MORGAN STANLEY DEAN WITTER INTERNATIONAL SMALLCAP FUND, N-30D, 2000-01-25

MORGAN STANLEY DEAN WITTER INTERNATIONAL SMALLCAP FUND
N-30D, 2000-01-25

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<PAGE>
Morgan Stanley Dean Witter International SmallCap Fund Two World Trade Center,
Letter to the Shareholders November 30, 1999 New York, New York 10048

DEAR SHAREHOLDER:

International equity markets rose during the six-month period ended November 30,
1999, driven by a combination of improving growth and continued low inflation.
Small-cap stocks participated in the international market rally, outperforming
their U.S. counterparts. In October and November, however, mega-cap stocks
turned in strong showings in both the international and domestic markets as
enthusiasm for technology and telecommunications stocks gained momentum.

In Japan, numerous restructuring initiatives pushed small-cap stocks to levels
not seen in many years. These stocks also benefited from the Japanese equity
market's new focus on technology, the Internet and outsourcing. The improving
national economy enhanced the prospects for earnings growth among Japanese
small-caps. Internet-related businesses in Japan are among the least developed
in the world and consequently stand to gain significantly from that sector's
considerable potential.

In Europe, the pace of merger and acquisition activity continued to accelerate,
fueled by industry consolidation. This trend is likely to continue as long as
small companies trade at a discount to large ones. As in Asia, Europe's apparent
economic upturn has raised expectations for small-cap earnings growth next year.

PERFORMANCE AND PORTFOLIO

For the six-month period ended November 30, 1999, Morgan Stanley Dean Witter
International SmallCap Fund's Class B shares produced a total return of 37.05
percent compared to 16.43 percent for the MSCI EAFE Index and 38.56 percent for
the Lipper International Small Cap Fund Average. For the same time period, the
Fund's Class A, C and D shares returned 37.37 percent, 36.96 percent and 37.67
percent, respectively. The performance of the Fund's four share classes varies
because each class has different expenses. (The total return figures shown
assume the reinvestment of all distributions and do not reflect the deduction of
any applicable sales charges.)

<PAGE>

Morgan Stanley Dean Witter International SmallCap Fund
Letter to the Shareholders November 30, 1999, continued

Performance continues to be driven by the Fund's exposure to the economic
recovery in the Pacific Basin, particularly in Japan, where the Fund has been
neutrally weighted and its stock selection has worked in its favor. The Fund's
Japanese holdings rose 118 percent for the period. Ryohin Keikaku, a retailer,
was the best-performing stock in the portfolio, returning 141 percent. In Asia
excluding Japan, positive contributions came from stock selection in Australia,
Hong Kong and Singapore.

The Fund's European holdings accounted for nearly 4 percent of its overall
return for the period under review, with the strongest performance posted by
holdings in Ireland and Spain. Within the European markets, the best-performing
sectors included services, electronics and consumer goods.

Morgan Stanley Dean Witter Investment Management Inc., the Fund's sub-advisor,
does not anticipate any major changes to the Fund's regional composition in the
coming months. At the end of the period under review, the Fund was slightly
overweighted in continental Europe and underweighted in the United Kingdom,
Japan and the Pacific Basin.

LOOKING AHEAD

While small-cap stocks rebounded in 1999, the sub-advisor believes the potential
remains for an even broader resurgence. The sub-advisor anticipates that a
further narrowing of the valuation gap between large-caps and small-caps,
continued merger-and-acquisition activity in the small-cap sector and maturation
of the nascent economic recoveries in Europe and Japan may lead to such a
scenario.

We appreciate your ongoing support of Morgan Stanley Dean Witter International
SmallCap Fund and look forward to continuing to serve your investment
objectives.

Very truly yours,

/s/ CHARLES A. FIUMEFREDDO /s/ MITCHELL M. MERIN
- -------------------------- ---------------------
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President

<PAGE>

Morgan Stanley Dean Witter International SmallCap Fund
Fund Performance November 30, 1999

AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------

CLASS A SHARES*
- --------------------------------------------

PERIOD ENDED 11/30/99
- ---------------------
1 Year 58.96%(1) 50.62%(2)
Since Inception (7/28/97) 14.25%(1) 11.65%(2)

CLASS B SHARES**
- --------------------------------------------

PERIOD ENDED 11/30/99
- ---------------------
1 Year 58.27%(1) 53.27%(2)
5 Years 7.11%(1) 6.81%(2)
Since Inception (7/29/94) 4.39%(1) 4.23%(2)

CLASS C SHARES+
- --------------------------------------------
PERIOD ENDED 11/30/99
- ---------------------
1 Year 58.53%(1) 57.53%(2)
Since Inception (7/28/97) 13.61%(1) 13.61%(2)

CLASS D SHARES++
- --------------------------------------------
PERIOD ENDED 11/30/99
- ---------------------
1 Year 59.69%(1)
Since Inception (7/28/97) 14.41%(1)

Past performance is not predictive of future returns

- ---------------
(1) Figure shown assumes reinvestment of all distributions and does not
reflect the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and the deduction
of the maximum applicable sales charge. See the Fund's current prospectus
for complete details on fees and sales charges.
* The maximum front-end sales charge for Class A is 5.25%. ** The maximum
contingent deferred sales charge (CDSC) for Class B is 5.0%. The CDSC
declines to 0% after six years.
+ The maximum contingent deferred sales charge for Class C shares is 1% for
shares redeemed within one year of purchase.
++ Class D shares have no sales charge.

<PAGE>
Morgan Stanley Dean Witter International SmallCap Fund
Portfolio of Investments November 30, 1999 (unaudited) continued

<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------ -----------------------------------------------------
<S> <C> <C>
COMMON AND PREFERRED STOCKS (97.6%)
AUSTRALIA (3.4%)
Building Products
1,377,214 Parbury Ltd. ....................... $ 350,198
-----------
Diversified Commercial Services
373,800 Ausdoc Group Ltd. .................. 665,349
-----------
Hospital/Nursing Management
321,200 Ramsay Health Care Ltd. ............ 200,103
-----------
Multi-Sector Companies
137,400 Pacific Dunlop Ltd. ................ 184,298
-----------
Office/Plant Automation
158,299 E.R.G. Ltd. ........................ 825,172
-----------
Water Supply
211,200 Neverfail Springwater Ltd. ......... 402,780
-----------
TOTAL AUSTRALIA .................... 2,627,900
-----------
DENMARK (1.1%)
International Banks
20,640 Sydbank A/S ........................ 849,981
-----------
FINLAND (5.3%)
Building Products
23,430 Kone Corp. (B Shares) .............. 968,603
-----------
Construction/Agricultural
Equipment/Trucks
23,255 KCI Konecranes International
PLC .............................. 638,959
-----------
Electronic Components
32,480 Perlos Oyj ......................... 573,118
60,140 Teleste Oyj* ....................... 472,379
-----------
1,045,497
-----------
Industrial Machinery/Components
16,400 Metso Oyj* ......................... 177,763
162,229 Rapala Normark Corp.* .............. 768,805
-----------
946,568
-----------
Paper
40,420 Metsa Tissue Corp. ................. 495,179
-----------
TOTAL FINLAND ...................... 4,094,806
-----------

NUMBER OF
SHARES VALUE
- ------------------ -----------------------------------------------------

FRANCE (4.4%)
Consumer Electronics/Appliances
6,930 Thomson Multimedia ................. $ 300,463
-----------
Consumer Specialties
18,847 Europeenne d'Extincteurs ........... 742,463
-----------
Environmental Services
8,800 Alliance et Gestion Commerciale 694,759
-----------
Fluid Controls
18,800 Groupe Legris Industries S.A. ...... 720,329
-----------
Office Equipment/Supplies
14,340 Neopost S.A.* ...................... 592,820
-----------
Textiles
6,560 Chargeurs S.A. ..................... 329,069
-----------
TOTAL FRANCE ....................... 3,379,903
-----------
GERMANY (5.0%)
Auto Parts: O.E.M.
27,628 Beru AG ............................ 644,897
-----------
Building Materials
20,400 Dyckerhoff AG (Pref.) .............. 596,510
-----------
Home Furnishings
5,440 WMF - Wuerttembergische
Metallwarenfabrik AG (Pref.) ....... 70,759
-----------
Industrial Machinery/Components
3,861 Sartorius AG (Pref.) ............... 700,748
30,429 Winkler & Duennebier ............... 441,815
-----------
1,142,563
-----------
Medical/Nursing Services
29,746 Marseille-Kliniken AG .............. 328,422
-----------
Other Specialty Stores
36,917 Moebel Walther AG -
Vorzugsakt ....................... 316,399
-----------
Recreational Products/Toys
8,960 Zapf Creation AG ................... 264,255
-----------
</TABLE>

See Notes to Financial Statements

4
<PAGE>
Morgan Stanley Dean Witter International SmallCap Fund
Portfolio of Investments November 30, 1999 (unaudited) continued

<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------ -------------------------------------------------------
<S> <C> <C>
Specialty Foods/Candy
6,447 Kamps AG ............................. $ 451,785
-----------
TOTAL GERMANY ........................ 3,815,590
-----------
HONG KONG (1.3%)
Cellular Telephone
101,500 SmarTone Telecommunications
Holdings Ltd. ...................... 497,895
-----------
Medical Specialties
1,128,000 Moulin International Holdings
Ltd. ............................... 106,018
-----------
Other Telecommunications
128,300 Asia Satellite Telecommunications
Holdings Ltd. ........................ 386,535
-----------
TOTAL HONG KONG ...................... 990,448
-----------
IRELAND (0.7%)
International Banks
234,000 Anglo Irish Bank Corp. PLC ........... 549,680
-----------
ITALY (1.9%)
International Banks
34,700 Banca Popolare di Bergamo
Credito Varesino SpA ............... 654,276
-----------
Office Equipment/Supplies
89,500 Buffetti SpA ......................... 810,381
-----------
TOTAL ITALY .......................... 1,464,657
-----------
JAPAN (43.4%)
Airlines
6,000 H.I.S. Co., Ltd. ..................... 426,471
-----------
Apparel
8,000 Nagaileben Co., Ltd. ................. 360,784
-----------
Beverages - Non-Alcoholic
7,500 Itoen, Ltd. .......................... 912,500
-----------
Books/Magazines
7,500 Shobunsha Publications, Inc. ......... 537,500
-----------
Clothing/Shoe/Accessory Stores
9,300 Ryohin Keikaku Co., Ltd. ............. 2,192,794
-----------

NUMBER OF
SHARES VALUE
- ------------------ -------------------------------------------------------

Computer Software
2,000 Alpha Systems Inc. ................... $ 356,863
4,000 CAC Corp. ............................ 221,569
10,000 Creo Co., Ltd. ....................... 164,706
4,000 Fuji Soft ABC Inc. ................... 343,137
4,500 Trend Micro Inc. ..................... 957,353
-----------
2,043,628
-----------
Consumer Electronics/Appliances
8,000 Shinwa Co., Ltd. ..................... 154,510
18,000 Yokowo Co., Ltd. ..................... 360,000
-----------
514,510
-----------
Consumer Sundries
9,000 Aderans Co., Ltd. .................... 404,118
-----------
Containers/Packaging
4,500 FP Corp. ............................. 286,765
4,300 Fuji Seal, Inc. ...................... 261,373
-----------
548,138
-----------
Diversified Commercial Services
1,500 Bellsystem 24, Inc. .................. 1,720,588
15 Goodwill Group, Inc. ................. 1,102,941
-----------
2,823,529
-----------
Diversified Electronic Products
800 Funai Electric Co., Ltd. ............. 501,177
-----------
Drugstore Chains
6,800 Matsumotokiyoshi Co. ................. 578,667
2,700 Tsuruha Co., Ltd. .................... 397,059
-----------
975,726
-----------
E.D.P. Peripherals
9,000 Tokki Corp. .......................... 264,706
-----------
E.D.P. Services
2 Acces Co., Ltd. ...................... 251,176
2,900 Fujitsu Support & Services Inc. ...... 1,222,549
18,000 MKC-Stat Corp. ....................... 511,765
-----------
1,985,490
-----------
Electrical Products
9,000 Cosel Co., Ltd. ...................... 264,706
12,000 Hosiden Corp. ........................ 494,118
5,300 Nidec Corp. .......................... 1,208,088
27,000 Ushio Inc. ........................... 351,000
-----------
2,317,912
-----------
Electronic Components
7,000 Zuken Inc. ........................... 287,549
-----------
</TABLE>

See Notes to Financial Statements

5
<PAGE>
Morgan Stanley Dean Witter International SmallCap Fund
Portfolio of Investments November 30, 1999 (unaudited) continued

<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------ -----------------------------------------------------
<S> <C> <C>
Electronic Production Equipment
5,300 Disco Corp. ........................ $ 1,070,392
7,000 Fujimi Inc. ........................ 329,412
4,300 Tokyo Seimitsu Co., Ltd. ........... 585,980
-----------
1,985,784
-----------
Farming/Seeds/Milling
35,000 Fuji Oil Co., Ltd. ................. 278,627
-----------
Finance Companies
5,800 Aeon Credit Service Co., Ltd. ...... 1,030,353
-----------
Food Chains
8,000 Circle K Japan Co., Ltd. ........... 352,941
5,000 Matsuya Foods Co., Ltd. ............ 274,510
-----------
627,451
-----------
Home Building
500 Higashi Nihon House Co. ............ 2,206
-----------
Industrial Machinery/Components
9,000 Fuji Machine Manufacturing
Co., Ltd. ........................ 525,882
15,000 THK Co., Ltd. ...................... 583,824
7,000 Union Tool Co. ..................... 809,804
-----------
1,919,510
-----------
Industrial Specialties
2,000 Taiyo Ink Manufacturing Co.,
Ltd. ............................. 290,196
-----------
Meat/Poultry/Fish
20,000 Yonekyu Corp. ...................... 278,431
-----------
Other Specialty Stores
6,000 Nitori Co. ......................... 244,118
2,700 Otsuka Kagu Ltd. ................... 844,412
11,500 Tsutsumi Jewelry Co., Ltd. ......... 358,529
-----------
1,447,059
-----------
Package Goods/Cosmetics
20,000 Combi Corp. ........................ 309,804
2,000 Fancl Corp. ........................ 709,804
3,000 Milbon Co. Ltd. .................... 429,412
-----------
1,449,020
-----------
Real Estate
700 Chubu Sekiwa Real Estate, Ltd. 5,490
25,000 Sekiwa Real Estate, Ltd. ........... 169,118
-----------
174,608
-----------

NUMBER OF
SHARES VALUE
- ------------------ -----------------------------------------------------

Recreational Products/Toys
3,500 Tomy Co., Ltd. ..................... $ 260,784
-----------
Restaurants
9,500 Doutor Coffee Co., Ltd. ............ 1,015,196
9,500 Saint Marc Co., Ltd. ............... 312,010
5,000 Saizeriya Co., Ltd. ................ 495,098
14,000 Watami Food Service Co., Ltd. ...... 1,125,490
-----------
2,947,794
-----------
Services to the Health Industry
6,000 Nichii Gakkan Co. .................. 1,235,882
-----------
Specialty Chemicals
3,500 Sony Chemicals Corp. ............... 368,529
-----------
Specialty Foods/Candy
8,200 Ariake Japan Co., Ltd. ............. 524,157
20,000 Fujicco Co., Ltd. .................. 450,980
8,000 Rock Field Co., Ltd. ............... 352,941
-----------
1,328,078
-----------
Telecommunications Equipment
25,000 Denki Kogyo Co., Ltd. .............. 215,931
-----------
Wholesale Distributors
4,300 Misumi Corp. ....................... 318,284
-----------
TOTAL JAPAN ........................ 33,255,059
-----------
NETHERLANDS (5.9%)
Engineering & Construction
13,050 GTI Holding NV ..................... 257,903
16,900 Hollandsche Beton Groep NV ......... 153,362
-----------
411,265
-----------
Farming/Seeds/Milling
26,692 Nutreco Holding NV ................. 780,493
-----------
Medical/Dental Distributors
30,000 Apothekers Cooperatie OPG NV 657,916
-----------
Multi-Sector Companies
21,000 Internatio-Muller NV ............... 364,198
-----------
Office Equipment/Supplies
30,833 Samas Groep NV ..................... 387,057
-----------
Package Goods/Cosmetics
24,493 Benckiser NV (B Shares) ............ 1,494,126
-----------
</TABLE>

See Notes to Financial Statements

6
<PAGE>
Morgan Stanley Dean Witter International SmallCap Fund
Portfolio of Investments November 30, 1999 (unaudited) continued

<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ------------------ ------------------------------------------------------
<S> <C> <C>
Wholesale Distributors
25,190 Buhrmann NV ......................... $ 396,479
-----------
TOTAL NETHERLANDS ................... 4,491,534
-----------
NEW ZEALAND (2.6%)
Casino/Gambling
96,843 Sky City Ltd. ....................... 362,375
-----------
Diversified Commercial Services
221,500 Auckland Intl Airport Ltd. .......... 322,510
-----------
Engineering & Construction
590,300 Fletcher Challenge Building ......... 745,294
-----------
Wholesale Distributors
184,300 Fisher & Paykel Industries Ltd. 577,037
-----------
TOTAL NEW ZEALAND ................... 2,007,216
-----------
NORWAY (1.7%)
Construction/Agricultural
Equipment/Trucks
27,860 Kverneland ASA ...................... 501,073
-----------
International Banks
34,680 Sparebanken NOR ..................... 804,401
-----------
TOTAL NORWAY ........................ 1,305,474
-----------
SINGAPORE (0.9%)
Metals Fabrications
234,000 Natsteel Broadway Ltd. .............. 327,600
-----------
Precision Instruments
98,000 Avimo Group Ltd. .................... 174,261
-----------
Specialty Foods/Candy
120,000 Want Want Holdings .................. 175,200
-----------
TOTAL SINGAPORE ..................... 677,061
-----------
SPAIN (1.8%)
E.D.P. Services
55,500 Amadeus Global Travel
Distribution S.A. (A Shares)* ..... 436,493
-----------
Paper
33,709 Miquel y Costas & Miquel, S.A. ...... 907,501
-----------
TOTAL SPAIN ......................... 1,343,994
-----------

NUMBER OF
SHARES VALUE
- ------------------ ------------------------------------------------------
SWEDEN (3.0%)
Construction/Agricultural
Equipment/Trucks
19,740 Svedala Industri AB ................. $ 330,624
-----------
Hotels/Resorts
69,930 Scandic Hotels AB ................... 616,449
-----------
Industrial Machinery/Components
27,300 Haldex AB ........................... 295,205
-----------
Medical/Nursing Services
45,630 Nobel Biocare AB .................... 659,672
-----------
Tobacco
117,000 Swedish Match AB .................... 418,053
-----------
TOTAL SWEDEN ........................ 2,320,003
-----------
SWITZERLAND (5.1%)
Advertising
655 Publigroupe S.A. .................... 610,069
-----------
Building Products
1,170 Zehnder Holdings AG ................. 633,228
-----------
E.D.P. Peripherals
1,010 Logitech International S.A.
(Registered Shares) ................. 235,815
-----------
Industrial Machinery/Components
295 Bobst AG (Bearer Shares) ............ 343,455
-----------
Medical Specialties
3,220 Sulzer Medica AG (Registered
Shares) ........................... 607,930
-----------
Other Specialty Stores
2,745 Valora Holding AG ................... 663,361
-----------
Printing/Forms
1,700 Edipresse S.A. (Bearer Shares) ...... 797,042
-----------
TOTAL SWITZERLAND ................... 3,890,900
-----------
UNITED KINGDOM (10.1%)
Broadcasting
38,100 Capital Radio PLC ................... 831,064
27,900 Scottish Media Group PLC ............ 415,971
-----------
1,247,035
-----------
</TABLE>

See Notes to Financial Statements

7
<PAGE>

Morgan Stanley Dean Witter International SmallCap Fund
Portfolio of Investments November 30, 1999 (unaudited) continued

<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------- -------------------------------------------------------
<S> <C> <C>
Building Products
203,350 SIG PLC .............................. $ 789,636
-----------
Department Stores
58,240 Le Riche Group Ltd. .................. 418,804
-----------
Industrial Machinery/Components
174,300 Money Controls PLC ................... 439,383
349,900 The Six Hundred Group PLC ............ 371,828
-----------
811,211
-----------
Meat/Poultry/Fish
639,800 Bernard Matthews PLC ................. 1,196,209
-----------
Other Consumer Services
150,100 Northern Leisure PLC ................. 407,762
-----------
Other Pharmaceuticals
128,600 Seton Scholl Healthcare PLC .......... 1,298,778
-----------
Paper
104,500 Bunzl PLC ............................ 554,410
-----------
Real Estate
201,900 NHP PLC .............................. 554,934
-----------
Wholesale Distributors
246,400 Time Products PLC .................... 404,575
-----------
TOTAL UNITED KINGDOM ................. 7,683,354
-----------
</TABLE>

<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(Identified Cost $57,586,981) (a)......... 97.6% 74,747,560
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES .................... 2.4 1,839,361
----- ----------
NET ASSETS ............................... 100.0% $76,586,921
===== ===========
</TABLE>

- --------------------------------
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $22,420,070 and the
aggregate gross unrealized depreciation is $5,259,491, resulting in net
unrealized appreciation of $17,160,579.

FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT NOVEMBER 30, 1999:

<TABLE>
<CAPTION>
CONTRACTS TO IN EXCHANGE DELIVERY UNREALIZED
DELIVER FOR DATE APPRECIATION
- ---------------- ----------------- ---------- -------------
<S> <C> <C> <C>
GBP 383,084 $ 613,892 12/01/99 $1,724
$ 230,610 SEK 1,963,646 12/01/99 190
------
Total unrealized appreciation ........... $1,914
======
</TABLE>

Currency Abbreviations:
- -----------------------
GBP British Pound.
SEK Swedish Krona.

See Notes to Financial Statements

<PAGE>
Morgan Stanley Dean Witter International SmallCap Fund
Summary of Investments November 30, 1999 (unaudited)

<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- -------------------------------------------------------------------
<S> <C> <C>
Advertising .......................... $ 610,069 0.8%
Airlines ............................. 426,471 0.6
Apparel .............................. 360,784 0.5
Auto Parts: O.E.M. ................... 644,897 0.8
Beverages - Non-Alcoholic ............ 912,500 1.2
Books/Magazines ...................... 537,500 0.7
Broadcasting ......................... 1,247,034 1.6
Building Materials ................... 596,510 0.8
Building Products ................... 2,741,665 3.6
Casino/Gambling ...................... 362,375 0.5
Cellular Telephone ................... 497,895 0.7
Clothing/Shoe/Accessory Stores ...... 2,192,794 2.9
Computer Software .................... 2,043,628 2.7
Construction/Agricultural
Equipment/Trucks .................. 1,470,656 1.9
Consumer Electronics/Appliances ..... 814,973 1.1
Consumer Specialties ................ 742,463 1.0
Consumer Sundries .................... 404,118 0.5
Containers/Packaging ................. 548,138 0.7
Department Stores .................... 418,804 0.5
Diversified Commercial Services ...... 3,811,388 5.0
Diversified Electronic Products ...... 501,177 0.6
Drugstore Chains ..................... 975,726 1.3
E.D.P. Peripherals ................... 500,521 0.6
E.D.P. Services ...................... 2,421,983 3.2
Electrical Products .................. 2,317,912 3.1
Electronic Components ............... 1,333,046 1.7
Electronic Production Equipment ..... 1,985,784 2.6
Engineering & Construction ........... 1,156,559 1.5
Environmental Services ............... 694,759 0.9
Farming/Seeds/Milling ............... 1,059,120 1.4
Finance Companies .................... 1,030,353 1.3
Fluid Controls ....................... 720,329 0.9
Food Chains .......................... 627,451 0.8
Home Building ....................... 2,206 0.0
Home Furnishings ..................... 70,759 0.0
Hospital/Nursing Management .......... 200,103 0.3
Hotels/Resorts ....................... 616,449 0.8

PERCENT OF
INDUSTRY VALUE NET ASSETS
- -------------------------------------------------------------------

Industrial Machinery/Components ..... $ 5,458,512 7.3%
Industrial Specialties .............. 290,196 0.3
International Banks ................. 2,858,338 3.8
Meat/Poultry/Fish .................. 1,474,640 2.0
Medical Specialties ................. 713,948 0.9
Medical/Dental Distributors ......... 657,916 0.9
Medical/Nursing Services ............ 988,094 1.3
Metals Fabrications ................. 327,600 0.4
Multi-Sector Companies .............. 548,496 0.7
Office Equipment/Supplies ........... 1,790,258 2.3
Office/Plant Automation ............ 825,172 1.1
Other Consumer Services ............. 407,762 0.5
Other Pharmaceuticals .............. 1,298,778 1.7
Other Specialty Stores .............. 2,426,819 3.2
Other Telecommunications ............ 386,535 0.5
Package Goods/Cosmetics ............ 2,943,146 3.9
Paper ............................... 1,957,090 2.6
Precision Instruments ............... 174,261 0.2
Printing/Forms ..................... 797,042 1.0
Real Estate ......................... 729,542 0.9
Recreational Products/Toys ......... 525,040 0.7
Restaurants ......................... 2,947,794 3.9
Services to the Health Industry ..... 1,235,882 1.6
Specialty Chemicals ................ 368,529 0.4
Specialty Foods/Candy ............... 1,955,063 2.6
Telecommunications Equipment ....... 215,931 0.2
Textiles ............................ 329,069 0.4
Tobacco ............................. 418,053 0.5
Water Supply ....................... 402,780 0.5
Wholesale Distributors .............. 1,696,375 2.2
----------- ----
$74,747,560 97.6%
=========== ====
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
- ----------------------------------------------------------
<S> <C> <C>
Common Stocks ............. $73,379,543 95.8%
Preferred Stocks ......... 1,368,017 1.8
----------- ----
$74,747,560 97.6%
=========== ====
</TABLE>

See Notes to Financial Statements

<PAGE>

Morgan Stanley Dean Witter International SmallCap Fund
Financial Statements

STATEMENT OF ASSETS AND LIABILITIES
November 30, 1999 (unaudited)

<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, at value
(identified cost $57,586,981) ....................................... $74,747,560
Cash (including $2,012,250 in foreign currency) ....................... 4,717,565
Unrealized appreciation on forward foreign currency contracts ......... 1,914
Receivable for:
Investments sold ................................................... 864,354
Shares of beneficial interest sold ................................. 148,906
Foreign withholding taxes reclaimed ................................ 62,761
Dividends .......................................................... 57,183
Prepaid expenses and other assets ..................................... 56,967
-----------
TOTAL ASSETS ....................................................... 80,657,210
-----------
LIABILITIES:
Payable for:
Shares of beneficial interest repurchased .......................... 2,043,901
Investments purchased .............................................. 1,800,801
Investment management fee .......................................... 82,054
Plan of distribution fee ........................................... 68,399
Accrued expenses and other payables ................................... 75,134
-----------
TOTAL LIABILITIES .................................................. 4,070,289
-----------
NET ASSETS ......................................................... $76,586,921
===========
COMPOSITION OF NET ASSETS:
Paid-in-capital ....................................................... $71,931,990
Net unrealized appreciation ........................................... 17,157,383
Accumulated net investment loss ....................................... (738,568)
Accumulated net realized loss ......................................... (11,763,884)
-----------
NET ASSETS ......................................................... $76,586,921
===========
CLASS A SHARES:
Net Assets ............................................................ $1,713,174
Shares Outstanding (unlimited authorized, $.01 par value) ............. 140,005
NET ASSET VALUE PER SHARE .......................................... $12.24
======
MAXIMUM OFFERING PRICE PER SHARE,
(net asset value plus 5.54% of net asset value) .................. $12.92
======
CLASS B SHARES:
Net Assets ............................................................ $72,894,720
Shares Outstanding (unlimited authorized, $.01 par value) ............. 6,044,595
NET ASSET VALUE PER SHARE .......................................... $12.06
======
CLASS C SHARES:
Net Assets ............................................................ $794,693
Shares Outstanding (unlimited authorized, $.01 par value) ............. 65,781
NET ASSET VALUE PER SHARE .......................................... $12.08
======
CLASS D SHARES:
Net Assets ............................................................ $1,184,334
Shares Outstanding (unlimited authorized, $.01 par value) ............. 96,436
NET ASSET VALUE PER SHARE .......................................... $12.28
======
</TABLE>

See Notes to Financial Statements

<PAGE>

Morgan Stanley Dean Witter International SmallCap Fund
Financial Statements, continued

STATEMENT OF OPERATIONS
For the six months ended November 30, 1999 (unaudited)

<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT LOSS:
INCOME
Dividends (net of $60,361 foreign withholding tax) ................... $ 440,836
Interest ............................................................. 73,121
-----------
TOTAL INCOME ...................................................... 513,957
-----------
EXPENSES
Investment management fee ............................................ 383,503
Plan of distribution fee (Class A shares) ............................ 2,005
Plan of distribution fee (Class B shares) ............................ 319,751
Plan of distribution fee (Class C shares) ............................ 2,582
Transfer agent fees and expenses ..................................... 64,130
Professional fees .................................................... 55,399
Registration fees .................................................... 32,154
Shareholder reports and notices ...................................... 31,061
Custodian fees ....................................................... 24,204
Trustees' fees and expenses .......................................... 6,211
Organizational expenses .............................................. 5,428
Other ................................................................ 9,462
-----------
TOTAL EXPENSES .................................................... 935,890
-----------
NET INVESTMENT LOSS ............................................... (421,933)
-----------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain/loss on:
Investments ....................................................... 9,858,510
Foreign exchange transactions ..................................... (53,333)
-----------
NET GAIN .......................................................... 9,805,177
-----------
Net change in unrealized appreciation/depreciation on:
Investments ....................................................... 11,219,852
Translation of forward foreign currency contracts, other assets and
liabilities denominated in foreign currencies ................... (54,970)
-----------
NET APPRECIATION .................................................. 11,164,882
-----------
NET GAIN .......................................................... 20,970,059
-----------
NET INCREASE ......................................................... $20,548,126
===========
</TABLE>

See Notes to Financial Statements

<PAGE>

Morgan Stanley Dean Witter International SmallCap Fund
Financial Statements, continued

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
NOVEMBER 30, 1999 MAY 31, 1999
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss .................................. $ (421,933) $ (462,452)
Net realized gain (loss) ............................. 9,805,177 (11,470)
Net change in unrealized appreciation ................ 11,164,882 (1,640,939)
------------ -----------
NET INCREASE (DECREASE) ........................... 20,548,126 (2,114,861)
------------ -----------
Net increase (decrease) from transactions in shares of
beneficial interest ................................ 6,118,121 (19,169,987)
------------ -----------
NET INCREASE (DECREASE) ........................... 26,666,247 (21,284,848)
NET ASSETS:
Beginning of period .................................. 49,920,674 71,205,522
------------ -----------
END OF PERIOD
Including accumulated net investment losses of
$738,568 and $316,635, respectively) .............. $ 76,586,921 $49,920,674
============ ===========
</TABLE>

See Notes to Financial Statements

<PAGE>

Morgan Stanley Dean Witter International SmallCap Fund
Notes to Financial Statements November 30, 1999 (unaudited)

1. ORGANIZATION AND ACCOUNTING POLICIES

Morgan Stanley 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 and 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 Morgan Stanley Dean Witter Advisors Inc. (the "Investment
Manager") or Morgan Stanley Dean Witter Investment Management Inc. (the
"Sub-Advisor"), an affiliate of 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

<PAGE>

Morgan Stanley Dean Witter International SmallCap Fund
Notes to Financial Statements November 30, 1999 (unaudited) continued

(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 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. 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.

E. FORWARD FOREIGN CURRENCY CONTRACTS - The Fund may enter into forward foreign
currency contracts which are valued daily at the appropriate exchange rates. The
resultant unrealized exchange gains and losses are included in the Statement of
Operations as unrealized foreign 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.

<PAGE>

Morgan Stanley Dean Witter International SmallCap Fund
Notes to Financial Statements November 30, 1999 (unaudited) continued

G. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - The Fund records dividends and
distributions to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations which may
differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income or distributions in excess of net
realized capital gains. To the extent they exceed net investment income and net
realized capital gains for tax purposes, they are reported as distributions of
paid-in-capital.

H. ORGANIZATIONAL EXPENSES - The Investment Manager paid the organizational
expenses of the Fund in the amount of approximately $172,000 and was reimbursed
for the full amount thereof. Such expenses were deferred and fully amortized as
of July 29, 1999.

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 1.15% 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-Advisor and the Investment
Manager, the Sub-Advisor 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-Advisor monthly compensation equal to 40% of its monthly compensation.

3. PLAN OF DISTRIBUTION

Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager and
Sub-Advisor. The Fund has adopted a Plan of Distribution (the

<PAGE>

Morgan Stanley Dean Witter International SmallCap Fund
Notes to Financial Statements November 30, 1999 (unaudited) continued

"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 and Class C shares, amounts paid under the Plan
are paid to the Distributor for (1) 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, Morgan Stanley Dean Witter Financial Advisors and others who
engage in or support distribution of the shares or who service shareholder
accounts, including overhead and telephone expenses; (2) printing and
distribution of prospectuses and reports used in connection with the offering of
these shares to other than current shareholders; and (3) 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 Dean Witter Reynolds Inc. ("DWR"), an affiliate of the
Investment Manager, Sub-Advisor and Distributor, 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 $8,482,256 at November 30, 1999.

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 Morgan Stanley Dean Witter Financial Advisors or other
selected

<PAGE>

Morgan Stanley Dean Witter International SmallCap Fund
Notes to Financial Statements November 30, 1999 (unaudited) continued

broker-dealer representatives may be reimbursed in the subsequent calendar year.
For the six months ended November 30, 1999, the distribution fee was accrued for
Class A shares and Class C shares at the annual rate of 0.25% and 1.00%,
respectively.

The Distributor has informed the Fund that for the six months ended November 30,
1999, it received contingent deferred sales charges from certain redemptions of
the Fund's Class A and Class B shares of $60 and $51,913, respectively and
received $3,497 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.

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, 1999 aggregated
$10,966,831 and $9,697,505, respectively.

Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager,
Sub-Advisor and Distributor, is the Fund's transfer agent. At November 30, 1999,
the Fund had transfer agent fees and expenses payable of approximately $300.

5. FEDERAL INCOME TAX STATUS

At May 31, 1999, the Fund had a net capital loss carryover of approximately
$21,281,000, which may be used to offset future capital gains to the extent
provided by regulations, which is available through May 31 of the following
years:

AMOUNT IN THOUSANDS
------------------------------------
2004 2005 2006
---- ---- ----
$6,371 $1,455 $13,455
====== ====== =======

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 $195,000 during fiscal 1999.

As of May 31, 1999, 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.

<PAGE>

Morgan Stanley Dean Witter International SmallCap Fund
Notes to Financial Statements November 30, 1999 (unaudited) continued

6. 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, 1999 MAY 31, 1999
---------------------------------- -----------------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
--------------- ---------------- --------------- -----------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold ...................................... 2,345,436 $ 25,240,757 817,915 $ 6,762,506
Redeemed .................................. (2,260,388) (24,560,020) (798,885) (6,671,991)
---------- ------------- -------- -------------
Net increase - Class A .................... 85,048 680,736 19,030 90,515
---------- ------------- -------- -------------
CLASS B SHARES
Sold ...................................... 7,549,815 82,134,836 1,186,270 10,200,450
Redeemed .................................. (7,031,138) (77,654,329) (3,614,395) (29,188,640)
---------- ------------- ---------- -------------
Net increase (decrease) - Class B ......... 518,677 4,480,507 (2,428,125) (18,988,190)
---------- ------------- ---------- -------------
CLASS C SHARES
Sold ...................................... 167,758 1,911,598 37,809 310,537
Redeemed .................................. (123,343) (1,421,776) (25,250) (216,451)
---------- ------------- ---------- -------------
Net increase - Class C .................... 44,415 489,822 12,559 94,086
---------- ------------- ---------- -------------
CLASS D SHARES
Sold ...................................... 469,637 5,567,921 161,889 1,219,122
Redeemed .................................. (432,535) (5,100,866) (198,378) (1,585,520)
---------- ------------- ---------- -------------
Net increase (decrease) - Class D ......... 37,102 467,055 (36,489) (366,398)
---------- ------------- ---------- -------------
Net increase (decrease) in Fund ........... 685,242 $ 6,118,121 (2,433,025) $ (19,169,987)
========== ============= ========== =============
</TABLE>

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.

Forward contracts 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 from the
potential inability of the counterparties to meet the terms of their contracts.

At November 30, 1999, there were outstanding forward contracts.

At November 30, 1999, the Fund's cash balance consisted principally of interest
bearing deposits with Chase Manhattan Bank N.A., the Fund's custodian.

<PAGE>

Morgan Stanley 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 PERIOD
FOR THE SIX FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED THROUGH
NOVEMBER 30, 1999 MAY 31, 1999 MAY 31, 1998
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(unaudited)
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $ 8.93 $8.85 $8.96
------ ----- -----
Income (loss) from investment operations:
Net investment loss ................................... (0.46) - -
Net realized and unrealized gain (loss) ............... 3.77 0.08 (0.11)
------ ----- -----
Total income (loss) from investment operations ......... 3.31 0.08 (0.11)
------ ----- -----
Net asset value, end of period ......................... $12.24 $8.93 $8.85
====== ===== =====
TOTAL RETURN+ ......................................... 37.37 %(1) 0.68 % (1.23)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 2.08 %(2)(3) 2.36 %(3) 2.52 %(2)
Net investment income (loss) ........................... (0.54)%(2)(3) (0.12)%(3) 0.03 %(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $1,713 $491 $318
Portfolio turnover rate ................................ 13 % 31 % 178 %
</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.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.

See Notes to Financial Statements

<PAGE>

Morgan Stanley Dean Witter International SmallCap Fund
Financial Highlights, continued

<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
NOVEMBER 30, 1999++
------------------------
<S> <C>
(unaudited)
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $ 8.82
------
Income (loss) from investment operations:
Net investment loss ................................... (0.02)
Net realized and unrealized gain (loss) ............... 3.26
------
Total income (loss) from investment operations ......... 3.24
------
Dividends from net investment income ................... -
------
Capital contribution ................................... -
------
Net asset value, end of period ......................... $12.06
======
TOTAL RETURN+ ......................................... 37.05 %(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 2.83 %(2)(4)
Net investment loss .................................... (1.29)%(2)(4)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $72,895
Portfolio turnover rate ................................ 13 %(1)

<CAPTION>
FOR THE YEAR ENDED MAY 31,
--------------------------------------------------------------------
1999++ 1998**++ 1997 1996
------------------ -------------- ------------------ ---------------
<S> <C> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $ 8.80 $ 8.92 $10.28 $ 8.54
------ ------ ------ ------
Income (loss) from investment operations:
Net investment loss ................................... (0.09) (0.11) (0.16) (0.08)
Net realized and unrealized gain (loss) ............... 0.11 (0.01) (0.88) 1.82
------ ------ ------ ------
Total income (loss) from investment operations ......... 0.02 (0.12) (1.04) 1.74
------ ------ ------ ------
Dividends from net investment income ................... - - (0.38) -
------ ------ ------ ------
Capital contribution ................................... - - 0.06 -
------ ------ ------ ------
Net asset value, end of period ......................... $ 8.82 $ 8.80 $ 8.92 $10.28
====== ====== ====== ======
TOTAL RETURN+ ......................................... 0.00 % (1.35)% (9.52)%(3) 20.37 %
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 3.12 %(4) 3.06 % 2.89 % 2.85 %
Net investment loss .................................... (0.88)%(4) (1.24)% (1.34)% (1.09)%
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $48,711 $69,960 $105,308 $145,254
Portfolio turnover rate ................................ 31 % 178 % 46 % 44 %

<CAPTION>
FOR THE PERIOD
JULY 29, 1994*
THROUGH
MAY 31, 1995
-------------------
<S> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $10.00
------
Income (loss) from investment operations:
Net investment loss ................................... (0.08)
Net realized and unrealized gain (loss) ............... (1.38)
------
Total income (loss) from investment operations ......... (1.46)
------
Dividends from net investment income ................... -
------
Capital contribution ................................... -
------
Net asset value, end of period ......................... $ 8.54
======
TOTAL RETURN+ ......................................... (14.60)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 2.90 %(2)
Net investment loss .................................... (1.12)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $93,729
Portfolio turnover rate ................................ 41 %(1)
</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 Morgan Grenfell Investment
Services Limited, the former sub-advisor, the effect of which was to
increase total return by 0.59%.
(4) Reflects overall Fund ratios for investment income and non-class specific
expenses.

See Notes to Financial Statements

<PAGE>

Morgan Stanley Dean Witter International SmallCap Fund
Financial Highlights, continued

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED THROUGH
NOVEMBER 30, 1999 MAY 31, 1999 MAY 31, 1998
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(unaudited)
CLASS C SHARES+
SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $ 8.83 $ 8.80 $ 8.96
------ ------ ------
Income (loss) from investment operations:
Net investment loss ................................... (1.66) (0.06) (0.09)
Net realized and unrealized gain (loss) ............... 4.91 0.09 (0.07)
------ ------ ------
Total income (loss) from investment operations ......... 3.25 0.03 (0.16)
------ ------ ------
Net asset value, end of period ......................... $12.08 $ 8.83 $ 8.80
====== ====== ======
TOTAL RETURN+ ......................................... 36.96 %(1) 0.23 % (1.79)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 2.83 %(2)(3) 2.90 %(3) 3.16 %(2)
Net investment loss .................................... (1.29)%(2)(3) (0.66)%(3) (1.37)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $795 $189 $77
Portfolio turnover rate ................................ 13 %(1) 31 % 178 %
</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.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.

See Notes to Financial Statements

<PAGE>

Morgan Stanley Dean Witter International SmallCap Fund
Financial Highlights, continued

<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED THROUGH
NOVEMBER 30, 1999 MAY 31, 1999 MAY 31, 1998
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(unaudited)
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period ................... $ 8.94 $8.87 $8.96
------ ----- -----
Income (loss) from investment operations:
Net investment income (loss) .......................... (0.01) 0.04 -
Net realized and unrealized gain (loss) ............... 3.35 0.03 (0.09)
------ ----- -----
Total income (loss) from investment operations ......... 3.34 0.07 (0.09)
------ ----- -----
Net asset value, end of period ......................... $12.28 $8.94 $8.87
====== ===== =====
TOTAL RETURN+ ......................................... 37.67 %(1) 0.56% (1.00)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses ............................................... 1.83 %(2)(3) 2.12%(3) 2.31 %(2)
Net investment income (loss) ........................... (0.29)%(2)(3) 0.12%(3) (0.02)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands ................ $1,184 $530 $850
Portfolio turnover rate ................................ 13 %(1) 31% 178 %
</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.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.

See Notes to Financial Statements

<PAGE>

(This page has been left blank intentionally.)

<PAGE>

TRUSTEES

Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
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

Mitchell M. Merin
President

Barry Fink
Vice President, Secretary and General Counsel

Thomas F. Caloia
Treasurer

TRANSFER AGENT

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

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036

INVESTMENT MANAGER

Morgan Stanley Dean Witter Advisors Inc.
Two World Trade Center
New York, New York 10048

SUB-ADVISOR
Morgan Stanley Dean Witter
Investment Management Inc.
1221 Avenue of the Americas
New York, New York 10020

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. Read the
prospectus carefully before investing.

MORGAN STANLEY
DEAN WITTER
INTERNATIONAL
SMALLCAP FUND

[GRAPHIC OMITTED]

SEMIANNUAL REPORT
NOVEMBER 30, 1999