<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND TWO WORLD TRADE CENTER,
INC. NEW YORK, NEW YORK 10048
LETTER TO THE SHAREHOLDERS APRIL 30, 1999
DEAR SHAREHOLDER:
The six-month period ended April 30, 1999, saw the European equity markets stage
an impressive recovery from sharp falls occasioned by the Asian and
emerging-markets crises of mid-1998. The key economic event of the period was
the successful launch of the European Monetary Union (EMU) on January 1, 1999.
The 11 first-wave members -- Germany, France, Italy, Spain, the Netherlands,
Belgium, Austria, Luxembourg, Portugal, Ireland and Finland -- successfully
transferred control of their monetary policy to the European Central Bank (ECB)
on that date.
During the period under review, Europe's economies experienced negative effects
stemming from economic crises in Asia, Latin America and Russia. Economic
developments within Europe itself, however, were generally positive and
improving. Inflation remains low and stable; interest rates have been cut by the
ECB in the eurozone and by the Bank of England in the United Kingdom; consumer
confidence in most economies has been improving and the weakness of the euro
relative to the dollar has been helping export-oriented companies.
Against this background, the region's equity markets have staged a sound
recovery thus far in 1999. First-quarter corporate earnings reports were broadly
in line with expectations. Takeover and merger activity has been strong, with
unprecedented developments in a number of key industries (e.g., the unsolicited
bid in the French banking sector by BNP for Societe Generale and Paribas and the
contested-takeover approach by Olivetti for Telecom Italia). Fund flow remains
strong, with a continuing trend for both individual and corporate investors in
Europe to move assets out of bonds and into equities.
PERFORMANCE
For the six-month period ended April 30, 1999, Morgan Stanley Dean Witter
European Growth Fund's Class B shares produced a total return of 13.34 percent
versus 12.74 percent for the Lipper European Region
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
LETTER TO THE SHAREHOLDERS APRIL 30, 1999, CONTINUED
Funds Index and 19.78 percent for the Morgan Stanley Capital International
(MSCI) World Index. During the same period, the Fund's Class A, C and D shares
posted total returns of 13.76 percent, 13.37 percent and 13.88 percent,
respectively. The performance of the Fund's four share classes varies because
each class has different expenses.
The Fund's significant exposure to growth sectors, such as European telecom
operators, telecom equipment suppliers, high-quality financials and technology
stocks, enabled the Fund to outperform its benchmarks. European markets also
witnessed exceptional sector rotation during the period as economically
sensitive cyclical sectors such as steel, chemicals and pulp and paper performed
well. But, because these sectors were underrepresented in the portfolio, the
Fund did not benefit from their strong performance.
PORTFOLIO
The Fund continues to focus on mid- to large-capitalization blue-chip growth
stocks, emphasizing such defensive and high-quality sectors of the market as
telecommunications, pharmaceuticals, technology, media and selected financials.
Individual stock selection takes priority in the Fund's investment strategy, so
country weightings derive from stock decisions. The Fund's regional weightings
at the end of the period under review were as follows: 41.3 percent in the
eurozone (the 11 countries that have adopted the euro as a common currency),
37.8 percent in the United Kingdom, 9.3 percent in Switzerland and 8.6 percent
in Sweden. The remaining 3.0 percent of assets were invested in cash and other
assets.
Toward the end of the period profits were taken in some key positions that had
performed well, notably Nokia, Telecom Italia, Mannesmann and SmithKline
Beecham. The proceeds were invested in a wide range of quality growth stocks
including, Banco Popular, Philips Electronics and Accor. This did not cause any
major sector reweightings, though the portfolio's overall exposure to telecoms
and health care was reduced.
LOOKING AHEAD
Morgan Stanley Dean Witter Investment Management Inc., the Fund's sub-advisor,
believes that the overall outlook for the European equity markets remains
positive. Economic growth in the key economies of Germany, France and the UK
should accelerate in the second half of 1999 and throughout 2000. The
sub-advisor anticipates that earnings growth will average 9 to 10 percent
2
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
LETTER TO THE SHAREHOLDERS APRIL 30, 1999, CONTINUED
across the region in 1999 and probably rise again in 2000. In addition, the
sub-advisor expects GDP growth in 2000 to exceed 2.5 percent in most European
countries. The high level of merger and acquisition activity should continue to
buoy the markets as well.
On May 1, 1999, Mitchell M. Merin was named President of the Morgan Stanley Dean
Witter Funds. Mr. Merin is also the President and Chief Operating Officer of
Asset Management of Morgan Stanley Dean Witter & Co. and President, Chief
Executive Officer and Director of Morgan Stanley Dean Witter Advisors Inc., the
Fund's Investment Manager. He also serves as Chairman, Chief Executive Officer
and Director of the Fund's distributor and transfer agent.
We appreciate your ongoing support of Morgan Stanley Dean Witter European Growth
Fund and look forward to continuing to serve your investment needs in the
future.
Very truly yours,
<TABLE>
<S> <C>
[SIGNATURE] [SIGNATURE]
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
CHAIRMAN OF THE BOARD PRESIDENT
</TABLE>
3
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
PORTFOLIO OF INVESTMENTS APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS AND RIGHTS (99.7%)
FINLAND (1.8%)
TELECOMMUNICATIONS EQUIPMENT
519,000 Nokia Oyj (A Shares)............................................................... $ 40,056,991
--------------
FRANCE (14.7%)
BROADCASTING
118,657 Societe Television Francaise 1..................................................... 23,224,735
--------------
BUILDING MATERIALS/DIY CHAINS
22,230 Castorama Dubois Investissement.................................................... 5,327,130
--------------
ELECTRICAL PRODUCTS
429,608 Alcatel............................................................................ 52,815,836
--------------
FINANCE COMPANIES
102,500 Compagnie Financiere de Paribas.................................................... 10,909,567
--------------
FOOD CHAINS
54,451 Carrefour S.A...................................................................... 43,206,868
--------------
HOTELS/RESORTS
160,550 Accor S.A.......................................................................... 42,380,544
--------------
INTEGRATED OIL COMPANIES
304,595 Elf Aquitaine S.A.................................................................. 47,372,442
--------------
INTERNATIONAL BANKS
525,471 Banque Nationale de Paris.......................................................... 43,614,146
--------------
MOTOR VEHICLES
625,900 Renault S.A........................................................................ 26,249,695
--------------
MULTI-LINE INSURANCE
235,900 Axa................................................................................ 30,498,945
--------------
OTHER PHARMACEUTICALS
75,561 Sanofi S.A......................................................................... 11,855,627
--------------
TOTAL FRANCE....................................................................... 337,455,535
--------------
GERMANY (9.0%)
APPAREL
10,185 Hugo Boss AG (Pref.)............................................................... 14,493,357
--------------
COMPUTERS SOFTWARE
68,520 SAP AG............................................................................. 21,965,731
--------------
DIVERSIFIED MANUFACTURING
280,242 Mannesmann AG...................................................................... 36,943,406
--------------
<CAPTION>
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INTERNATIONAL BANKS
163,935 Bayerische Vereinsbank AG.......................................................... $ 10,701,447
277,000 Deutsche Bank AG................................................................... 16,118,630
--------------
26,820,077
--------------
MAJOR CHEMICALS
767,444 Hoechst AG......................................................................... 36,416,215
--------------
MOTOR VEHICLES
471,390 Volkswagen AG...................................................................... 33,464,825
--------------
MULTI-LINE INSURANCE
69,444 Allianz AG (Reg)................................................................... 22,151,733
--------------
SHOE MANUFACTURING
135,000 Adidas-Salomon AG.................................................................. 13,311,756
--------------
TOTAL GERMANY...................................................................... 205,567,100
--------------
ITALY (5.2%)
BROADCASTING
2,740,056 Mediaset SpA....................................................................... 23,771,630
--------------
INTERNATIONAL BANKS
9,278,116 Banca di Roma*..................................................................... 15,313,345
6,195,300 Unicredito Italiano SpA............................................................ 31,462,211
--------------
46,775,556
--------------
PRINTING/FORMS
11,226,300 Seat Pagine Gialle SpA............................................................. 14,015,362
--------------
TELECOMMUNICATIONS
3,300,433 Telecom Italia SpA................................................................. 35,163,011
--------------
TOTAL ITALY........................................................................ 119,725,559
--------------
NETHERLANDS (7.3%)
BOOKS/MAGAZINES
891,730 Ver Ned Uitgev Ver Bezit NV........................................................ 36,134,148
--------------
DIVERSIFIED ELECTRONIC PRODUCTS
720,333 Koninklijke (Royal) Philips Electronics NV......................................... 62,112,154
--------------
DIVERSIFIED FINANCIAL SERVICES
425,705 ING Groep NV....................................................................... 26,258,080
--------------
E.D.P. SERVICES
430,000 Getronics NV....................................................................... 17,674,419
--------------
FOOD CHAINS
702,725 Koninklijke Ahold NV............................................................... 26,133,429
--------------
TOTAL NETHERLANDS.................................................................. 168,312,230
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
PORTFOLIO OF INVESTMENTS APRIL 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SPAIN (4.5%)
INTERNATIONAL BANKS
1,256,809 Banco Bilbao Vizcaya, S.A.......................................................... $ 18,828,608
521,496 Banco Popular Espanol S.A.......................................................... 36,966,765
--------------
55,795,373
--------------
TELECOMMUNICATIONS
991,008 Telefonica S.A.*................................................................... 46,500,375
991,008 Telefonica S.A. (Bonus Rights)*.................................................... 922,668
--------------
47,423,043
--------------
TOTAL SPAIN........................................................................ 103,218,416
--------------
SWEDEN (8.9%)
CLOTHING/SHOE/ACCESSORY STORES
105,285 Hennes & Mauritz AB (B Shares)..................................................... 9,092,790
--------------
DIVERSIFIED COMMERCIAL SERVICES
2,852,500 Securitas AB (Series "B" Free)..................................................... 42,357,655
--------------
INDUSTRIAL MACHINERY/COMPONENTS
495,000 Assa Abloy AB (Series B)........................................................... 21,639,601
--------------
INTERNATIONAL BANKS
3,598,500 Nordbanken Holding AB.............................................................. 22,656,541
--------------
LIFE INSURANCE
1,588,060 Skandia Forsakrings AB............................................................. 30,750,399
--------------
MAJOR PHARMACEUTICALS
859,188 AstraZeneca PLC.................................................................... 33,580,001
--------------
TELECOMMUNICATIONS EQUIPMENT
1,659,100 Ericsson (L.M.) Telephone Co. AB (Series "B" Free)................................. 43,655,858
--------------
TOTAL SWEDEN....................................................................... 203,732,845
--------------
SWITZERLAND (9.6%)
INTERNATIONAL BANKS
111,040 UBS AG............................................................................. 37,722,141
--------------
MAJOR PHARMACEUTICALS
20,681 Novartis AG........................................................................ 30,286,380
4,583 Roche Holdings AG.................................................................. 53,921,183
--------------
84,207,563
--------------
<CAPTION>
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
OTHER TELECOMMUNICATIONS
59,480 Swisscom AG*....................................................................... $ 21,844,701
--------------
PACKAGED FOODS
25,682 Nestle S.A......................................................................... 47,547,407
--------------
TOBACCO
17,010 Compagnie Financiere Richemont AG (Series A)....................................... 28,937,526
--------------
TOTAL SWITZERLAND.................................................................. 220,259,338
--------------
UNITED KINGDOM (38.7%)
AEROSPACE
2,893,128 British Aerospace PLC.............................................................. 21,639,223
1,563,760 Smiths Industries PLC.............................................................. 24,222,416
--------------
45,861,639
--------------
ALCOHOLIC BEVERAGES
2,942,100 Allied Domecq PLC.................................................................. 22,999,308
1,995,128 Diageo PLC......................................................................... 23,025,747
--------------
46,025,055
--------------
AUTO PARTS: O.E.M.
3,668,010 BBA Group PLC...................................................................... 29,322,971
--------------
BOOKS/MAGAZINES
1,265,808 EMAP PLC........................................................................... 26,855,528
2,354,600 Reed International PLC............................................................. 21,417,601
--------------
48,273,129
--------------
BROADCASTING
2,671,518 Granada Group PLC.................................................................. 57,065,976
--------------
CABLE TELEVISION
2,609,057 TeleWest Communications PLC*....................................................... 12,044,438
--------------
CATALOG/SPECIALTY DISTRIBUTION
2,224,600 Great Universal Stores PLC......................................................... 25,530,950
--------------
CELLULAR TELEPHONE
1,820,100 Vodafone Group PLC................................................................. 33,521,373
--------------
DIVERSIFIED COMMERCIAL SERVICES
1,776,330 Securicor PLC...................................................................... 16,657,632
--------------
DIVERSIFIED FINANCIAL SERVICES
1,640,800 Lloyds TSB Group PLC............................................................... 26,405,464
--------------
E.D.P. SERVICES
1,496,360 SEMA Group PLC..................................................................... 14,465,439
--------------
FOOD CHAINS
4,708,600 Morrison (W.M.) Supermarkets PLC................................................... 23,933,155
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
PORTFOLIO OF INVESTMENTS APRIL 30, 1999 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INTEGRATED OIL COMPANIES
3,931,834 British Petroleum Co. PLC.......................................................... $ 74,564,145
--------------
INTERNATIONAL BANKS
1,365,000 Abbey National PLC................................................................. 30,826,259
1,937,600 Barclays PLC....................................................................... 61,522,268
501,175 HSBC Holdings PLC.................................................................. 19,097,456
--------------
111,445,983
--------------
LIFE INSURANCE
1,809,200 Prudential Corp. PLC............................................................... 25,798,021
--------------
MAJOR PHARMACEUTICALS
1,114,225 Glaxo Wellcome PLC................................................................. 32,941,204
2,523,880 SmithKline Beecham PLC............................................................. 33,370,413
--------------
66,311,617
--------------
MOVIES/ENTERTAINMENT
761,274 Flextech PLC*...................................................................... 10,975,031
--------------
MULTI-LINE INSURANCE
2,794,246 Royal & Sun Alliance Insurance Group PLC........................................... 24,090,760
--------------
MULTI-SECTOR COMPANIES
3,531,600 General Electric Co. PLC........................................................... 37,406,611
--------------
OIL/GAS TRANSMISSION
4,016,697 BG PLC............................................................................. 22,532,239
--------------
OTHER SPECIALTY STORES
2,481,700 Kingfisher PLC..................................................................... 37,123,874
--------------
TELECOMMUNICATIONS
3,388,000 British Telecommunications PLC..................................................... 56,893,803
2,776,273 Cable & Wireless PLC............................................................... 39,833,465
--------------
96,727,268
--------------
TOTAL UNITED KINGDOM............................................................... 886,082,770
--------------
TOTAL COMMON AND PREFERRED STOCKS AND RIGHTS
(IDENTIFIED COST $1,703,955,177)................................................... 2,284,410,784
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT (a) (1.6%)
U.S. GOVERNMENT AGENCY
$ 36,500 Student Loan Marketing Assoc. 4.80% due 05/03/99 (AMORTIZED COST $36,490,267)...... $ 36,490,267
--------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $1,740,445,443) (b).................................................... 101.3 % 2,320,901,051
LIABILITIES IN EXCESS OF OTHER ASSETS................................................... (1.3) (29,953,148)
------ ---------------
NET ASSETS.............................................................................. 100.0 % $ 2,290,947,903
------ ---------------
------ ---------------
</TABLE>
- ---------------------
* Non-income producing security.
(a) Security was purchased on a discount basis. The interest rate shown has
been adjusted to reflect a money market equivalent yield.
(b) The aggregate cost for federal income tax purposes approximates identified
cost. The aggregate gross unrealized appreciation is $597,045,246 and the
aggregate gross unrealized depreciation is $16,589,638, resulting in net
unrealized appreciation of $580,455,608.
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT APRIL 30, 1999:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO IN DELIVERY APPRECIATION/
RECEIVE EXCHANGE FOR DATE DEPRECIATION
- ----------------------------------------------------------
<S> <C> <C> <C>
$ 8,020,045 EUR 7,563,940 05/03/99 $17,397
EUR 2,618,730 $ 2,776,901 05/03/99 (6,285)
-------
Net unrealized appreciation......... $11,112
-------
-------
</TABLE>
CURRENCY ABBREVIATION:
EUR Euro.
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
SUMMARY OF INVESTMENTS APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Aerospace....................................................................... $ 45,861,639 2.0%
Alcoholic Beverages............................................................. 46,025,055 2.0
Apparel......................................................................... 14,493,357 0.6
Auto Parts: O.E.M............................................................... 29,322,971 1.3
Books/Magazines................................................................. 84,407,277 3.7
Broadcasting.................................................................... 104,062,341 4.5
Building Materials/DIY Chains................................................... 5,327,130 0.2
Cable Television................................................................ 12,044,438 0.5
Catalog/Specialty Distribution.................................................. 25,530,950 1.1
Cellular Telephone.............................................................. 33,521,373 1.5
Clothing/Shoe/Accessory Stores.................................................. 9,092,790 0.4
Computers Software.............................................................. 21,965,730 1.0
Diversified Commercial Services................................................. 59,015,287 2.6
Diversified Electronic Products................................................. 62,112,154 2.7
Diversified Financial Services.................................................. 52,663,545 2.3
Diversified Manufacturing....................................................... 36,943,406 1.6
E.D.P. Services................................................................. 32,139,858 1.4
Electrical Products............................................................. 52,815,836 2.3
Finance Companies............................................................... 10,909,567 0.5
Food Chains..................................................................... 93,273,452 4.1
Hotels/Resorts.................................................................. 42,380,544 1.8
Industrial Machinery/Components................................................. 21,639,601 0.9
Integrated Oil Companies........................................................ 121,936,587 5.3
International Banks............................................................. 344,829,817 15.1
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Life Insurance.................................................................. $ 56,548,420 2.5%
Major Chemicals................................................................. 36,416,215 1.6
Major Pharmaceuticals........................................................... 184,099,181 8.0
Motor Vehicles.................................................................. 59,714,520 2.6
Movies/Entertainment............................................................ 10,975,031 0.5
Multi-Line Insurance............................................................ 76,741,438 3.3
Multi-Sector Companies.......................................................... 37,406,611 1.6
Oil/Gas Transmission............................................................ 22,532,239 1.0
Other Pharmaceuticals........................................................... 11,855,627 0.5
Other Specialty Stores.......................................................... 37,123,874 1.6
Other Telecommunications........................................................ 21,844,701 1.0
Packaged Foods.................................................................. 47,547,407 2.1
Printing/Forms.................................................................. 14,015,362 0.6
Shoe Manufacturing.............................................................. 13,311,756 0.6
Telecommunications.............................................................. 179,313,322 7.8
Telecommunications Equipment.................................................... 83,712,849 3.7
Tobacco......................................................................... 28,937,526 1.3
U.S. Government Agency.......................................................... 36,490,267 1.6
--------------- -----
$ 2,320,901,051 101.3%
--------------- -----
--------------- -----
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------
Common Stocks................................................................... $ 2,268,994,759 99.0%
Preferred Stocks................................................................ 14,493,357 0.6
Rights & Warrants............................................................... 922,668 0.1
Short-Term Investments.......................................................... 36,490,267 1.6
--------------- -----
$ 2,320,901,051 101.3%
--------------- -----
--------------- -----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $1,740,445,443).......................................................... $2,320,901,051
Receivable for:
Investments sold........................................................................ 21,788,366
Dividends............................................................................... 4,572,968
Foreign withholding taxes reclaimed..................................................... 3,145,432
Capital stock sold...................................................................... 2,650,368
Prepaid expenses and other assets........................................................... 191,735
--------------
TOTAL ASSETS........................................................................... 2,353,249,920
--------------
LIABILITIES:
Payable for:
Investments purchased................................................................... 48,068,162
Capital stock repurchased............................................................... 3,715,865
Plan of distribution fee................................................................ 1,858,089
Investment management fee............................................................... 1,696,619
Payable to bank............................................................................. 6,299,338
Accrued expenses and other payables......................................................... 663,944
--------------
TOTAL LIABILITIES...................................................................... 62,302,017
--------------
NET ASSETS............................................................................. $2,290,947,903
--------------
--------------
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................. $1,608,898,361
Net unrealized appreciation................................................................. 580,394,845
Accumulated net investment loss............................................................. (7,461,201)
Accumulated undistributed net realized gain................................................. 109,115,898
--------------
NET ASSETS............................................................................. $2,290,947,903
--------------
--------------
CLASS A SHARES:
Net Assets.................................................................................. $21,822,470
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 1,081,831
NET ASSET VALUE PER SHARE.............................................................. $20.17
--------------
--------------
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE)...................................... $21.29
--------------
--------------
CLASS B SHARES:
Net Assets.................................................................................. $2,233,947,662
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 111,875,066
NET ASSET VALUE PER SHARE.............................................................. $19.97
--------------
--------------
CLASS C SHARES:
Net Assets.................................................................................. $31,819,970
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 1,596,116
NET ASSET VALUE PER SHARE.............................................................. $19.94
--------------
--------------
CLASS D SHARES:
Net Assets.................................................................................. $3,357,801
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 163,822
NET ASSET VALUE PER SHARE.............................................................. $20.50
--------------
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT LOSS:
INCOME
Dividends (net of $2,333,438 foreign withholding tax)......................................... $ 15,045,347
Interest...................................................................................... 1,525,172
------------
TOTAL INCOME............................................................................. 16,570,519
------------
EXPENSES
Plan of distribution fee (Class A shares)..................................................... 21,862
Plan of distribution fee (Class B shares)..................................................... 10,982,685
Plan of distribution fee (Class C shares)..................................................... 143,259
Investment management fee..................................................................... 10,264,004
Transfer agent fees and expenses.............................................................. 1,363,446
Custodian fees................................................................................ 867,946
Registration fees............................................................................. 168,808
Shareholder reports and notices............................................................... 95,383
Professional fees............................................................................. 43,801
Directors' fees and expenses.................................................................. 6,910
Other......................................................................................... 19,861
------------
TOTAL EXPENSES........................................................................... 23,977,965
------------
NET INVESTMENT LOSS...................................................................... (7,407,446)
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain on:
Investments............................................................................... 108,767,221
Foreign exchange transactions............................................................. 609,959
------------
NET GAIN................................................................................. 109,377,180
------------
Net change in unrealized appreciation/depreciation on:
Investments............................................................................... 176,871,597
Translation of forward foreign currency contracts, other assets and liabilities
denominated in foreign currencies....................................................... (296,655)
------------
NET APPRECIATION......................................................................... 176,574,942
------------
NET GAIN................................................................................. 285,952,122
------------
NET INCREASE.................................................................................. $278,544,676
------------
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
APRIL 30, 1999 OCTOBER 31, 1998
- -------------------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss............................................... $ (7,407,446) $ (5,255,213)
Net realized gain................................................. 109,377,180 203,754,608
Net change in unrealized appreciation............................. 176,574,942 39,913,912
---------------- ----------------
NET INCREASE................................................. 278,544,676 238,413,307
---------------- ----------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income
Class A shares................................................ -- (30,346)
Class B shares................................................ -- (15,068,038)
Class C shares................................................ -- (31,106)
Class D shares................................................ -- (374,194)
Net realized gain
Class A shares................................................ (1,516,858) (215,076)
Class B shares................................................ (198,989,683) (143,682,142)
Class C shares................................................ (2,439,296) (276,452)
Class D shares................................................ (290,397) (2,520,602)
---------------- ----------------
TOTAL DIVIDENDS AND DISTRIBUTIONS............................ (203,236,234) (162,197,956)
---------------- ----------------
Net increase from capital stock transactions...................... 117,400,678 309,793,888
---------------- ----------------
NET INCREASE................................................. 192,709,120 386,009,239
NET ASSETS:
Beginning of period............................................... 2,098,238,783 1,712,229,544
---------------- ----------------
END OF PERIOD
(INCLUDING NET INVESTMENT LOSSES OF $7,461,201 AND $53,755,
RESPECTIVELY)................................................. $ 2,290,947,903 $ 2,098,238,783
---------------- ----------------
---------------- ----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1999 (UNAUDITED)
1. ORGANIZATION AND ACCOUNTING POLICIES
Morgan Stanley 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's investment
objective is to maximize the capital appreciation of its investments. The Fund
was incorporated in Maryland on February 13, 1990 and commenced operations on
May 31, 1990. On July 28, 1997, the Fund converted to a multiple class share
structure.
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 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 are 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") 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
11
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1999 (UNAUDITED) CONTINUED
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 on foreign securities which are recorded as soon as
the Fund is informed after the ex-dividend date. Discounts are accreted over the
life of the respective securities. Interest income is accrued daily.
C. MULTIPLE CLASS ALLOCATIONS -- Investment income, expenses (other than
distribution fees), and realized and unrealized gains and losses are allocated
to each class of shares based upon the relative net asset value on the date such
items are recognized. Distribution fees are charged directly to the respective
class.
D. OPTION ACCOUNTING PRINCIPLES -- When the Fund writes a call option, an amount
equal to the premium received is included in the Fund's Statement of Assets and
Liabilities as a liability which is subsequently marked-to-market to reflect the
current market value of the option written. If a written option either expires
or the Fund enters into a closing purchase transaction, the Fund realizes a gain
or loss without regard to any unrealized gain or loss on the underlying security
or currency and the liability related to such option is extinguished. If a
written call option is exercised, the Fund realizes a gain or loss from the sale
of the underlying security or currency and the proceeds from such sale are
increased by the premium originally received.
When the Fund purchases a call or put option, the premium paid is recorded as an
investment 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
12
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1999 (UNAUDITED) CONTINUED
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.
E. FOREIGN CURRENCY TRANSLATION -- The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities, other assets and liabilities and forward foreign currency
contracts are translated at the exchange rates prevailing at the end of the
period; and (2) purchases, sales, income and expenses are translated at the
exchange rates prevailing on the respective dates of such transactions. The
resultant exchange gains and losses are included in the Statement of Operations.
Pursuant to U.S. Federal income tax regulations, certain foreign exchange
gains/losses included in realized and unrealized gain/loss are included in or
are a reduction of ordinary income for federal income tax purposes. The Fund
does not isolate that portion of the results of operations arising as a result
of changes in the foreign exchange rates from the changes in the market prices
of the securities.
F. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward foreign
currency contracts which are valued daily at the appropriate exchange rates. The
resultant unrealized exchange gains and losses are included in the Statement of
Operations as unrealized 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.
G. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Accordingly, no federal income tax provision is required.
H. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and
distributions to its shareholders on the ex-dividend date. The amount of
dividends and distributions from net investment income and net realized capital
gains are determined in accordance with federal income tax regulations which may
differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment
13
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1999 (UNAUDITED) CONTINUED
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.
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
following annual rates to the net assets of the Fund determined as of the close
of each business day: 0.95% of the portion of net assets not exceeding $500
million; 0.90% to the portion of daily net assets exceeding $500 million but not
$2 billion; and 0.85% of the portion of daily net assets in excess of $2
billion. Prior to December 1, 1998, the annual rates were equal to 1.0% of the
portion of net assets not exceeding $500 million; 0.95% to the portion of daily
net assets exceeding $500 million but not $2 billion; and 0.90% of the portion
of daily net assets in excess of $2 billion.
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 compensation equal to 40% of its monthly compensation.
Prior to December 1, 1998, Morgan Grenfell Investment Services Limited served as
the Fund's sub-advisor, providing identical services and receiving compensation
at the same rate as the current Sub-Advisor.
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. The Fund has
adopted a Plan of Distribution (the "Plan") pursuant to Rule 12b-1 under the
Act. The Plan provides that the Fund will pay the
14
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1999 (UNAUDITED) CONTINUED
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 inception of the Fund (not including
reinvestment of dividends or capital gain distributions) less the average 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 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 $31,715,678 at April 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
15
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1999 (UNAUDITED) CONTINUED
that expenses representing a gross sales credit to Morgan Stanley Dean Witter
Financial Advisors or other selected broker-dealer representatives may be
reimbursed in the subsequent calendar year. For the six months ended April 30,
1999, the distribution fee was accrued for Class A shares and Class C shares at
the annual rate of 0.22% and 1.0%, respectively.
The Distributor has informed the Fund that for the six months ended April 30,
1999, it received contingent deferred sales charges from certain redemptions of
the Fund's Class A shares, Class B shares and Class C shares of $1,242,
$1,800,863 and $23,990, respectively and received $89,112 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 April 30, 1999 aggregated
$761,027,708 and $806,466,491, respectively.
For the six months ended April 30, 1999 the Fund incurred brokerage commissions
of $7,129 with Morgan Stanley & Co., Inc., an affiliate of the Investment
Manager and Distributor, for portfolio transactions executed on behalf of the
Fund.
The Fund has an unfunded noncontributory defined benefit pension plan covering
all independent Directors of the Fund who will have served as independent
Directors 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, 1999
included in Directors' fees and expenses in the Statement of Operations amounted
to $2,548. At April 30, 1999 the Fund had an accrued pension liability of
$51,997 which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. FEDERAL INCOME TAX STATUS
As of October 31, 1998, the Fund had temporary book/tax differences primarily
attributable to capital loss deferrals on wash sales.
16
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1999 (UNAUDITED) CONTINUED
6. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
APRIL 30, 1999 FOR THE YEAR
------------------------------- ENDED
OCTOBER 31, 1998
(UNAUDITED) -----------------------------
SHARES AMOUNT SHARES AMOUNT
------------ ---------------- ------------ --------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold........................................................ 3,397,657 $ 66,965,523 972,628 $ 19,445,361
Reinvestment of dividends and distributions................. 75,390 1,463,319 13,548 229,902
Redeemed.................................................... (3,117,900) (61,645,388) (360,375) (6,702,611)
------------ ---------------- ------------ --------------
Net increase - Class A...................................... 355,147 6,783,454 625,801 12,972,652
------------ ---------------- ------------ --------------
CLASS B SHARES
Sold........................................................ 32,075,212 630,624,930 63,396,156 1,273,279,806
Reinvestment of dividends and distributions................. 9,664,315 186,231,346 8,774,632 148,905,493
Redeemed.................................................... (36,337,909) (715,402,292) (58,362,589) (1,150,703,310)
------------ ---------------- ------------ --------------
Net increase - Class B...................................... 5,401,618 101,453,984 13,808,199 271,481,989
------------ ---------------- ------------ --------------
CLASS C SHARES
Sold........................................................ 2,061,714 40,465,060 2,310,164 46,726,072
Reinvestment of dividends and distributions................. 123,351 2,373,265 17,786 301,660
Redeemed.................................................... (1,736,325) (34,077,864) (1,337,353) (26,487,758)
------------ ---------------- ------------ --------------
Net increase - Class C...................................... 448,740 8,760,461 990,597 20,539,974
------------ ---------------- ------------ --------------
CLASS D SHARES
Sold........................................................ 2,476,205 49,486,073 2,115,452 39,819,014
Reinvestment of dividends and distributions................. 5,981 117,940 231 3,921
Redeemed.................................................... (2,448,903) (49,201,234) (1,987,563) (35,023,662)
------------ ---------------- ------------ --------------
Net increase - Class D...................................... 33,283 402,779 128,120 4,799,273
------------ ---------------- ------------ --------------
Net increase in Fund........................................ 6,238,788 $ 117,400,678 15,552,717 $ 309,793,888
------------ ---------------- ------------ --------------
------------ ---------------- ------------ --------------
</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.
17
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 1999 (UNAUDITED) CONTINUED
At April 30, 1999, there were outstanding forward contracts used to facilitate
settlement of foreign currency denominated portfolio transactions.
At April 30, 1999, investments in securities of issuers in the United Kingdom
represented 38.7% of the Fund's net assets. These investments, as well as other
non-U.S. investments, which involve risks and considerations not present with
respect to U.S. securities, may be affected by economic or political
developments in this region.
18
<PAGE>
MORGAN STANLEY 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
APRIL
30, FOR THE YEAR ENDED OCTOBER 31
1999++ ------------------------------------------------------
(UNAUDITED) 1998++ 1997*++ 1996 1995 1994
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning
of period................. $19.34 $ 18.43 $ 16.76 $ 14.44 $ 13.49 $ 11.86
------- ------- ------- ------- ------- ------------
Income (loss) from
investment operations:
Net investment income
(loss).................. (0.07) (0.05) 0.04 0.02 0.02 0.02
Net realized and
unrealized gain......... 2.58 2.69 3.02 3.03 2.00 1.84
------- ------- ------- ------- ------- ------------
Total income from
investment operations..... 2.51 2.64 3.06 3.05 2.02 1.86
------- ------- ------- ------- ------- ------------
Less dividends and
distributions from:
Net investment income... -- (0.16) (0.11) -- -- --
Net realized gain....... (1.88) (1.57) (1.28) (0.73) (1.07) (0.23)
------- ------- ------- ------- ------- ------------
Total dividends and
distributions............. (1.88) (1.73) (1.39) (0.73) (1.07) (0.23)
------- ------- ------- ------- ------- ------------
Net asset value, end of
period.................... $19.97 $ 19.34 $ 18.43 $ 16.76 $ 14.44 $ 13.49
------- ------- ------- ------- ------- ------------
------- ------- ------- ------- ------- ------------
TOTAL RETURN+.............. 13.34%(1) 15.67% 19.40% 22.27% 16.83% 15.61%
RATIOS TO AVERAGE NET
ASSETS:
Expenses................... 2.14%(2)(3) 2.10%(3) 2.06% 2.13% 2.23% 2.27%
Net investment income
(loss).................... (0.67)%(2)(3) (0.26)%(3) 0.22% 0.14% 0.13% 0.21%
SUPPLEMENTAL DATA:
Net assets, end of period,
in millions............... $2,234 $2,059 $1,707 $1,228 $868 $759
Portfolio turnover rate.... 35%(1) 50% 44% 49% 61% 72%
</TABLE>
- ---------------------
* 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) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED FOR THE YEAR JULY 28, 1997*
APRIL 30, 1999 ENDED THROUGH
(UNAUDITED) OCTOBER 31, 1998 OCTOBER 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $ 19.45 $ 18.46 $ 18.64
------- ------- ------
Income (loss) from investment operations:
Net investment income (loss)....................................... 0.02 0.08 (0.02)
Net realized and unrealized gain (loss)............................ 2.58 2.70 (0.16)
------- ------- ------
Total income (loss) from investment operations........................ 2.60 2.78 (0.18)
------- ------- ------
Less dividends and distributions from:
Net investment income.............................................. -- (0.22) --
Net realized gain.................................................. (1.88) (1.57) --
------- ------- ------
Total dividends and distributions..................................... (1.88) (1.79) --
------- ------- ------
Net asset value, end of period........................................ $ 20.17 $ 19.45 $ 18.46
------- ------- ------
------- ------- ------
TOTAL RETURN+......................................................... 13.76%(1) 16.50% (0.97)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 1.36%(2)(3) 1.44%(3) 1.48%(2)
Net investment income (loss).......................................... 0.11%(2)(3) 0.40%(3) (0.33)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $21,822 $14,133 $ 1,862
Portfolio turnover rate............................................... 35%(1) 50% 44%
</TABLE>
<TABLE>
<S> <C> <C> <C>
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $ 19.31 $ 18.43 $ 18.64
------- ------- ------
Income (loss) from investment operations:
Net investment loss................................................ (0.06) (0.08) (0.04)
Net realized and unrealized gain (loss)............................ 2.57 2.71 (0.17)
------- ------- ------
Total income (loss) from investment operations........................ 2.51 2.63 (0.21)
------- ------- ------
Less dividends and distributions from:
Net investment income.............................................. -- (0.18) --
Net realized gain.................................................. (1.88) (1.57) --
------- ------- ------
Total dividends and distributions..................................... (1.88) (1.75) --
------- ------- ------
Net asset value, end of period........................................ $ 19.94 $ 19.31 $ 18.43
------- ------- ------
------- ------- ------
TOTAL RETURN+......................................................... 13.37%(1) 15.57% (1.13)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 2.14%(2)(3) 2.19%(3) 2.24%(2)
Net investment loss................................................... (0.67)%(2)(3) (0.35)%(3) (0.76)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $31,820 $22,159 $ 2,889
Portfolio turnover rate............................................... 35%(1) 50% 44%
</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
20
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE SIX FOR THE PERIOD
MONTHS ENDED FOR THE YEAR JULY 28, 1997*
APRIL 30, 1999 ENDED THROUGH
(UNAUDITED) OCTOBER 31, 1998 OCTOBER 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period.................................. $ 19.72 $ 18.47 $ 18.64
------ ------ ------
Income (loss) from investment operations:
Net investment income.............................................. 0.04 0.16 0.02
Net realized and unrealized gain (loss)............................ 2.62 2.89 (0.19)
------ ------ ------
Total income (loss) from investment operations........................ 2.66 3.05 (0.17)
------ ------ ------
Less dividends and distributions from:
Net investment income.............................................. -- (0.23) --
Net realized gain.................................................. (1.88) (1.57) --
------ ------ ------
Total dividends and distributions..................................... (1.88) (1.80) --
------ ------ ------
Net asset value, end of period........................................ $ 20.50 $ 19.72 $ 18.47
------ ------ ------
------ ------ ------
TOTAL RETURN+......................................................... 13.88%(1) 18.12% (0.91)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses.............................................................. 1.14%(2)(3) 1.19%(3) 1.23%(2)
Net investment income................................................. 0.33%(2)(3) 0.65%(3) 0.33%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in thousands............................... $ 3,358 $ 2,575 $ 45
Portfolio turnover rate............................................... 35%(1) 50% 44%
</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
21
<PAGE>
DIRECTORS
Michael Bozic MORGAN STANLEY
Charles A. Fiumefreddo DEAN WITTER
Edwin J. Garn EUROPEAN
Wayne E. Hedien GROWTH FUND
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 directors, 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 Semiannual Report
accompanied by an effective prospectus. April 30, 1999
