D, 1998-02-03

DEAN WITTER INTERNATIONAL SMALLCAP FUND
N-30D, 1998-02-03

Previous: FIRST INDUSTRIAL REALTY TRUST INC, 424B5, 1998-02-03

Next: MENTOR INSTITUTIONAL TRUST, 497, 1998-02-03

<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND TWO WORLD TRADE CENTER, NEW YORK, NEW
YORK 10048
LETTER TO THE SHAREHOLDERS NOVEMBER 30, 1997

DEAR SHAREHOLDER:

During the six months ended November 30, 1997, global small-cap markets were
generally weak, with the benchmark NatWest Markets Euro-Pacific Small Cap Index
producing a total return of -14.11 percent in U.S. dollar terms. Larger
companies outperformed smaller ones, with the Morgan Stanley Capital
International Europe, Australia and Far East (MSCI EAFE) Index, the most
commonly used international large-cap equity benchmark, returning -4.14 percent.

UNITED KINGDOM AND EUROPE

During the period under review, both U.K. and continental European small caps
produced positive returns, of 5.80 percent and 8.30 percent, respectively.
However, despite a period of relative outperformance during the volatile month
of October, these small caps underperformed their large-cap counterparts, by
8.30 percent in the United Kingdom and 4.00 percent in continental Europe. In
the United Kingdom, small-cap underperformance was a result of the sector's
relatively low exposure to strongly performing U.K. banks and pharmaceuticals,
which are dominated by large companies. In continental Europe the
underperformance was the result of high cash flows into domestic mutual funds as
well as restructurings and consolidations, which primarily benefited larger
companies.

PACIFIC BASIN

The worst-performing markets during the period were those of the Pacific Basin,
which fell 23.90 percent as a result of dramatic currency devaluations and
resulting high interest rates as these countries sought to defend their
currencies. Small-cap companies underperformed the broader market in the region
by 7.7 percent -- falling by 31.60 percent. This underperformance was due to the
fact that many larger companies were able to obtain some benefit from the
region's currency weakness, while domestically biased small-cap stocks, with the
exception of the export-based electronics sector, failed to benefit.
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
LETTER TO THE SHAREHOLDERS NOVEMBER 30, 1997, CONTINUED

Japanese smaller companies returned -14.40 percent, underperforming their
large-cap counterparts by 8.8 percent. Again, this was a result of investors'
attention focusing on the large export earners that could be expected to benefit
from a weak yen. This underperformance was exacerbated in the latter part of the
period by a number of high-profile bankruptcies, which turned investors'
interest to larger, more resistent stocks.

PERFORMANCE AND PORTFOLIO

For the six-month period ended November 28, 1997, Dean Witter International
SmallCap Fund produced a total return of -12.22 percent versus -14.11 percent
for the NatWest Markets Euro-Pacific Small Cap Index and -6.14 percent for the
Lipper International Small Company Funds Average.

The Fund's asset allocation was positive during the period, with the portfolio
benefiting from overweightings in the strongly performing markets of Italy and
Norway and underweightings in the poorly performing market of Japan. The Fund's
stock selection was negative overall, with strong individual stock performance
in Japan, the United Kingdom and the Pacific Basin being outweighed by poor
performance in Continental Europe.

The Fund's portfolio consists of a geographically diversified selection of
growth stocks, defined as companies we expect to deliver premium earnings growth
to the market at prices that do not yet reflect this analysis. Such companies
include, for example, the support services company Capita Group PLC in the
United Kingdom, which provides outsourced office cleaning and management
services, and Fininfo S.A. in France, a financial information services company
that provides detailed information on niche markets in France, Scandinavia and
Switzerland, allowing it to stave off competition from larger players such as
Bloomberg. Both of these companies are presently showing superior earnings
prospects derived from ongoing outsourcing of noncore activities by their client
companies.

Certain companies involved in the development or exploitation of newer
technologies are also demonstrating superior earnings growth. Such stocks in the
portfolio include Nycomed Amersham PLC in the United Kingdom, which is involved
in the development, manufacture and sale of specialized products for life
science research, and Saes Getters SpA of Italy, the worldwide leader in
"getter" technology, which is used to create and maintain vacuum and purified
gas environments.

OUTLOOK

During the period under review, the Fund's Board of Trustees approved the
selection of Morgan Stanley Asset Management Inc., an affiliate of Dean Witter
InterCapital, to act as sub-adviser to the
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
LETTER TO THE SHAREHOLDERS NOVEMBER 30, 1997, CONTINUED

Fund. In addition, InterCapital proposed that the management agreement be
amended to reduce the overall annual management fee that InterCapital receives
from the Fund from an annual rate of 1.25 percent of the Fund's daily net assets
to 1.15 percent of the Fund's daily net assets. The new sub-advisory agreement
was approved by the shareholders at a special meeting held on November 25, 1997,
to take effect on December 1, 1997. The results of the vote are as follows:

<TABLE>
<S> <C>
For.................................................................. 4,848,537
Against.............................................................. 166,468
Abstain.............................................................. 668,312
</TABLE>

Morgan Stanley Asset Management Inc. is a preeminent global financial services
firm that maintains leading market positions in each of three primary businesses
- -- securities, asset management and credit services. Morgan Stanley Asset
Management Inc. serves in various portfolio management and similar capacities to
investment companies and pension plans and other institutional and individual
investors. Morgan Stanley Asset Management Inc. replaces Morgan Grenfell
Investment Services Limited as the Fund's sub-adviser and, going forward, will
provide the Fund with investment advice and portfolio management relating to the
Fund's investments, subject to the overall supervision of Dean Witter
InterCapital, the Fund's Investment Manager.

We remain positive regarding the outlook for international smaller companies and
the investment prospects for the Fund. Small-cap stocks now appear to be
attractively valued, relative to large caps, in all regions for 1998. Indeed,
Japanese small caps now trade below their historical valuation range relative to
large caps. Furthermore, we observe that the earnings of smaller companies are
generally stronger than those of large caps in every geographic region the Fund
intends to invest in.

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, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS,
BONDS AND RIGHTS (78.1%)
AUSTRALIA (1.6%)
APPLIANCES & HOUSEHOLD DURABLES
121,730 McPherson's Ltd......................................................................... $ 137,611
-----------
MANUFACTURING
79,000 Pacific BBA Ltd......................................................................... 244,785
-----------
OIL - EXPLORATION & PRODUCTION
100,000 Novus Petroleum Ltd..................................................................... 303,045
-----------
RETAIL - FOOD CHAINS
65,000 Foodland Associated Ltd................................................................. 486,915
-----------

TOTAL AUSTRALIA......................................................................... 1,172,356
-----------

AUSTRIA (1.2%)
CONSUMER PRODUCTS
12,770 Wolford AG.............................................................................. 921,186
-----------

DENMARK (0.1%)
ELECTRONIC COMPONENTS
1,083 William Demant Holding.................................................................. 53,643
-----------

FINLAND (1.5%)
FOOD PROCESSING
20,560 Cultor Oy (Series "1").................................................................. 1,117,622
-----------

FRANCE (3.8%)
COMPUTER SOFTWARE & SERVICES
1,750 Fininfo S.A............................................................................. 207,294
-----------
PHARMACEUTICALS
63,450 Genset (ADR)*........................................................................... 1,407,797
-----------
RETAIL - SPECIALTY
6,214 Grand Optical Photoservice.............................................................. 1,075,712
-----------
TEXTILES
1,158 Deveaux S.A............................................................................. 137,169
-----------

TOTAL FRANCE............................................................................ 2,827,972
-----------

GERMANY (5.6%)
INSURANCE
2,270 Marschollek, Lautenschlaeger und Partner AG (Pref.)..................................... 560,430
-----------
MEDICAL SERVICES
2,510 Rhoen-Klinikum AG (Pref.)............................................................... 251,569
-----------

TOTAL GERMANY........................................................................... 4,155,919
-----------

HONG KONG (0.6%)
ENGINEERING
160,000 Hong Kong Aircraft Engineering Co., Ltd................................................. 441,926
-----------

ITALY (3.9%)
ELECTRONICS & ELECTRICAL
27,228 Gewiss SpA.............................................................................. 503,613
-----------
MANUFACTURING
82,244 Industrie Natuzzi SpA (ADR)............................................................. 1,768,246
33,936 SAES Getters Di Risp.................................................................... 336,400
16,508 SAES Getters SpA........................................................................ 271,939
-----------
2,376,585
-----------

TOTAL ITALY............................................................................. 2,880,198
-----------

JAPAN (22.0%)
APPAREL
17,900 World Co., Ltd.......................................................................... 488,182
-----------
AUTO TRUCKS & PARTS
76,000 NGK Spark Plug Co., Ltd................................................................. 497,335
20,000 Yasunaga Corp........................................................................... 152,038
-----------
649,373
-----------
BEVERAGES
15,300 Itoen, Ltd.............................................................................. 350,125
-----------
BUILDING & CONSTRUCTION
40,000 Kaneshita Construction.................................................................. 244,514
-----------
BUILDING MATERIALS
38,000 Ibiden Co., Ltd......................................................................... 622,414
24,000 Nichiha Corp............................................................................ 188,088
-----------
810,502
-----------
BUSINESS SERVICES
16,000 Nichii Gakkan Co........................................................................ 520,376
-----------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1997 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
CHEMICALS
45,000 Mitsubishi Gas Chemical Co.............................................................. $ 122,375
80,000 Sumitomo Bakelite Co., Ltd.............................................................. 532,915
-----------
655,290
-----------
COMPUTERS
22,000 Meitec.................................................................................. 681,034
-----------
ELECTRONIC & ELECTRICAL EQUIPMENT
27,000 Mitsui High-Tec......................................................................... 535,345
-----------
ELECTRONIC COMPONENTS
70,000 Dainippon Screen Manufacturing Co., Ltd................................................. 410,893
21,000 Mitsumi Electric Co., Ltd............................................................... 353,840
7,000 Tokyo Seimitsu.......................................................................... 164,577
-----------
929,310
-----------
ELECTRONICS
24,000 Aiwa Co., Ltd........................................................................... 571,787
8,000 Nidec Corp.............................................................................. 326,019
Y 26,000 Nippon Densan Corp. 1.00% 09/30/03 (Conv.).............................................. 278,135
2,700 Nitto Kohki Co., Ltd.................................................................... 34,914
-----------
1,210,855
-----------
ELECTRONICS - SEMICONDUCTORS/COMPONENTS
15,000 Shinko Electric Industries Co., Ltd..................................................... 605,407
-----------
HAND TOOLS
13,000 Disco Corp.............................................................................. 366,771
-----------
HEALTH & PERSONAL CARE
15,000 Aderans Co., Ltd........................................................................ 356,191
-----------
HOME BUILDING
500 Higashi Nihon House..................................................................... 2,931
-----------
LEISURE TIME
12,100 H.I.S. Co., Ltd......................................................................... 284,483
-----------
MACHINERY
26,300 Misumi Corp............................................................................. 424,592
11,600 Shima Seiki Manufacturing Ltd........................................................... 485,455
-----------
910,047
-----------
MACHINERY & MACHINE TOOLS
17,000 Fuji Machine Manufacturing Co., Ltd..................................................... 487,618
9,000 Nippon Thompson Co...................................................................... 50,854
100,000 OSG Corp................................................................................ 564,263
39,000 Tsudakoma............................................................................... 91,693
-----------
1,194,428
-----------

<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MEDICAL SUPPLIES
15,000 Terumo Corp............................................................................. $ 235,110
-----------
METALS & MINING
33,000 Sumitomo Sitix Corp..................................................................... 574,138
-----------
METALS - MISCELLANEOUS
23,000 Sumitomo Special Metals................................................................. 493,887
-----------
MISCELLANEOUS MATERIALS & COMMODITIES
12,200 Fujimi Inc.............................................................................. 525,862
25,000 Toshiba Ceramics Co., Ltd............................................................... 106,779
-----------
632,641
-----------
OFFICE EQUIPMENT
6,000 Riso Kagaku............................................................................. 341,850
-----------
REAL ESTATE
35,700 Chubu Sekiwa Real Estate, Ltd........................................................... 251,802
-----------
RETAIL
14,500 Ministop Co., Ltd....................................................................... 373,864
8,500 Otsuka Kagu Ltd......................................................................... 424,334
-----------
798,198
-----------
RETAIL - GENERAL MERCHANDISE
11,000 Circle K Japan Co., Ltd................................................................. 552,586
-----------
RETAIL - SPECIALTY
3,000 Shimachu Co., Ltd....................................................................... 55,486
-----------
STEEL & IRON
40,000 Yamato Kogyo Co., Ltd................................................................... 307,837
-----------
TEXTILES
140,000 Nitto Boseki Co., Ltd................................................................... 414,734
-----------
TEXTILES - APPAREL
24,000 Shimamura Co., Ltd...................................................................... 489,028
-----------
TRANSPORTATION
14,000 Kanto Seino Transportation.............................................................. 228,213
-----------

TOTAL JAPAN............................................................................. 16,170,674
-----------

NETHERLANDS (5.8%)
COMPUTER SOFTWARE
19,228 Baan Co., NV*........................................................................... 1,379,778
-----------
HARDWARE & TOOLS
30,764 Aalberts Industries NV.................................................................. 780,694
-----------
TRANSPORTATION
22,369 IHC Caland NV........................................................................... 1,190,391
-----------
</TABLE>

TOTAL NETHERLANDS....................................................................... 4,270,886
-----------

NORWAY (0.6%)
ELECTRONICS & ELECTRICAL
29,663 Sensonor AS*............................................................................ 127,703
-----------
TRANSPORTATION - MISCELLANEOUS
87,201 NCL Holdings (Rights)*.................................................................. 1,211
87,201 NCL Holdings ASA*....................................................................... 325,761
-----------
326,972
-----------
TOTAL NORWAY............................................................................ 454,675
-----------

SINGAPORE (1.0%)
ELECTRONIC & ELECTRICAL EQUIPMENT
56,000 Elec & Eltek International Co., Ltd..................................................... 411,600
-----------
ELECTRONICS & ELECTRICAL
85,000 Venture Manufacturing Ltd............................................................... 314,617
-----------

TOTAL SINGAPORE......................................................................... 726,217
-----------

SPAIN (0.1%)
MACHINERY - DIVERSIFIED
459 Azkoyen S.A............................................................................. 49,199
-----------

SWEDEN (0.7%)
MISCELLANEOUS
19,772 Assa Abloy AB (Series B)................................................................ 488,576
-----------
SWITZERLAND (5.6%)
CONGLOMERATES
1,078 Kardex AG............................................................................... 286,389
-----------
FOOD SERVICES
5,906 Selecta Group*.......................................................................... 790,723
-----------
HEALTH & PERSONAL CARE
499 Ares-Serono Group (B Shares)............................................................ 865,712
-----------
MACHINERY
330 SIG Schweizerische Industrie - Gesellschaft Holding AG - Bearer......................... 855,881
-----------
RETAIL - FOOD CHAINS
1,876 Valora Holding AG....................................................................... 394,505
-----------

TOTAL SWITZERLAND....................................................................... 4,137,668
-----------

UNITED KINGDOM (24.0%)
AUTO PARTS - ORIGINAL EQUIPMENT
96,958 BBA Group PLC........................................................................... 615,199
43,954 Henlys Group PLC........................................................................ 303,365
76,206 Laird Group PLC......................................................................... 546,540
80,483 UPF Group PLC........................................................................... 105,936
-----------
1,571,040
-----------
BROADCAST MEDIA
189,697 General Cable PLC*...................................................................... 310,510
-----------
BUILDING MATERIALS
92,317 Hepworth PLC............................................................................ 375,442
566,666 Ibstock PLC............................................................................. 497,249
99,954 SIG PLC................................................................................. 482,403
-----------
1,355,094
-----------
CHEMICALS
102,130 Scapa Group............................................................................. 386,051
-----------
COMMERCIAL SERVICES
73,550 Capita Group PLC........................................................................ 407,099
-----------
COMPUTER SERVICES
60,000 ISA International PLC................................................................... 81,000
-----------
CONGLOMERATES
26,180 Charter PLC............................................................................. 318,971
-----------
CONTAINERS - PAPER
29,097 David S. Smith Holdings PLC............................................................. 98,693
-----------
ELECTRONIC & ELECTRICAL EQUIPMENT
74,798 Fairey Group PLC........................................................................ 699,583
-----------
ENTERTAINMENT
92,157 London Clubs International PLC.......................................................... 410,560
-----------
FINANCIAL SERVICES
852,528 Rutland Trust PLC....................................................................... 719,321
-----------
FOOD PROCESSING
183,015 Devro PLC............................................................................... 1,244,616
-----------
HOUSEHOLD FURNISHINGS & APPLIANCES
125,341 MFI Furniture Group PLC................................................................. 260,161
-----------
MACHINERY & MACHINE TOOLS
11,755 Spirax-Sarco Engineering PLC............................................................ 108,109
-----------
MANUFACTURING
152,821 Bunzl PLC............................................................................... 586,689
70,780 Glynwed International PLC............................................................... 272,326
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
PORTFOLIO OF INVESTMENTS NOVEMBER 30, 1997 (UNAUDITED) CONTINUED

<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
110,114 Trinity Holdings PLC.................................................................... $ 583,467
56,997 Vitec Group PLC......................................................................... 605,949
25,219 Vosper Thornycroft Holdings PLC......................................................... 360,884
-----------
2,409,315
-----------
PHARMACEUTICALS
8,372 Nycomed Amersham PLC.................................................................... 282,555
-----------
PUBLISHING
33,211 Daily Mail & General Trust (Class A).................................................... 1,011,586
156,479 Mirror Group PLC........................................................................ 499,070
-----------
1,510,656
-----------
REAL ESTATE
104,718 Bradford Property Trust PLC............................................................. 507,162
83,467 Capital Shopping Centers PLC............................................................ 581,713
85,693 Pillar Property Investments PLC......................................................... 405,623
-----------
1,494,498
-----------
RESTAURANTS
19,135 Compass Group PLC....................................................................... 228,615
-----------
RETAIL - SPECIALTY
76,063 Arriva PLC.............................................................................. 489,590
93,619 Christies International PLC............................................................. 358,619
-----------
848,209
-----------
TELECOMMUNICATIONS
244,525 Securicor PLC........................................................................... 1,147,128
-----------
TRANSPORTATION
40,032 Associated British Ports Holdings PLC................................................... 189,827
52,509 Forth Ports PLC......................................................................... 524,565
82,503 Stagecoach Holdings PLC................................................................. 1,049,748
-----------
1,764,140
-----------

TOTAL UNITED KINGDOM.................................................................... 17,655,924
-----------

TOTAL COMMON AND PREFERRED STOCKS, BONDS AND RIGHTS
(IDENTIFIED COST $55,380,544)........................................................... 57,524,641
-----------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENTS (a) (17.0%)
U.S. GOVERNMENT AGENCIES
$ 1,000 Federal Farm Credit Bank 5.46% due 12/01/97............................................. $ 1,000,000
11,500 Federal Home Loan Mortgage Corp. 5.63% due 12/01/97..................................... 11,500,000
-----------

TOTAL SHORT-TERM INVESTMENTS
(AMORTIZED COST $12,500,000)............................................................ 12,500,000
-----------
</TABLE>

<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $67,880,544) (b).......................................................... 95.1 % 70,024,641

CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES............................................. 4.9 3,592,630
------ ------------

NET ASSETS................................................................................. 100.0 % $ 73,617,271
------ ------------
------ ------------
</TABLE>

- ---------------------

ADR American Depository Receipt.
* Non-income producing security.
(a) Securities were purchased on a discount basis. The interest rates shown
have 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 $7,642,029 and the
aggregate gross unrealized depreciation is $5,497,932, resulting in net
unrealized appreciation of $2,144,097.

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
SUMMARY OF INVESTMENTS NOVEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Apparel............................................................................ $ 488,182 0.7 %
Appliances & Household Durables.................................................... 137,611 0.2
Auto Parts - Original Equipment.................................................... 1,571,040 2.1
Auto Trucks & Parts................................................................ 649,373 0.9
Beverages.......................................................................... 350,125 0.5
Broadcast Media.................................................................... 310,510 0.4
Building & Construction............................................................ 244,514 0.3
Building Materials................................................................. 2,165,596 2.9
Business Services.................................................................. 520,376 0.7
Chemicals.......................................................................... 1,041,341 1.4
Commercial Services................................................................ 407,099 0.5
Computer Services.................................................................. 81,000 0.1
Computer Software.................................................................. 1,379,778 1.9
Computer Software & Services....................................................... 207,294 0.3
Computers.......................................................................... 681,034 0.9
Conglomerates...................................................................... 605,360 0.8
Consumer Products.................................................................. 921,186 1.2
Containers - Paper................................................................. 98,693 0.1
Electronic & Electrical Equipment.................................................. 1,646,528 2.2
Electronic Components.............................................................. 982,953 1.3
Electronics........................................................................ 1,210,855 1.6
Electronics & Electrical........................................................... 945,933 1.3
Electronics - Semiconductors/Components............................................ 605,407 0.8
Engineering........................................................................ 441,926 0.6
Entertainment...................................................................... 410,560 0.6
Financial Services................................................................. 719,321 1.0
Food Processing.................................................................... 2,362,238 3.2
Food Services...................................................................... 790,723 1.1
Hand Tools......................................................................... 366,771 0.5
Hardware & Tools................................................................... 780,694 1.1
Health & Personal Care............................................................. 1,221,903 1.7
Home Building...................................................................... 2,931 0.0
Household Furnishings & Appliances................................................. 260,161 0.4
Insurance.......................................................................... 560,430 0.8
Leisure Time....................................................................... 284,483 0.4
Machinery.......................................................................... 1,765,928 2.4
Machinery & Machine Tools.......................................................... 1,302,537 1.8

<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Machinery - Diversified............................................................ $ 49,199 0.1 %
Manufacturing...................................................................... 5,030,685 6.8
Medical Services................................................................... 251,569 0.3
Medical Supplies................................................................... 235,110 0.3
Metals & Mining.................................................................... 574,138 0.8
Metals - Miscellaneous............................................................. 493,887 0.7
Miscellaneous...................................................................... 488,576 0.7
Miscellaneous Materials & Commodities.............................................. 1,355,462 1.8
Multi-Industry..................................................................... 1,528,964 2.1
Office Equipment................................................................... 341,850 0.5
Oil - Exploration & Production..................................................... 303,045 0.4
Pharmaceuticals.................................................................... 1,690,352 2.3
Photography........................................................................ 987,543 1.3
Publishing......................................................................... 1,510,656 2.1
Real Estate........................................................................ 1,746,300 2.4
Restaurants........................................................................ 228,615 0.3
Retail............................................................................. 798,198 1.1
Retail - Food Chains............................................................... 881,420 1.2
Retail - General Merchandise....................................................... 552,586 0.8
Retail - Specialty................................................................. 2,083,999 2.8
Steel & Iron....................................................................... 307,837 0.4
Telecommunications................................................................. 1,147,128 1.6
Textiles........................................................................... 551,903 0.7
Textiles - Apparel................................................................. 489,028 0.7
Transportation..................................................................... 4,127,202 5.6
Transportation - Miscellaneous..................................................... 326,972 0.4
Transportation - Shipping.......................................................... 920,023 1.2
U.S. Government Agencies........................................................... 12,500,000 17.0
----------- ---
$70,024,641 95.1 %
----------- ---
----------- ---
</TABLE>

<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Common Stocks...................................................................... $54,904,332 74.6 %
Convertible Bond................................................................... 278,135 0.4
Preferred Stocks................................................................... 2,340,963 3.1
Rights............................................................................. 1,211 0.0
Short-Term Investments............................................................. 12,500,000 17.0
----------- ---
$70,024,641 95.1 %
----------- ---
----------- ---
</TABLE>

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

STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 1997 (UNAUDITED)

<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $67,880,544)............................................................... $ 70,024,641
Cash.......................................................................................... 661,456
Receivable for:
Investments sold.......................................................................... 3,019,573
Dividends................................................................................. 66,117
Foreign withholding taxes reclaimed....................................................... 51,008
Shares of beneficial interest sold........................................................ 31,456
Deferred organizational expenses.............................................................. 55,713
Prepaid expenses and other assets............................................................. 54,110
------------
TOTAL ASSETS............................................................................. 73,964,074
------------
LIABILITIES:
Payable for:
Investment management fee................................................................. 78,433
Investments purchased..................................................................... 67,709
Plan of distribution fee.................................................................. 62,713
Shares of beneficial interest repurchased................................................. 37,908
Accrued expenses and other payables........................................................... 105,773
------------
TOTAL LIABILITIES........................................................................ 352,536
------------
NET ASSETS............................................................................... $ 73,611,538
------------
------------
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................... $ 96,259,425
Net unrealized appreciation................................................................... 2,090,966
Accumulated net investment loss............................................................... (2,495,021)
Accumulated net realized loss................................................................. (22,243,832)
------------
NET ASSETS............................................................................... $ 73,611,538
------------
------------
CLASS A SHARES:
Net Assets.................................................................................... $29,036
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 3,700
NET ASSET VALUE PER SHARE................................................................ $7.85
------------
------------

MAXIMUM OFFERING PRICE PER SHARE
(NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE)........................................ $8.28
------------
------------
CLASS B SHARES:
Net Assets.................................................................................... $73,438,142
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 9,378,000
NET ASSET VALUE PER SHARE................................................................ $7.83
------------
------------
CLASS C SHARES:
Net Assets.................................................................................... $67,332
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 8,598
NET ASSET VALUE PER SHARE................................................................ $7.83
------------
------------
CLASS D SHARES:
Net Assets.................................................................................... $77,028
Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 9,803
NET ASSET VALUE PER SHARE................................................................ $7.86
------------
------------
</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, 1997* (UNAUDITED)

<TABLE>
<S> <C>
NET INVESTMENT INCOME:

INCOME
Dividends (net of $69,055 foreign withholding tax)............................................ $ 690,123
Interest...................................................................................... 63,234
------------

TOTAL INCOME............................................................................. 753,357
------------

EXPENSES
Investment management fee..................................................................... 585,886
Plan of distribution fee (Class A shares)..................................................... 26
Plan of distribution fee (Class B shares)..................................................... 468,357
Plan of distribution fee (Class C shares)..................................................... 206
Transfer agent fees and expenses.............................................................. 117,039
Custodian fees................................................................................ 49,058
Shareholder reports and notices............................................................... 44,351
Registration fees............................................................................. 36,186
Professional fees............................................................................. 34,226
Organizational expenses....................................................................... 18,730
Trustees' fees and expenses................................................................... 6,431
Other......................................................................................... 7,600
------------

TOTAL EXPENSES........................................................................... 1,368,096
------------

NET INVESTMENT LOSS...................................................................... (614,739)
------------

NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments............................................................................... 2,445,466
Foreign exchange transactions............................................................. (247,488)
------------

NET GAIN................................................................................. 2,197,978
------------
Net change in unrealized appreciation/depreciation on:
Investments............................................................................... (12,418,970)
Translation of forward foreign currency contracts, other assets and liabilities
denominated in foreign currencies....................................................... (51,189)
------------

NET DEPRECIATION......................................................................... (12,470,159)
------------

NET LOSS................................................................................. (10,272,181)
------------

NET DECREASE.................................................................................. $(10,886,920)
------------
------------
</TABLE>

- ---------------------

* Class A, Class C and Class D shares were issued July 28, 1997.

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 YEAR
NOVEMBER 30, ENDED
1997* MAY 31, 1997
- -------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>

INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
Net investment loss......................................... $ (614,739) $ (1,703,229)
Net realized gain (loss).................................... 2,197,978 (14,228,804)
Net change in unrealized appreciation/depreciation.......... (12,470,159) 756,452
------------- -------------

NET DECREASE........................................... (10,886,920) (15,175,581)

Dividends to shareholders from net investment income --
Class B shares............................................ -- (5,142,946)
Net decrease from transactions in shares of beneficial
interest.................................................. (20,809,727) (20,347,659)
Capital contribution........................................ -- 720,000
------------- -------------

NET DECREASE........................................... (31,696,647) (39,946,186)

NET ASSETS:
Beginning of period......................................... 105,308,185 145,254,371
------------- -------------

END OF PERIOD
(INCLUDING AN ACCUMULATED NET INVESTMENT LOSS OF
$2,495,021 AND DIVIDENDS IN EXCESS OF NET INVESTMENT
INCOME OF $1,880,282, RESPECTIVELY)..................... $ 73,611,538 $ 105,308,185
------------- -------------
------------- -------------
</TABLE>

- ---------------------

* Class A, Class C and Class D shares were issued July 28, 1997.

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1997 (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. On
July 28, 1997, the Fund commenced offering three additional classes of shares,
with the then current shares designated as Class B shares.

The Fund offers Class A shares, Class B shares, Class C shares and Class D
shares. The four classes are substantially the same except that most Class A
shares are subject to a sales charge imposed at the time of purchase, some Class
A shares, and most Class B shares and Class C shares are subject to a contingent
deferred sales charge imposed on shares redeemed within one year, six years and
one year, respectively. Class D shares are not subject to a sales charge.
Additionally, Class A shares, Class B shares and Class C shares incur
distribution expenses.

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ from
those estimates.

The following is a summary of significant accounting policies:

A. VALUATION OF INVESTMENTS -- (1) an equity security listed or traded on the
New York, American or other domestic or foreign stock exchange is valued at its
latest sale price on that exchange prior to the time when assets are valued; if
there were no sales that day, the security is valued at the latest bid price (in
cases where securities are traded on more than one exchange, the securities are
valued on the exchange designated as the primary market pursuant to procedures
adopted by the Trustees); (2) 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 Dean Witter InterCapital Inc. (the "Investment Manager") or Morgan
Grenfell Investment Services Limited (the "Sub-Adviser") that sale and bid
prices are not reflective of a security's market value, portfolio securities are
valued at their fair value as determined in good faith under procedures
established by and under the general supervision of the Trustees (valuation of
debt
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1997 (UNAUDITED) CONTINUED

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 by the identified cost method.
Dividend income and other distributions are recorded on the ex-dividend date
except for certain dividends from foreign securities which are recorded as soon
as the Fund is informed after the ex-dividend date. Discounts are accreted over
the life of the respective securities. Interest income is accrued daily.

C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.

D. 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.
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1997 (UNAUDITED) CONTINUED

E. 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 foreign currency
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.

F. 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 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.

G. 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.

H. 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.
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1997 (UNAUDITED) CONTINUED

I. ORGANIZATIONAL EXPENSES -- 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, 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 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 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. The Plan
provides that the Fund will pay the Distributor a fee which is accrued daily and
paid monthly at the following annual rates: (i) Class A -- up to 0.25% of the
average daily net assets of Class A; (ii) Class B -- 1.0% of the lesser of: (a)
the average daily aggregate gross sales of the Class B shares since the
inception of the Fund (not including reinvestment of dividend or capital gain
distributions) less the average daily aggregate net asset value of the Class B
shares redeemed since the Fund's inception upon which a contingent deferred
sales charge has been imposed or waived; or (b) the average daily net assets of
Class B; and (iii) Class C -- up to 1.0% of the average daily net assets of
Class C. In the case of Class A shares, amounts paid under the Plan are paid to
the Distributor for services provided. In the case of Class B
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1997 (UNAUDITED) CONTINUED

and Class C shares, amounts paid under the Plan are paid to the Distributor for
services provided and the expenses borne by it and others in the distribution of
the shares of these Classes, including the payment of commissions for sales of
these Classes and incentive compensation to, and expenses of, the account
executives of Dean Witter Reynolds Inc. ("DWR"), an affiliate of the Investment
Manager and Distributor, and others who engage in or support distribution of the
shares or who service shareholder accounts, including overhead and telephone
expenses; printing and distribution of prospectuses and reports used in
connection with the offering of these shares to other than current shareholders;
and preparation, printing and distribution of sales literature and advertising
materials. In addition, the Distributor may utilize fees paid pursuant to the
Plan, in the case of Class B shares, to compensate DWR and other selected
broker-dealers for their opportunity costs in advancing such amounts, which
compensation would be in the form of a carrying charge on any unreimbursed
expenses.

In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Trustees will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts, including
carrying charges, totaled $8,323,221 at November 30, 1997.

In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to account executives may be reimbursed in the subsequent
calendar year. For the period ended November 30, 1997, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.25% and
1.0%, respectively.

The Distributor has informed the Fund that for the period ended November 30,
1997, it received contingent deferred sales charges from certain redemptions of
the Fund's Class B shares of $205,972 and received $1,648 in front-end sales
charges from sales of the Fund's Class A shares. The respective shareholders pay
such charges which are not an expense of the Fund.
<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1997 (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, 1997 aggregated
$28,276,974 and $60,822,760, respectively.

At November 30, 1997, the Fund's receivable for investments sold included
unsettled trades with affiliates of the Sub-Adviser of $2,776,435.

For the six months ended November 30, 1997, the Fund incurred brokerage
commissions of $1,681 with Morgan Stanley & Co., Inc., an affiliate of the
Investment Manager, for portfolio transactions executed on behalf of the Fund.

Dean Witter Trust FSB, an affiliate of the Investment Manager and Distributor,
is the Fund's transfer agent. At November 30, 1997, the Fund had transfer agent
fees and expenses payable of approximately $2,500.

5. SHARES OF BENEFICIAL INTEREST

Transactions in shares of beneficial interest were as follows:

<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
NOVEMBER 30, 1997 MAY 31, 1997
--------------------------- ---------------------------
(UNAUDITED)
SHARES AMOUNT SHARES AMOUNT
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
CLASS A SHARES*
Sold............................................................. 4,080 $ 36,257 -- --
Redeemed......................................................... (380) (3,000) -- --
----------- ------------- ----------- -------------
Net increase -- Class A.......................................... 3,700 33,257 -- --
----------- ------------- ----------- -------------

CLASS B SHARES
Sold............................................................. 612,426 5,354,198 2,242,741 $ 21,576,152
Reinvestment of dividends........................................ -- -- 534,196 4,743,655
Redeemed......................................................... (3,044,434) (26,351,026) (5,096,720) (46,667,466)
----------- ------------- ----------- -------------
Net decrease -- Class B.......................................... (2,432,008) (20,996,828) (2,319,783) (20,347,659)
----------- ------------- ----------- -------------

CLASS C SHARES*
Sold............................................................. 8,598 75,915 -- --
----------- ------------- ----------- -------------

CLASS D SHARES*
Sold............................................................. 9,803 77,929 -- --
----------- ------------- ----------- -------------
Net decrease in Fund............................................. (2,409,907) $ (20,809,727) (2,319,783) $ (20,347,659)
----------- ------------- ----------- -------------
----------- ------------- ----------- -------------
</TABLE>

- ---------------------

* For the period July 28, 1997 (issue date) through November 30, 1997.

<PAGE>
DEAN WITTER INTERNATIONAL SMALLCAP FUND
NOTES TO FINANCIAL STATEMENTS NOVEMBER 30, 1997 (UNAUDITED) CONTINUED

6. FEDERAL INCOME TAX STATUS

At May 31, 1997, the Fund had a net capital loss carryover of approximately
$8,489,000 of which $7,034,000 will be available through May 31, 2004 and
$1,455,000 which will be available through May 31, 2005 to offset future capital
gains to the extent provided by regulations.

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 $15,832,000 and $79,000,
respectively during fiscal 1997.

As of May 31, 1997, the Fund had temporary book/tax differences primarily
attributable to post-October losses and income from the mark-to-market of
passive foreign investment companies.

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.

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.

At November 30, 1997, there were no outstanding forward contracts or purchased
put options.

8. SUBSEQUENT EVENT

On November 25, 1997, the Fund's shareholders approved a new Sub-Advisory
Agreement with Morgan Stanley Asset Management Inc. The new Sub-Advisory
Agreement became effective December 1, 1997. At the same time that the new
Sub-Advisory Agreement took effect, the Investment Manager and the Fund amended
the Investment Management Agreement to reduce the annual management fee from an
annual rate of 1.25% of the Fund's daily net assets to 1.15% of the Fund's daily
net assets.
<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 FOR THE PERIOD
MONTHS ENDED FOR THE YEAR FOR THE YEAR JULY 29, 1994*
NOVEMBER 30, ENDED ENDED THROUGH
1997**++ MAY 31, 1997 MAY 31, 1996 MAY 31, 1995
- -----------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C>
CLASS B SHARES

PER SHARE OPERATING PERFORMANCE:

Net asset value, beginning of period......... $ 8.92 $ 10.28 $ 8.54 $ 10.00
------ ------ ------ ------

Net investment loss.......................... (0.06) (0.16) (0.08) (0.08)
Net realized and unrealized gain (loss)...... (1.03) (0.88) 1.82 (1.38)
------ ------ ------ ------

Total from investment operations............. (1.09) (1.04) 1.74 (1.46)
------ ------ ------ ------

Dividends from net investment income:........ -- (0.38) -- --
------ ------ ------ ------

Capital contribution......................... -- 0.06 -- --
------ ------ ------ ------

Net asset value, end of period............... $ 7.83 $ 8.92 $ 10.28 $ 8.54
------ ------ ------ ------
------ ------ ------ ------

TOTAL INVESTMENT RETURN+..................... (12.22)%(1) (9.52)%(3) 20.37% (14.60)%(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses..................................... 2.92%(2) 2.89% 2.85% 2.90%(2)

Net investment loss.......................... (1.31)%(2) (1.34)% (1.09)% (1.12)%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands...... $73,438 $105,308 $145,254 $93,729

Portfolio turnover rate...................... 32%(1) 46% 44% 41%(1)

Average commission rate paid................. $0.0114 $0.0030 $0.0069 --
</TABLE>

- ---------------------

* Commencement of operations.
** Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date have been designated Class B shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Includes voluntary capital contribution from Sub-Adviser, the effect of
which was to increase total return by 0.59%.

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

<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
NOVEMBER 30,
1997++
- ----------------------------------------------------------------------------------------
<S> <C>
CLASS A SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................. $ 8.96
------
Net investment loss................................................... (0.03)
Net realized and unrealized loss...................................... (1.08)
------
Total from investment operations...................................... (1.11)
------
Net asset value, end of period........................................ $ 7.85
------
------
TOTAL INVESTMENT RETURN+.............................................. (12.39)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 2.23%(2)
Net investment loss................................................... (1.08)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $29
Portfolio turnover rate............................................... 32%(1)
Average commission rate paid.......................................... $0.0114
</TABLE>

<TABLE>
<S> <C>
CLASS C SHARES
PER SHARE OPERATING PERFORMANCE:
Net asset value, beginning of period.................................. $8.96
------
Net investment loss................................................... (0.05)
Net realized and unrealized loss...................................... (1.08)
------
Total from investment operations...................................... (1.13)
------
Net asset value, end of period........................................ $7.83
------
------
TOTAL INVESTMENT RETURN+.............................................. (12.61)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 3.00%(2)
Net investment loss................................................... (1.83)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $67
Portfolio turnover rate............................................... 32%(1)
Average commission rate paid.......................................... $0.0114
</TABLE>

- ---------------------

* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.

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

<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 28, 1997*
THROUGH
NOVEMBER 30,
1997++
- ----------------------------------------------------------------------------------------

<S> <C>
CLASS D SHARES

PER SHARE OPERATING PERFORMANCE:

Net asset value, beginning of period.................................. $ 8.96
------

Net investment loss................................................... (0.03)

Net realized and unrealized loss...................................... (1.07)
------

Total from investment operations...................................... (1.10)
------

Net asset value, end of period........................................ $ 7.86
------
------

TOTAL INVESTMENT RETURN+.............................................. (12.28)%(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 2.12%(2)

Net investment loss................................................... (1.01)%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $77

Portfolio turnover rate............................................... 32%(1)

Average commission rate paid.......................................... $0.0114
</TABLE>

- ---------------------

* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.

SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
(This page has been left blank intentionally.)
<PAGE>

TRUSTEES

Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Wayne E. Hedien
Dr. Manuel H. Johnson
Michael E. Nugent
Philip J. Purcell
John L. Schroeder

OFFICERS

Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Barry Fink
Vice President, Secretary and General Counsel
Thomas F. Caloia
Treasurer

TRANSFER AGENT

Dean Witter Trust FSB
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036

INVESTMENT MANAGER

Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048

SUB-ADVISER

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, 1997