<PAGE>
DEAN WITTER EUROPEAN GROWTH FUND INC. TWO WORLD TRADE CENTER, NEW YORK, NEW
YORK 10048
LETTER TO THE SHAREHOLDERS
DEAR SHAREHOLDER:
The global investment trends that had influenced the European equity markets
throughout 1994 continued to be felt right up to year-end 1994: the weakness of
the U.S. dollar, the weakness of bond markets worldwide and the rise in US
interest rates. The collapse in Mexico and corresponding collapse in other
emerging equity markets added another element of uncertainty to the European
equity markets.
However, despite the poor local currency performance of European equity markets,
the underlying economic and corporate data coming out of Europe has continued to
be on an improving trend. Inflation in Europe poses little threat, all economies
are recovering from the 1993 recession and corporate earnings are maintaining
their upward momentum.
Politics has featured prominently in Europe during early 1995 and has influenced
some markets significantly. On the positive side the French stock market has
begun the year strongly despite the closeness of the race for the Presidency.
Following two years of relative underperformance investors sense that a change
in economic policy, however modest, will likely re-stimulate interest in French
stocks. The possibility of a weaker French franc together with lower interest
rates will also help the market. By contrast, the shifting economic and
political scene in Italy -- the fall of Berlusconi, the collapse in the
currency, the budgetary problems -- gave rise to a very sharp sell off in
Italian stocks, concentrated in February, from which investor confidence has not
recovered. Spain was also buffeted by financial and security scandals
surrounding Prime Minister Gonzales's government, as well as rising inflation
and weak Government finances. As in France, the prospects of a change in
Government should ultimately be viewed positively but fresh elections are
unlikely before 1997.
The UK market saw strong performance reflecting the continuation of the economic
recovery at a stable, non-inflationary pace. Earnings and dividends provided
strong support to the market as did the rise in Wall Street. Companies are
generating substantial free cash flow and pick-up in merger and takeover
activity is in prospect, which should provide another prop for the market.
PERFORMANCE AND PORTFOLIO STRATEGY
During the six-month period ended April 30, 1995, Dean Witter European Growth
Fund posted a return of 4.66 percent, compared to a
<PAGE>
DEAN WITTER EUROPEAN GROWTH FUND INC.
LETTER TO THE SHAREHOLDERS, CONTINUED
return of 4.75 percent for the Morgan Stanley Capital International (MSCI)
Europe Index (the performance of the Index does not reflect the reinvestment of
dividends). During the six-month reporting period, the Fund paid out
distributions totaling $1.06 per share, including a short-term capital gain
distribution of $.84 per share and a long-term capital gain distribution of $.22
per share paid on December 30, 1994. On April 30, 1995, the Fund's net assets
totaled $760 million.
Given the relative strength of the European economies, the Fund was fully
invested during late 1994 and early 1995. The portfolio's orientation has
shifted from the strongly cyclical stand that prevailed in 1993 and 1994, to a
more balanced split between cyclicals, financials and defensive/interest rate
sensitive stocks. Country-wise, the United Kingdom remains the largest single
position, representing 36.5 percent of the portfolio at the end of the reporting
period. The Fund's holdings in France were increased during the period and now
represent 11.2 percent of the portfolio. Scandinavian holdings (Norway, Sweden,
Denmark and Finland), particularly those in Sweden, are being reduced from very
overweighted positions, and now represent 13.7 percent and 9.4 percent,
respectively. Italy and Spain are also not currently favored by the portfolio
manager. Country weightings of Holland and Switzerland are at neutral levels.
Key positions as of April 30, 1995 include Nokia (telecommunications equipment)
in Finland, LVMH (luxury goods) in France, Sap (software) in Germany, Wegener
(publishing) in Holland, Roche (pharmaceutical) in Switzerland, MoOch and Stora
(forest products) in Sweden, and Granada (media) and Glaxo (pharmaceutical) in
the United Kingdom.
LOOKING AHEAD
The Fund's portfolio manager believes the prospects for a European economic
recovery for the balance of 1995 are positive. In local currency terms, most
European continental markets have made little sustained progress since the bull
market of 1993. In the meantime, earnings have been progressing steadily and are
not expected to peak in the earnings cycle until 1997 in most industries.
Valuations in most countries are broadly in the mid point of their historic
ranges and offer modest support. All these factors should bode well for the
Fund's long-term growth prospects.
We appreciate your support of Dean Witter European Growth Fund and look forward
to continuing to serve your investment needs.
Very truly yours,
[SIGNATURE]
CHARLES A. FIUMEFREDDO
CHAIRMAN OF THE BOARD
<PAGE>
DEAN WITTER EUROPEAN GROWTH FUND INC.
PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS AND WARRANTS (95.3%)
AUSTRIA (2.1%)
BUILDING & CONSTRUCTION
60,000 VA Technologie AG.................. $ 6,622,557
---------------
OIL & GAS
45,000 OMV AG............................. 4,653,024
---------------
UTILITIES
75,000 Oester Elek (A Shares)............. 4,946,915
---------------
TOTAL AUSTRIA...................... 16,222,496
---------------
BELGIUM (0.9%)
RETAIL
26,100 Colruyt S.A........................ 6,771,399
---------------
DENMARK (0.9%)
BANKING
110,000 Den Danske Bank.................... 6,612,131
---------------
FINLAND (2.3%)
ELECTRONICS
202,000 Nokia AB (Series A)................ 8,244,898
226,000 Nokia AB (Series K)................ 9,171,475
---------------
TOTAL FINLAND...................... 17,416,373
---------------
FRANCE (11.2%)
BANKING
95,000 Societe Generale................... 10,430,009
---------------
BUILDING MATERIALS
70,300 Compagnie de Saint Gobain.......... 9,033,161
---------------
FINANCIAL SERVICES
117,335 Credit Local de France............. 9,990,830
---------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
80,450 LVMH Moet-Hennessy Louis Vuitton... 15,293,433
---------------
INSURANCE
172,209 Scor S.A........................... 3,851,375
---------------
MULTI - INDUSTRY
64,000 Compagnie Generale des Eaux........ 6,727,254
---------------
OIL RELATED
97,101 Societe National Elf Aquitaine..... 7,752,681
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
RETAIL
18,000 Carrefour Supermarche.............. $ 9,021,043
33,000 Castorama Dubois................... 5,461,421
---------------
14,482,464
---------------
TEXTILES
4,666 Christian Dior (Warrants due
06/30/98)*......................... 46,295
32,666 Christian Dior S.A................. 2,918,256
39,452 Hermes International............... 5,061,342
---------------
8,025,893
---------------
TOTAL FRANCE....................... 85,587,100
---------------
GERMANY (9.5%)
BANKING
14,205 Deutsche Pfandbrief &
Hypothekenbank AG.................. 7,225,487
---------------
BUILDING & CONSTRUCTION
1,147 BayWa AG........................... 250,751
---------------
BUSINESS SERVICES
18,470 Sap AG (Pref.)..................... 18,256,782
---------------
CHEMICALS
42,750 BASF AG............................ 9,500,000
---------------
CONGLOMERATES
7,700 Krones AG (Pref.).................. 3,666,667
---------------
COSMETICS
1,000 Wella AG (Pref.)................... 748,918
---------------
HEALTH & PERSONAL CARE
5,000 Rhoen-Klinikum AG.................. 4,509,380
2,883 Rhoen-Klinikum AG (Pref.).......... 2,111,288
---------------
6,620,668
---------------
PHARMACEUTICALS
11,740 Gehe AG............................ 5,048,369
8,140 Schering AG........................ 6,040,397
---------------
11,088,766
---------------
RETAIL
12,313 Hornbach Baumarkt Holdings......... 7,782,242
---------------
UTILITIES
19,000 Veba AG............................ 7,073,593
---------------
TOTAL GERMANY...................... 72,213,874
---------------
ITALY (2.2%)
ELECTRICAL EQUIPMENT
1,721,000 Ansaldo Trans...................... 4,297,360
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER EUROPEAN GROWTH FUND INC.
PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
RETAIL
102,400 Fila Holding SpA (ADR)............. $ 2,291,200
---------------
TELECOMMUNICATIONS
3,866,850 Telecom Italia SpA................. 10,337,009
---------------
TOTAL ITALY........................ 16,925,569
---------------
LUXEMBOURG (1.0%)
METALS & MINING
49,000 Arbed S.A.*........................ 7,324,301
---------------
NETHERLANDS (7.3%)
BUILDING & CONSTRUCTION
187,500 Hunter Douglas NV.................. 8,029,849
---------------
BUSINESS SERVICES
138,050 Randstad Holdings NV............... 8,268,064
---------------
INSURANCE
77,509 Aegon NV........................... 6,014,834
---------------
MACHINERY - DIVERSIFIED
170,000 Koninklijke Boskalis Westminster
NV................................. 2,320,969
---------------
MANUFACTURING
50,000 ASM Lithography Holding NV*........ 1,384,596
---------------
PUBLISHING
900,000 Elsevier NV........................ 9,853,168
95,000 Ver Ned Uitgev..................... 10,620,814
112,700 Wegener NV......................... 9,290,057
---------------
29,764,039
---------------
TOTAL NETHERLANDS.................. 55,782,351
---------------
NORWAY (1.1%)
BUILDING & CONSTRUCTION
91,900 Rieber & Son AS (Class A).......... 2,081,089
50,000 Rieber & Son AS (Class B).......... 1,043,925
---------------
3,125,014
---------------
BUSINESS SERVICES
200,000 Sysdeco Group AS................... 1,445,435
---------------
OIL RELATED
467,000 Smedvig Tankships.................. 3,300,088
---------------
TRANSPORTATION
35,000 Storli AS (B Shares)............... 657,673
---------------
TOTAL NORWAY....................... 8,528,210
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
SPAIN (4.4%)
BANKING
315,000 Banco Bilbao Vizcaya............... $ 8,468,978
---------------
BUILDING & CONSTRUCTION
45,500 Fomento de Construcciones y
Contratas S.A...................... 4,125,629
---------------
BUILDING MATERIALS
56,287 Energia e Indust Aragonesas........ 287,598
---------------
ENGINEERING & CONSTRUCTION
600,000 Uralita S.A.*...................... 6,472,019
---------------
OIL RELATED
83,750 Gas Natural........................ 8,252,737
---------------
TELECOMMUNICATIONS
475,000 Telefonica de Espana S.A........... 5,778,589
---------------
TOTAL SPAIN........................ 33,385,550
---------------
SWEDEN (9.4%)
AEROSPACE & DEFENSE
311,550 Securitas AB (Series B Free)....... 9,286,236
---------------
AUTOMOBILES
215,000 Volvo AB (Series B Free)........... 4,025,607
---------------
AUTOMOTIVE
80,000 Autoliv AB......................... 3,612,583
---------------
ELECTRICAL EQUIPMENT
120,000 Ericsson (L.M.) Telephone Co. AB
(Series B Free).................... 7,938,322
---------------
FOREST PRODUCTS, PAPER & PACKAGING
160,000 Mo Och Domsjoe AB (Series K)....... 8,921,319
105,000 Stora Kopparbergs (Series B
Free).............................. 7,025,539
---------------
15,946,858
---------------
INTERNATIONAL TRADE
241,700 Kinnevik AB (Series B Free)........ 8,352,268
---------------
METALS & MINING
132,600 SSAB Svenskt Stal AB (Series A
Free).............................. 5,850,940
---------------
PHARMACEUTICALS
226,830 Astra AB (Series A Free)........... 6,620,494
---------------
RETAIL
80,000 Hennes & Mauritz AB................ 5,396,847
---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER EUROPEAN GROWTH FUND INC.
PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
RETAIL STORES
300,000 Lindex AB*......................... $ 4,212,845
---------------
TOTAL SWEDEN....................... 71,243,000
---------------
SWITZERLAND (6.5%)
BUSINESS SERVICES
4,780 Societe Generale de Surveillance
Holdings S.A....................... 7,987,577
---------------
ELECTRICAL EQUIPMENT
2,350 Swisslog Holdings AG............... 606,518
---------------
HEALTH & PERSONAL CARE
2,505 Roche Holdings AG.................. 15,078,215
---------------
INDUSTRIALS
11,000 Hilti AG........................... 8,517,060
---------------
MULTI - INDUSTRY
9,800 BBC Brown Boveri AG................ 9,697,113
---------------
PHARMACEUTICALS
6,000 Sandoz AG.......................... 3,931,759
6,000 Sandoz AG (Series B)............... 3,963,255
---------------
7,895,014
---------------
TOTAL SWITZERLAND.................. 49,781,497
---------------
UNITED KINGDOM (36.5%)
AEROSPACE & DEFENSE
572,222 British Aerospace PLC.............. 4,913,459
22,888 British Aerospace PLC (Units)+..... 268,064
548,000 Smiths Industries PLC.............. 4,255,231
---------------
9,436,754
---------------
AUTOMOTIVE
1,910,000 BBA Group PLC...................... 6,369,411
---------------
BANKING
850,000 Abbey National PLC................. 6,353,784
925,000 TSB Group PLC...................... 3,695,634
---------------
10,049,418
---------------
BROADCAST MEDIA
1,373,000 British Sky Broadcasting Group
PLC*............................... 5,441,281
---------------
BUILDING & CONSTRUCTION
1,626,000 Blue Circle Industries PLC......... 7,517,925
1,205,200 Mowlem (John) & Co. PLC............ 1,417,351
1,366,200 Williams Holdings PLC.............. 7,263,129
---------------
16,198,405
---------------
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
BUSINESS SERVICES
648,000 Reuters Holdings PLC............... $ 4,906,462
---------------
CONGLOMERATES
1,505,857 BTR PLC............................ 7,908,550
---------------
CONSTRUCTION PLANT & EQUIPMENT
1,320,000 CRH PLC............................ 8,123,306
---------------
FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS
711,153 B.A.T. Industries PLC.............. 5,338,811
850,000 Dalgety PLC........................ 5,860,818
1,155,000 Grand Metropolitan PLC............. 7,424,213
1,042,100 Rothmans International PLC
(Units)+........................... 10,224,033
700,000 Tate & Lyle PLC.................... 4,849,110
---------------
33,696,985
---------------
FOREST PRODUCTS, PAPER & PACKAGING
145,000 De La Rue PLC...................... 2,090,675
---------------
HEALTH & PERSONAL CARE
1,274,325 Glaxo Wellcome PLC................. 15,027,503
554,750 Reckitt & Colman PLC............... 5,719,694
1,447,300 Smithkline Beecham (Units)+........ 11,028,469
---------------
31,775,666
---------------
INSURANCE
460,000 Britannic Assurance PLC............ 3,764,585
961,884 Commercial Union PLC............... 8,600,253
791,000 Lloyds Abbey Life.................. 4,714,914
1,209,800 Prudential Corp. PLC............... 6,100,332
1,121,666 Royal Insurance Holdings PLC....... 5,439,082
---------------
28,619,166
---------------
LEISURE
1,160,000 Granada Group PLC.................. 10,595,869
---------------
OIL RELATED
2,680,000 British Petroleum Co. PLC.......... 19,299,136
1,917,000 Lasmo PLC.......................... 5,126,556
---------------
24,425,692
---------------
PUBLISHING
325,000 Daily Mail & General Trust......... 5,811,683
425,000 Pearson PLC........................ 3,902,648
---------------
9,714,331
---------------
REAL ESTATE
1,000,000 Hammerson PLC...................... 5,155,200
---------------
RETAIL STORES
668,000 Great Universal Stores PLC......... 6,327,750
985,000 Kingfisher PLC..................... 7,077,284
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER EUROPEAN GROWTH FUND INC.
PORTFOLIO OF INVESTMENTS APRIL 30, 1995 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- -----------------------------------------------------------------
<C> <S> <C>
2,211,000 Morrison (W.M.) Supermarkets PLC... $ 5,129,166
1,230,000 Next PLC........................... 6,261,635
---------------
24,795,835
---------------
TELECOMMUNICATIONS
2,260,000 British Telecommunications PLC..... 14,090,128
885,000 Cable & Wireless PLC............... 5,674,425
---------------
19,764,553
---------------
TRANSPORTATION
1,129,300 British Airways PLC................ 7,259,016
---------------
UTILITIES
700,000 Anglican Water PLC................. 5,615,946
985,000 Scottish Power PLC................. 5,331,766
---------------
10,947,712
---------------
TOTAL UNITED KINGDOM............... 277,274,287
---------------
TOTAL COMMON AND PREFERRED STOCKS
AND WARRANTS
(IDENTIFIED COST $621,455,461)..... 725,068,138
---------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- -----------------------------------------------------------------
<C> <S> <C>
SHORT TERM INVESTMENT (a) (3.1%)
U.S. GOVERNMENT AGENCY
$ 23,400 Federal Home Loan Mortgage Corp.
5.85% due 05/01/95 (Amortized Cost
$23,400,000)....................... 23,400,000
---------------
<C>
TOTAL INVESTMENTS
(IDENTIFIED COST
$644,855,461) (B)........... 98.4% 748,468,138
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES....... 1.6 11,833,184
----- ---------------
NET ASSETS.................. 100.0% $ 760,301,322
----- ---------------
----- ---------------
<FN>
- ---------------------
ADR American Depository Receipt.
* Non-income producing security.
+ Consists of more than one class of securities traded together as a unit;
generally stocks with attached stocks/warrants.
(a) U.S. Government agency was purchased on a discount basis. The interest
rate shown has been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes is $645,108,761; the
aggregate gross unrealized appreciation is $122,565,918 and the aggregate
gross unrealized depreciation is $19,206,541, resulting in net unrealized
appreciation of $103,359,377.
</TABLE>
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT APRIL 30, 1995:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO IN EXCHANGE DELIVERY APPRECIATION/
RECEIVE FOR DATE (DEPRECIATION)
- ------------------------------------------------------
<S> <C> <C> <C>
US$ 3,029,823 ATS 29,551,379 05/02/95 $ 1,554
DEM 973,160 US$ 705,700 05/03/95 (3,564)
US$ 571,483 L 353,706 05/04/95 (1,662)
-------
Net unrealized depreciation...... $(3,672)
-------
-------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER EUROPEAN GROWTH FUND INC.
SUMMARY OF INVESTMENTS APRIL 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aerospace & Defense................................................................. $ 18,722,990 2.5%
Automobiles......................................................................... 4,025,607 0.5
Automotive.......................................................................... 9,981,994 1.3
Banking............................................................................. 42,786,023 5.6
Broadcast Media..................................................................... 5,441,281 0.7
Building & Construction............................................................. 38,352,205 5.0
Building Materials.................................................................. 9,320,759 1.2
Business Services................................................................... 40,864,320 5.4
Chemicals........................................................................... 9,500,000 1.2
Conglomerates....................................................................... 11,575,217 1.5
Construction Plant & Equipment...................................................... 8,123,306 1.1
Cosmetics........................................................................... 748,918 0.1
Electrical Equipment................................................................ 12,842,200 1.7
Electronics......................................................................... 17,416,373 2.3
Engineering & Construction.......................................................... 6,472,019 0.9
Financial Services.................................................................. 9,990,830 1.3
Food, Beverage, Tobacco & Household Products........................................ 48,990,418 6.4
Forest Products, Paper & Packaging.................................................. 18,037,533 2.4
Health & Personal Care.............................................................. 57,406,308 7.6
Industrials......................................................................... 8,517,060 1.1
Insurance........................................................................... 38,485,375 5.1
International Trade................................................................. 8,352,268 1.1
Leisure............................................................................. 10,595,869 1.4
Machinery - Diversified............................................................. 2,320,969 0.3
Manufacturing....................................................................... 1,384,596 0.2
Metals & Mining..................................................................... 13,175,241 1.7
Multi - Industry.................................................................... 16,424,367 2.2
Oil & Gas........................................................................... 4,653,024 0.6
Oil Related......................................................................... 43,731,198 5.7
Pharmaceuticals..................................................................... 21,672,515 2.9
Publishing.......................................................................... 39,478,370 5.2
Real Estate......................................................................... 5,155,200 0.7
Retail.............................................................................. 36,724,152 4.8
Retail Stores....................................................................... 29,008,680 3.8
Telecommunications.................................................................. 35,880,151 4.7
Textiles............................................................................ 8,025,893 1.1
Transportation...................................................................... 7,916,689 1.0
U.S. Government Agency.............................................................. 23,400,000 3.1
Utilities........................................................................... 22,968,220 3.0
------------------ ---
$ 748,468,138 98.4%
------------------ ---
------------------ ---
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks....................................................................... $ 703,904,855 92.5%
Preferred Stocks.................................................................... 21,116,988 2.8
U.S. Government Agency.............................................................. 23,400,000 3.1
Warrants............................................................................ 46,295 0.0
------------------ ---
$ 748,468,138 98.4%
------------------ ---
------------------ ---
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $644,855,461)............................ $748,468,138
Cash (including $3,296,728 in foreign currency)............. 3,545,476
Unrealized appreciation on forward foreign currency
contracts................................................. 1,554
Receivable for:
Investments sold........................................ 6,449,467
Dividends............................................... 3,612,110
Foreign withholding taxes reclaimed..................... 1,268,257
Capital stock sold...................................... 1,227,799
Deferred organizational expenses............................ 2,547
Prepaid expenses and other assets........................... 250,896
------------
TOTAL ASSETS........................................... 764,826,244
------------
LIABILITIES:
Unrealized depreciation on forward foreign currency
contracts................................................. 5,226
Payable for:
Investments purchased................................... 1,420,380
Capital stock repurchased............................... 1,384,167
Investment management fees.............................. 601,799
Plan of distribution fee................................ 592,674
Accrued expenses............................................ 520,676
------------
TOTAL LIABILITIES...................................... 4,524,922
------------
NET ASSETS:
Paid-in-capital............................................. 644,605,009
Net unrealized appreciation................................. 103,734,412
Accumulated net investment loss............................. (758,479)
Accumulated undistributed net realized gain................. 12,720,380
------------
NET ASSETS............................................. $760,301,322
------------
------------
NET ASSET VALUE PER SHARE,
58,715,010 SHARES OUTSTANDING (200,000,000 SHARES
AUTHORIZED OF $.01 PAR VALUE).............................
$12.95
------------
------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1995 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
INCOME
Dividends (net of $1,258,711 foreign withholding tax)....... $ 7,387,000
Interest.................................................... 348,069
-----------
TOTAL INCOME........................................... 7,735,069
-----------
EXPENSES
Plan of distribution fee.................................... 3,582,307
Investment management fees.................................. 3,565,156
Transfer agent fees and expenses............................ 556,499
Custodian fees.............................................. 354,696
Shareholder reports and notices............................. 38,499
Professional fees........................................... 36,364
Registration fees........................................... 19,483
Directors' fees and expenses................................ 15,066
Organizational expenses..................................... 14,869
Other....................................................... 8,444
-----------
TOTAL EXPENSES......................................... 8,191,383
-----------
NET INVESTMENT LOSS.................................... (456,314)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain on:
Investments............................................. 11,616,473
Foreign exchange transactions........................... 730,930
-----------
TOTAL.................................................. 12,347,403
-----------
Net change in unrealized appreciation/ depreciation on:
Investments............................................. 20,952,147
Translation of forward foreign exchange contracts, other
assets and liabilities denominated in foreign
currencies............................................ (14,530)
-----------
TOTAL.................................................. 20,937,617
-----------
NET GAIN............................................... 33,285,020
-----------
NET INCREASE................................................ $32,828,706
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED FOR THE YEAR
APRIL 30, 1995 ENDED
(UNAUDITED) OCTOBER 31, 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income (loss)................................ $ (456,314) $ 1,305,840
Net realized gain........................................... 12,347,403 61,479,985
Net change in unrealized appreciation....................... 20,937,617 27,138,310
------------------ ----------------
NET INCREASE........................................... 32,828,706 89,924,135
------------------ ----------------
Distributions to shareholders from net realized gain........ (59,733,527) (9,695,849)
Net increase from capital stock transactions................ 28,704,318 219,072,953
------------------ ----------------
TOTAL INCREASE......................................... 1,799,497 299,301,239
NET ASSETS:
Beginning of period......................................... 758,501,825 459,200,586
------------------ ----------------
END OF PERIOD
(INCLUDING ACCUMULATED NET INVESTMENT LOSS OF $758,479
AND $302,165, RESPECTIVELY)............................. $760,301,322 $758,501,825
------------------ ----------------
------------------ ----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED)
1. ORGANIZATION AND ACCOUNTING POLICIES
Dean Witter European Growth Fund Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as a diversified,
open-end management investment company. The Fund was incorporated in Maryland on
February 13, 1990 and commenced operations on May 31, 1990.
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 Stock Exchange or other domestic or foreign stock exchanges
is valued at its latest sale price on that exchange prior to the time when
assets are valued; if there were no sales that day, the security is valued at
the latest bid price (in cases where securities are traded on more than one
exchange; the securities are valued on the exchange designated as the primary
market by the Directors); (2) listed options are valued at the latest sale price
on the exchange on which they are listed unless no sales of such options have
taken place that day, in which case they will be valued at the mean between
their latest bid and asked price; (3) all other portfolio securities for which
over-the-counter market quotations are readily available are valued at the
latest available bid price prior to the time of valuation; (4) when market
quotations are not readily available, including circumstances under which it is
determined by the Investment Manager that sale and bid prices are not reflective
of a security's market value, portfolio securities are valued at their fair
value as determined in good faith under procedures established by and under the
general supervision of the Directors (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. Interest income is accrued
daily and includes amortization of discounts of certain short-term securities.
C. OPTION ACCOUNTING PRINCIPLES -- When the Fund writes a call option, an amount
equal to the premium received is included in the Fund's Statement of Assets and
Liabilities as a liability which is
<PAGE>
DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) CONTINUED
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 and is subsequently marked-to-market to reflect the current market
value. If a purchased option expires, the Fund will realize a loss to the extent
of the premium paid. If the Fund enters into a closing sale transaction, a gain
or loss is realized for the difference between the proceeds from the sale and
the cost of the option. If a put option is exercised, the cost of the security
or currency sold upon exercise will be increased by the premium originally paid.
If a call option is exercised, the cost of the security purchased upon exercise
will be increased by the premium originally paid.
D. FOREIGN CURRENCY TRANSLATION -- The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities, other assets and liabilities and forward contracts are
translated at the exchange rates prevailing at the end of the period; and (2)
purchases, sales, income and expenses are translated at the exchange rates
prevailing on the respective dates of such transactions. The resultant exchange
gains and losses are included in the Statement of Operations. 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 gain/loss on foreign exchange transactions. 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>
DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (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 -- Dean Witter InterCapital Inc. (the "Investment
Manager") paid the organizational expenses of the Fund in the amounts of
approximately $150,000. Such expenses have been deferred and are being amortized
by the Fund 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 its Investment
Manager a management fee, accrued daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined as of the close
of each business day: 1.0% to the portion of net assets not exceeding $500
million and 0.95% to the portion of net assets exceeding $500 million.
Under the terms of the Agreement, in addition to managing the Fund's
investments, the Investment Manager maintains certain of the Fund's books and
records and furnishes, at its own expense, office space, facilities, equipment,
clerical, bookkeeping and certain legal services and pays the salaries of all
personnel, including officers of the Fund who are employees of the Investment
Manager. The Investment Manager also bears the cost of telephone services, heat,
light, power and other utilities provided to the Fund.
Under a Sub-Advisory Agreement between Morgan Grenfell Investment Services
Limited (the "Sub-Advisor") and the Investment Manager, the Sub-Advisor provides
the Fund with investment advice 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 compensation equal to 40%
of its monthly compensation.
<PAGE>
DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) CONTINUED
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Dean Witter Distributors Inc. (the
"Distributor"), an affiliate of the Investment Manager. The Fund has adopted a
Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the Act pursuant
to which the Fund pays the Distributor compensation accrued daily and payable
monthly at an annual rate of 1.0% of the lesser of: (a) the average daily
aggregate gross sales of the Fund's shares since the Fund's inception (not
including reinvestment of dividend or capital gain distributions) less the
average daily aggregate net asset value of the Fund's shares redeemed since the
Fund's inception upon which a contingent deferred sales charge has been imposed
or upon which such charge has been waived; or (b) the Fund's average daily net
assets. Amounts paid under the Plan are paid to the Distributor to compensate it
for the services provided and the expenses borne by it and others in the
distribution of the Fund's shares, including the payment of commissions for
sales of the Fund's shares and incentive compensation to, and expenses of, the
account executives of Dean Witter Reynolds Inc. ("DWR"), an affiliate of the
Investment Manager and Distributor, and other employees or selected dealers who
engage in or support distribution of the Fund's shares or who service
shareholder accounts, including overhead and telephone expenses, printing and
distribution of prospectuses and reports used in connection with the offering of
the Fund's shares to other than current shareholders and preparation and
printing and distribution of sales literature and advertising materials. In
addition, the Distributor may be compensated under the Plan for its opportunity
costs in advancing such amounts, which compensation would be in the form of a
carrying charge on any unreimbursed expenses incurred by the Distributor.
Provided that the Plan continues in effect, any cumulative expenses incurred but
not yet recovered, may be recovered through future distribution fees from the
Fund and contingent deferred sales charges from the Fund's shareholders.
The Distributor has informed the Fund that for the six months ended April 30,
1995, it received approximately $1,024,000 in contingent deferred sales charges
from certain redemptions of the Fund's shares. The Fund's shareholders pay such
charges which are not an expense of the Fund.
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 April 30, 1995 aggregated
$178,303,356 and $228,273,841, respectively.
Dean Witter Trust Company, an affiliate of the Investment Manager and
Distributor, is the Fund's transfer agent. At April 30, 1995, the Fund had
transfer agent fees and expenses payable of approximately $94,000.
<PAGE>
DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1995 (UNAUDITED) CONTINUED
The Fund established an unfunded noncontributory defined benefit pension plan
covering all independent Directors of the Fund who will have served as
independent Directors/Trustees for at least five years at the time of
retirement. Benefits under this plan are based on years of service and
compensation during the last five years of service. Aggregate pension costs for
the six months ended April 30, 1995, included in Directors' fees and expenses in
the Statement of Operations amounted to $49,656. At April 30, 1995, the Fund had
an accrued pension liability of $4,384 which is included in accrued expenses in
the Statement of Assets and Liabilities.
5. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED FOR THE YEAR ENDED
APRIL 30, 1995 OCTOBER 31, 1994
---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Sold............................................................. 7,104,064 $ 88,775,860 29,930,054 $375,870,856
Reinvestment of distributions.................................... 4,794,424 56,142,712 746,489 9,137,027
----------- -------------- ----------- ------------
11,898,488 144,918,572 30,676,543 385,007,883
Repurchased...................................................... (9,408,135) (116,214,254) (13,166,728) (165,934,930)
----------- -------------- ----------- ------------
Net increase..................................................... 2,490,353 $ 28,704,318 17,509,815 $219,072,953
----------- -------------- ----------- ------------
----------- -------------- ----------- ------------
</TABLE>
6. FEDERAL INCOME TAX STATUS
As of October 31, 1994, the Fund had temporary book/tax differences primarily
attributable to the mark-to-market of passive foreign investment companies
("PFIC") and permanent book/tax differences primarily attributable to foreign
currency gains, dividend redesignations and net operating losses and tax
adjustments on PFICs sold by the Fund.
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.
At April 30, 1995, there were no outstanding forward contracts other than those
used to facilitate settlement of foreign currency denominated portfolio
transactions.
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.
<PAGE>
DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL HIGHLIGHTS
Selected ratios and per share data for a share of capital stock outstanding
throughout each period:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR ENDED FOR THE PERIOD
APRIL 30, OCTOBER 31 MAY 31, 1990*
1995 ------------------------------------------------- THROUGH
(UNAUDITED) 1994 1993 1992 1991 OCTOBER 31, 1990
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE:
Net asset value,
beginning of period............... $ 13.49 $ 11.86 $ 8.57 $ 9.22 $ 9.23 $ 10.00
------ ---------- ----------- ----------- ----------- ------
Net investment income (loss)....... (0.01) 0.02 (0.01) 0.01 0.05 0.05
Net realized and unrealized gain
(loss)............................ 0.53 1.84 3.30 (0.23) 0.07 (0.82)
------ ---------- ----------- ----------- ----------- ------
Total from investment operations... 0.52 1.86 3.29 (0.22) 0.12 (0.77)
------ ---------- ----------- ----------- ----------- ------
Less dividends and distributions
from:
Net investment income........... -- -- -- (0.03) (0.07) --
Net realized gain............... (1.06) (0.23) -- (0.40) (0.06) --
------ ---------- ----------- ----------- ----------- ------
Total dividends and
distributions..................... (1.06) (0.23) -- (0.43) (0.13) --
------ ---------- ----------- ----------- ----------- ------
Net asset value, end of period..... $ 12.95 $ 13.49 $ 11.86 $ 8.57 $ 9.22 $ 9.23
------ ---------- ----------- ----------- ----------- ------
------ ---------- ----------- ----------- ----------- ------
TOTAL INVESTMENT RETURN+........... 4.66% (1) 15.61% 38.74% (2.39)% 1.33% (7.70)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses........................... 2.26% (2) 2.27% 2.38% 2.40% 2.44% 2.45% (2)
Net investment income (loss)....... (0.13)%(2) 0.21% (0.09)% 0.11% 0.51% 1.52% (2)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands......................... $760,301 $758,502 $459,201 $296,548 $315,944 $303,872
Portfolio turnover rate............ 25% (1) 72% 120% 116% 111% 36% (1)
<FN>
- ---------------------
* Commencement of operations.
+ Does not reflect the deduction of sales charge.
(1) Not annualized.
(2) Annualized.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
BOARD OF DIRECTORS
Jack F. Bennett
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
John R. Haire
Dr. Manuel H. Johnson
Paul Kolton
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Sheldon Curtis
Vice President, Secretary and General Counsel
Thomas H. Connelly
Vice President
Thomas F. Caloia
Treasurer
TRANSFER AGENT
Dean Witter Trust Company
Harborside Financial Center - Plaza Two
Jersey City, New Jersey 07311
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
INVESTMENT MANAGER
Dean Witter InterCapital Inc.
Two World Trade Center
New York, New York 10048
SUB-ADVISOR
Morgan Grenfell Investment Services Limited
The financial statements included herein have been taken from the records of the
Fund without examination by the independent accountants and accordingly they do
not express an opinion thereon.
This report is submitted for the general information of shareholders of the
Fund. For more detailed information about the Fund, its officers and trustees,
fees, expenses and other pertinent information, please see the prospectus of the
Fund.
This report is not authorized for distribution to prospectus investors in the
Fund unless preceded or accompanied by an effective prospectus.
DEAN WITTER EUROPEAN GROWTH FUND
[Graphic]
SEMIANNUAL REPORT
APRIL 30, 1995
