<PAGE>
<TABLE>
<S> <C>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND TWO WORLD TRADE CENTER,
INC. NEW YORK, NEW YORK 10048
LETTER TO THE SHAREHOLDERS APRIL 30, 2000
</TABLE>
DEAR SHAREHOLDER:
During the six-month period ended April 30, 2000, many of the developments in
the European equity markets mirrored events in the U.S. equity market. Contrary
to most forecasts, a Y2K-related year-end slowdown in activity did not
materialize. Returns from European equities in November and December were
exceptionally strong, which was partially attributable to abundant evidence that
companies had extensively prepared their information technology systems for the
Y2K date change.
Wide sector divergence characterized the European markets during the period.
Late 1999 and early 2000 witnessed a significantly improved outlook for the
technology, media, software and telecommunications sectors. New-economy stocks
drove the markets' performance while old-economy stocks were shunned. The
valuation divergence between these two market segments eventually became
overextended. Between March and the end of April the technology and new-economy
sectors experienced a significant correction.
Another noteworthy issue facing European investors during the period was the
ongoing weakness of the euro versus the U.S. dollar. The euro has weakened
steadily since its launch. Among the factors responsible for its decline were
increased capital flows into the dollar, driven by the strong U.S. economy, an
interest-rate differential that supports the dollar and a lack of clarity in the
policy intentions of the European Central Bank. Several different currency
valuation yardsticks support the current consensus that the euro is cheap
relative to the dollar. It may take slower economic growth in the United States
for this situation to reverse.
Corporate earnings results in Europe for 1999 and the first quarter of 2000 were
in line with estimates. Several companies (including Philips, Adecco and
Alcatel, all of which are held in the portfolio) reported first-quarter earnings
substantially in excess of consensus estimates. The outlook for corporate
profitability in Europe is strong given the benign economic environment there.
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
LETTER TO THE SHAREHOLDERS APRIL 30, 2000, CONTINUED
PERFORMANCE
For the six-month period ended April 30, 2000, Morgan Stanley Dean Witter
European Growth Fund's Class B shares produced a total return of 19.66 percent
compared to 7.49 percent for the Morgan Stanley Capital International World
Index.* For the same period, the Fund's Class A, C and D shares posted total
returns of 20.10 percent, 19.63 percent and 20.20 percent, respectively. The
performance of the Fund's four share classes varies because each class has
different expenses. The total return figures given assume the reinvestment of
all distributions but do not reflect the deduction of any applicable sales
charges.
PORTFOLIO
During the period, the Fund maintained its concentration in mid- and
large-capitalization growth stocks, continuing to use an investment process
driven by stock-specific considerations. The Fund's growth-stock emphasis gave
rise in 1999 to significant weightings in the technology, media,
telecommunications and software sectors. This emphasis generated strong
investment returns from November through February. Profits were taken as share
prices reached and in some cases exceeded the Fund's price targets. Weightings
in more traditional and defensive growth sectors such as pharmaceuticals were
increased. This redeployment of assets provided a cushion when markets corrected
during the latter part of the period.
As of April 30, 2000, the Fund's regional weightings were as follows: 47.7
percent of assets in the eurozone (the 11 countries that have adopted the euro
as a common currency), 31.9 percent in the United Kingdom, 9.0 percent in Sweden
and 8.8 percent in Switzerland. The remaining 2.6 percent of assets were
invested in cash and other such assets.
LOOKING AHEAD
Morgan Stanley Dean Witter Investment Management Inc., the Fund's sub-advisor,
believes the outlook for European equities remains generally positive. Economic
growth has accelerated sharply,
----------------
* The Morgan Stanley Capital International World Index measures performance from
a diverse range of global stock markets, including the U.S., Europe, Australia,
New Zealand and the Far East. The performance of the index is listed in U.S.
dollars and assumes reinvestment of net dividends. "Net dividends" reflects a
reduction in dividends after taking into account withholding of taxes by certain
foreign countries represented in the index. The index does not take into account
the Fund's expenses, fees or charges. The index is unmanaged and should not be
considered an investment.
2
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
LETTER TO THE SHAREHOLDERS APRIL 30, 2000, CONTINUED
giving rise to a healthy corporate earnings outlook. However, interest rates are
likely to rise over the course of the year and a rising interest rate
environment typically holds back the performance of stock markets. The expected
continuation of a high level of merger and acquisition activity should benefit
the European equity markets, and any recovery in the euro versus the U.S. dollar
should boost returns to a United States-based investor.
We appreciate your ongoing support of Morgan Stanley Dean Witter European Growth
Fund and look forward to continuing to serve your investment needs.
Very truly yours,
<TABLE>
<S> <C>
[/S/ CHARLES A. FIUMEFREDDO] [/S/ MITCHELL M. MERIN]
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
CHAIRMAN OF THE BOARD PRESIDENT
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FUND PERFORMANCE APRIL 30, 2000
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
-----------------------------------------------------------------------------------------------------------------------------
CLASS A SHARES* CLASS B SHARES**
----------------------------------------------------------- -----------------------------------------------------------
PERIOD ENDED 4/30/00 PERIOD ENDED 4/30/00
------------------------------------ ------------------------------------
<S> <C> <C> <C> <C> <C>
1 Year 23.26%(1) 16.79%(2) 1 Year 22.30%(1) 17.30%(2)
Since Inception (7/28/97) 19.06 (1) 16.76 (2) 5 Years 21.18 (1) 20.99 (2)
Since Inception (6/1/90) 15.02 (1) 15.02 (2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES+ CLASS D SHARES++
----------------------------------------------------------- -----------------------------------------------------------
PERIOD ENDED 4/30/00 PERIOD ENDED 4/30/00
------------------------------------ ------------------------------------
<S> <C> <C> <C> <C> <C>
1 Year 22.27%(1) 21.27%(2) 1 Year 23.43%(1)
Since Inception (7/28/97) 18.15 (1) 18.15 (2) Since Inception (7/28/97) 19.79 (1)
</TABLE>
------------------------
<TABLE>
<C> <S>
(1) Figure shown assumes reinvestment of all distributions and
does not reflect the deduction of any sales charges.
(2) Figure shown assumes reinvestment of all distributions and
the deduction of the maximum applicable sales charge. See
the Fund's current prospectus for complete details on fees
and sales charges.
* The maximum front-end sales charge for Class A is 5.25%.
** The maximum contingent deferred sales charge (CDSC) for
Class B is 5.0%. The CDSC declines to 0% after six years.
+ The maximum CDSC for Class C shares is 1% for shares
redeemed within one year of purchase.
++ Class D shares have no sales charge.
</TABLE>
4
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
PORTFOLIO OF INVESTMENTS APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS (98.2%)
DENMARK (0.5%)
OTHER TELECOMMUNICATIONS
170,220 Tele Danmark AS (B Shares)........................................................ $ 12,461,657
--------------
FINLAND (5.1%)
TELECOMMUNICATION EQUIPMENT
2,290,665 Nokia Oyj......................................................................... 131,387,734
--------------
FRANCE (17.4%)
BROADCASTING
11,106 Societe Television Francaise 1.................................................... 7,601,802
--------------
BUILDING MATERIALS/DIY CHAINS
72,330 Castorama Dubois Investissement................................................... 15,779,513
--------------
CONSUMER ELECTRONICS/APPLIANCES
184,520 Thomson Multimedia*............................................................... 18,114,697
--------------
E.D.P. SERVICES
70,475 Cap Gemini S.A.................................................................... 13,837,343
--------------
FOOD CHAINS
378,392 Carrefour S.A..................................................................... 24,627,416
--------------
INTERNATIONAL BANKS
579,846 Banque Nationale
de Paris........................................................................ 46,857,413
--------------
MAJOR CHEMICALS
1,105,666 Aventis S.A....................................................................... 60,805,549
--------------
MAJOR PHARMACEUTICALS
328,264 Sanofi-Synthelabo S.A............................................................. 12,248,991
--------------
MULTI-LINE INSURANCE
256,200 AXA............................................................................... 37,983,674
--------------
MULTI-SECTOR COMPANIES
353,440 Vivendi........................................................................... 34,954,933
--------------
OIL REFINING/MARKETING
569,950 Total Fina Elf.................................................................... 86,468,311
--------------
OTHER TELECOMMUNICATIONS
189,880 France Telecom S.A................................................................ 29,376,677
--------------
TELECOMMUNICATION EQUIPMENT
253,708 Alcatel........................................................................... 58,808,246
--------------
TOTAL FRANCE...................................................................... 447,464,565
--------------
<CAPTION>
SHARES VALUE
----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
GERMANY (9.5%)
APPAREL
180,815 Hugo Boss AG (Pref.).............................................................. $ 28,763,146
--------------
BANKING
253,169 Bayerische Hypo - und Vereinsbank AG.............................................. 15,671,895
--------------
COMPUTER SOFTWARE
94,640 SAP AG............................................................................ 44,390,324
169,249 Software AG....................................................................... 19,538,612
--------------
63,928,936
--------------
DIVERSIFIED ELECTRONIC PRODUCTS
254,790 Siemens AG........................................................................ 37,589,347
--------------
MULTI-LINE INSURANCE
85,110 Allianz AG (Registered Shares).................................................... 32,764,073
--------------
SEMICONDUCTORS
385,345 Infineon Technologies
AG*............................................................................. 26,533,605
--------------
TELECOMMUNICATIONS
591,780 Deutsche Telecom AG............................................................... 37,923,926
--------------
TOTAL GERMANY..................................................................... 243,174,928
--------------
ITALY (2.4%)
BROADCASTING
467,741 Mediaset SpA...................................................................... 7,589,402
--------------
INTERNATIONAL BANKS
2,095,680 Unicredito Italiano SpA........................................................... 8,496,180
--------------
TELECOMMUNICATIONS
3,254,400 Telecom Italia SpA................................................................ 45,497,879
--------------
TOTAL ITALY....................................................................... 61,583,461
--------------
NETHERLANDS (7.8%)
ALCOHOLIC BEVERAGES
263,170 Heineken NV....................................................................... 14,592,513
--------------
DIVERSIFIED ELECTRONIC PRODUCTS
1,838,424 Koninklijke (Royal) Philips Electronics NV........................................ 82,002,222
--------------
DIVERSIFIED FINANCIAL SERVICES
705,840 Fortis (NL) NV.................................................................... 17,746,893
--------------
E.D.P. SERVICES
217,420 Getronics NV...................................................................... 12,964,842
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
PORTFOLIO OF INVESTMENTS APRIL 30, 2000 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
SHARES VALUE
----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INTEGRATED OIL COMPANIES
689,380 Royal Dutch Petroleum Co.......................................................... $ 39,729,383
--------------
TELECOMMUNICATIONS
315,790 Koninklijke KPN NV................................................................ 31,819,837
--------------
TOTAL NETHERLANDS................................................................. 198,855,690
--------------
SPAIN (5.0%)
ADVERTISING
113,000 Telefonica Publicidad e Informacion, S.A.......................................... 4,468,190
--------------
INTERNATIONAL BANKS
2,440,600 Banco Bilbao Vizcaya Argentaria, S.A.............................................. 33,277,581
--------------
OIL REFINING/MARKETING
783,340 Repsol-YPF, S.A................................................................... 16,021,261
--------------
OTHER CONSUMER SERVICES
1,440,240 Amadeus Global Travel Distribution S.A. (A Shares)*............................... 17,804,823
--------------
TELECOMMUNICATIONS
2,588,001 Telefonica S.A.*.................................................................. 57,589,026
--------------
TOTAL SPAIN....................................................................... 129,160,881
--------------
SWEDEN (9.0%)
DIVERSIFIED COMMERCIAL SERVICES
2,408,050 Securitas AB (Series "B" Free).................................................... 62,476,107
--------------
INDUSTRIAL MACHINERY/COMPONENTS
2,001,900 Assa Abloy AB (Series B).......................................................... 40,744,993
--------------
INTERNATIONAL BANKS
4,849,040 Nordbanken Holding AB............................................................. 30,638,302
--------------
LIFE INSURANCE
279,740 Skandia Forsakrings AB............................................................ 13,420,613
--------------
OTHER TELECOMMUNICATIONS
332,000 Tele1 Europe Holding
AB*............................................................................. 5,235,012
--------------
TELECOMMUNICATION EQUIPMENT
874,695 Ericsson (L.M.) Telephone Co. AB (Series "B" Free)................................ 77,960,648
--------------
TOTAL SWEDEN...................................................................... 230,475,675
--------------
<CAPTION>
SHARES VALUE
----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SWITZERLAND (8.8%)
CONSUMER SPECIALTIES
18,470 Compagnie Financiere Richemont AG (Series A)...................................... $ 44,925,868
--------------
DIVERSIFIED COMMERCIAL SERVICES
32,700 Adecco S.A. (Registered Shares)................................................... 26,860,850
--------------
INTERNATIONAL BANKS
174,195 UBS AG (Registered Shares)*....................................................... 42,724,595
--------------
MAJOR PHARMACEUTICALS
16,231 Novartis AG (Registered Shares)................................................... 22,698,525
3,871 Roche Holdings AG - Genusshein.................................................... 40,471,793
--------------
63,170,318
--------------
PACKAGED FOODS
27,892 Nestle S.A. (Registered Shares)................................................... 49,223,081
--------------
TOTAL SWITZERLAND................................................................. 226,904,712
--------------
UNITED KINGDOM (31.9%)
ADVERTISING
1,335,200 WPP Group PLC..................................................................... 21,443,429
--------------
AEROSPACE
1,698,360 Smiths Industries PLC............................................................. 19,744,627
--------------
ALCOHOLIC BEVERAGES
7,593,400 Allied Domecq PLC................................................................. 37,121,832
--------------
AUTO PARTS: O.E.M.
2,988,210 BBA Group PLC..................................................................... 18,333,087
--------------
BOOKS/MAGAZINES
907,408 EMAP PLC.......................................................................... 17,462,294
2,908,400 Reed International PLC............................................................ 20,079,518
--------------
37,541,812
--------------
CABLE TELEVISION
876,160 Telewest Communications PLC*...................................................... 5,310,724
--------------
CELLULAR TELEPHONE
30,262,529 Vodafone AirTouch PLC............................................................. 138,426,073
--------------
FINANCE COMPANIES
3,811,200 Woolwich PLC...................................................................... 18,454,215
--------------
FOOD CHAINS
2,935,000 Tesco PLC......................................................................... 9,983,426
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
PORTFOLIO OF INVESTMENTS APRIL 30, 2000 (UNAUDITED) CONTINUED
<TABLE>
<CAPTION>
SHARES VALUE
----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
INTEGRATED OIL COMPANIES
6,691,268 BP Amoco PLC....................................................... $ 57,628,506
--------------
INTERNATIONAL BANKS
1,784,600 Barclays PLC....................................................... 45,513,625
--------------
LIFE INSURANCE
3,735,200 Prudential Corp.................................................... 57,202,915
--------------
MAJOR PHARMACEUTICALS
1,371,198 AstraZeneca Group PLC.............................................. 57,379,737
1,469,125 Glaxo Wellcome PLC................................................. 45,203,348
2,415,981 SmithKline Beecham PLC............................................. 32,965,727
--------------
135,548,812
--------------
MOVIES/ENTERTAINMENT
535,074 Flextech PLC*...................................................... 12,258,385
--------------
MULTI-SECTOR COMPANIES
2,755,600 Marconi PLC........................................................ 34,304,183
--------------
OIL/GAS TRANSMISSION
5,001,555 BG Group PLC....................................................... 29,753,030
--------------
OTHER SPECIALTY STORES
1,430,140 Kingfisher PLC..................................................... 11,678,450
--------------
OTHER TELECOMMUNICATIONS
912,400 Thus PLC*.......................................................... 5,222,160
--------------
RESTAURANTS
4,286,536 Granada Group PLC.................................................. 41,678,127
--------------
TELECOMMUNICATIONS
4,616,200 British Telecommunications PLC..................................... 82,525,340
--------------
TOTAL UNITED KINGDOM............................................... 819,672,758
--------------
UNITED STATES (0.8%)
OTHER TELECOMMUNICATIONS
251,075 NTL Inc.*.......................................................... 19,207,237
--------------
TOTAL COMMON AND PREFERRED STOCKS
(IDENTIFIED COST $1,887,334,614)................................... 2,520,349,298
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
-------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT (a) (1.3%)
U.S. GOVERNMENT AGENCY
$ 33,000 Federal Home Loan Mortgage Corp. 5.88% due 05/01/00 (AMORTIZED COST
$33,000,000)........................................................ $ 33,000,000
--------------
</TABLE>
<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $1,920,334,614) (b).................................................... 99.5% 2,553,349,298
OTHER ASSETS IN EXCESS OF LIABILITIES................................................... 0.5 12,819,764
----- ---------------
NET ASSETS.............................................................................. 100.0% $ 2,566,169,062
----- ---------------
----- ---------------
</TABLE>
---------------------
* Non-income producing security.
(a) 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 $673,230,765 and the
aggregate gross unrealized depreciation is $40,216,081, resulting in net
unrealized appreciation of $633,014,684.
FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT APRIL 30, 2000:
<TABLE>
<CAPTION>
CONTRACTS IN EXCHANGE DELIVERY UNREALIZED
TO DELIVER FOR DATE DEPRECIATION
--------------------------------------------------------------------
<S> <C> <C> <C>
EUR 5,633,293 $5,109,397 05/03/00 $ (11,267)
SEK 44,860,540 $4,999,224 05/03/00 (17,567)
------------
Total unrealized depreciation................. $ (28,834)
============
</TABLE>
CURRENCY ABBREVIATIONS:
------------------------
<TABLE>
<S> <C>
EUR Euro.
SEK Swedish Krona.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
SUMMARY OF INVESTMENTS APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Advertising..................................................................... $ 25,911,619 1.0%
Aerospace....................................................................... 19,744,627 0.8
Alcoholic Beverages............................................................. 51,714,345 2.0
Apparel......................................................................... 28,763,146 1.1
Auto Parts: O.E.M............................................................... 18,333,087 0.7
Banking......................................................................... 15,671,895 0.6
Books/Magazines................................................................. 37,541,812 1.5
Broadcasting.................................................................... 15,191,203 0.6
Building Materials/DIY Chains................................................... 15,779,513 0.6
Cable Television................................................................ 5,310,724 0.2
Cellular Telephone.............................................................. 138,426,073 5.4
Computer Software............................................................... 63,928,937 2.5
Consumer Electronics/Appliances................................................. 18,114,698 0.7
Consumer Specialties............................................................ 44,925,868 1.7
Diversified Commercial Services................................................. 89,336,957 3.5
Diversified Electronic Products................................................. 119,591,569 4.8
Diversified Financial Services.................................................. 17,746,893 0.7
E.D.P. Services................................................................. 26,802,185 1.0
Finance Companies............................................................... 18,454,215 0.7
Food Chains..................................................................... 34,610,842 1.3
Industrial Machinery/Components................................................. 40,744,993 1.6
Integrated Oil Companies........................................................ 97,357,889 3.8
International Banks............................................................. 207,507,696 8.1
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Life Insurance.................................................................. $ 70,623,527 2.7%
Major Chemicals................................................................. 60,805,549 2.4
Major Pharmaceuticals........................................................... 210,968,121 8.2
Movies/Entertainment............................................................ 12,258,385 0.5
Multi-Line Insurance............................................................ 70,747,747 2.8
Multi-Sector Companies.......................................................... 69,259,117 2.7
Oil Refining/Marketing.......................................................... 102,489,573 4.0
Oil/Gas Transmission............................................................ 29,753,030 1.2
Other Consumer Services......................................................... 17,804,823 0.7
Other Specialty Stores.......................................................... 11,678,450 0.5
Other Telecommunications........................................................ 71,502,742 2.8
Packaged Foods.................................................................. 49,223,081 1.9
Restaurants..................................................................... 41,678,127 1.6
Semiconductors.................................................................. 26,533,604 1.0
Telecommunication Equipment..................................................... 268,156,628 10.4
Telecommunications.............................................................. 255,356,008 9.9
U.S. Government Agency.......................................................... 33,000,000 1.3
-------------- ----
$2,553,349,298 99.5%
-------------- ----
-------------- ----
</TABLE>
<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks................................................................... $2,491,586,152 97.1%
Preferred Stocks................................................................ 28,763,146 1.1
Short-Term Investment........................................................... 33,000,000 1.3
-------------- ----
$2,553,349,298 99.5%
-------------- ----
-------------- ----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $1,920,334,614).......................................................... $2,553,349,298
Cash........................................................................................ 100,842
Receivable for:
Investments sold........................................................................ 10,137,442
Dividends............................................................................... 4,041,152
Foreign withholding taxes reclaimed..................................................... 3,380,791
Capital stock sold...................................................................... 3,353,735
Prepaid expenses and other assets........................................................... 125,056
--------------
TOTAL ASSETS........................................................................... 2,574,488,316
--------------
LIABILITIES:
Unrealized depreciation on open forward foreign currency contracts.......................... 28,834
Payable for:
Capital stock repurchased............................................................... 4,015,150
Plan of distribution fee................................................................ 2,064,891
Investment management fee............................................................... 1,903,743
Accrued expenses and other payables......................................................... 306,636
--------------
TOTAL LIABILITIES...................................................................... 8,319,254
--------------
NET ASSETS............................................................................. $2,566,169,062
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................. $1,712,761,386
Net unrealized appreciation................................................................. 632,340,903
Accumulated net investment loss............................................................. (9,581,964)
Accumulated undistributed net realized gain................................................. 230,648,737
--------------
NET ASSETS............................................................................. $2,566,169,062
==============
CLASS A SHARES:
Net Assets.................................................................................. $43,458,084
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 1,990,325
NET ASSET VALUE PER SHARE.............................................................. $21.83
==============
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE)...................................... $23.04
==============
CLASS B SHARES:
Net Assets.................................................................................. $2,446,369,268
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 114,296,836
NET ASSET VALUE PER SHARE.............................................................. $21.40
==============
CLASS C SHARES:
Net Assets.................................................................................. $46,178,748
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 2,160,678
NET ASSET VALUE PER SHARE.............................................................. $21.37
==============
CLASS D SHARES:
Net Assets.................................................................................. $30,162,962
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 1,353,603
NET ASSET VALUE PER SHARE.............................................................. $22.28
==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL STATEMENTS, CONTINUED
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 2000 (UNAUDITED)
<TABLE>
<S> <C>
NET INVESTMENT LOSS:
INCOME
Dividends (net of $1,898,181 foreign withholding tax)......................................... $ 13,170,305
Interest...................................................................................... 2,849,274
------------
TOTAL INCOME............................................................................. 16,019,579
------------
EXPENSES
Plan of distribution fee (Class A shares)..................................................... 39,405
Plan of distribution fee (Class B shares)..................................................... 12,085,443
Plan of distribution fee (Class C shares)..................................................... 206,077
Investment management fee..................................................................... 11,305,939
Transfer agent fees and expenses.............................................................. 1,203,593
Custodian fees................................................................................ 378,501
Registration fees............................................................................. 144,697
Shareholder reports and notices............................................................... 113,801
Professional fees............................................................................. 47,384
Directors' fees and expenses.................................................................. 9,091
Other......................................................................................... 14,854
------------
TOTAL EXPENSES........................................................................... 25,548,785
------------
NET INVESTMENT LOSS...................................................................... (9,529,206)
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain/loss on:
Investments............................................................................... 232,785,554
Foreign exchange transactions............................................................. (1,770,499)
------------
NET GAIN................................................................................. 231,015,055
------------
Net change in unrealized appreciation/depreciation on:
Investments............................................................................... 202,580,368
Translation of forward foreign currency contracts, other assets and liabilities
denominated in foreign currencies....................................................... (663,128)
------------
NET APPRECIATION......................................................................... 201,917,240
------------
NET GAIN................................................................................. 432,932,295
------------
NET INCREASE.................................................................................. $423,403,089
============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<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, 2000 OCTOBER 31, 1999
------------------------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment loss.............................. $ (9,529,206) $ (7,048,059)
Net realized gain................................ 231,015,055 305,455,814
Net change in unrealized appreciation............ 201,917,240 26,603,760
-------------- --------------
NET INCREASE................................ 423,403,089 325,011,515
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED
GAIN:
Class A shares................................... (3,648,172) (1,516,858)
Class B shares................................... (298,461,246) (198,989,683)
Class C shares................................... (4,576,497) (2,439,296)
Class D shares................................... (1,288,378) (290,397)
-------------- --------------
TOTAL DISTRIBUTIONS......................... (307,974,293) (203,236,234)
-------------- --------------
Net increase (decrease) from capital stock
transactions................................... 297,166,584 (66,440,382)
-------------- --------------
NET INCREASE................................ 412,595,380 55,334,899
NET ASSETS:
Beginning of period.............................. 2,153,573,682 2,098,238,783
-------------- --------------
END OF PERIOD
(INCLUDING NET INVESTMENT LOSSES OF
$9,581,964 AND $52,758, RESPECTIVELY)........ $2,566,169,062 $2,153,573,682
============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 2000 (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
June 1, 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 the Directors (valuation of debt securities for which market quotations are
not readily available may
12
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 2000 (UNAUDITED) CONTINUED
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 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.
13
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 2000 (UNAUDITED) CONTINUED
E. FOREIGN CURRENCY TRANSLATION -- The books and records of the Fund are
maintained in U.S. dollars as follows: (1) the foreign currency market value of
investment securities, other assets and liabilities and forward foreign currency
contracts are translated at the exchange rates prevailing at the end of the
period; and (2) purchases, sales, income and expenses are translated at the
exchange rates prevailing on the respective dates of such transactions. The
resultant exchange gains and losses are included in the Statement of Operations
as realized and unrealized gain/loss on foreign exchange transactions. Pursuant
to U.S. Federal income tax regulations, certain foreign exchange gains/losses
included in realized and unrealized gain/loss are included in or are a reduction
of ordinary income for federal income tax purposes. The Fund does not isolate
that portion of the results of operations arising as a result of changes in the
foreign exchange rates from the changes in the market prices of the securities.
F. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward foreign
currency contracts which are valued daily at the appropriate exchange rates. The
resultant unrealized exchange gains and losses are included in the Statement of
Operations as unrealized 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 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.
14
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 2000 (UNAUDITED) CONTINUED
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% to the portion of daily net assets not exceeding
$500 million; 0.90% to the portion of daily net assets exceeding $500 million
but not exceeding $2 billion; and 0.85% to the portion of daily net assets in
excess of $2 billion.
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.
3. PLAN OF DISTRIBUTION
Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors
Inc. (the "Distributor"), an affiliate of the Investment Manager and
Sub-Advisor. The Fund has adopted a Plan of Distribution (the "Plan") pursuant
to Rule 12b-1 under the Act. The Plan provides that the Fund will pay the
Distributor a fee which is accrued daily and paid monthly at the following
annual rates: (i) Class A -- up to 0.25% of the average daily net assets of
Class A; (ii) Class B -- 1.0% of the lesser of: (a) the average daily aggregate
gross sales of the Class B shares since 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 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
Directors will consider at that time the manner in which to treat such expenses.
The Distributor has advised the Fund that such excess amounts totaled
$23,933,658 at April 30, 2000.
15
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS APRIL 30, 2000 (UNAUDITED) CONTINUED
In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other
selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the six months ended April 30, 2000, 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,
2000, it received contingent deferred sales charges from certain redemptions of
the Fund's Class A shares, Class B shares and Class C shares of $3,089,
$1,339,464 and $8,345, respectively and received $96,683 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, 2000 aggregated
$790,589,952 and $748,806,860, respectively.
Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager,
Sub-Advisor, and Distributor, is the Fund's transfer agent.
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, 2000
included in Directors' fees and expenses in the Statement of Operations amounted
to $2,992. At April 30, 2000 the Fund had an accrued pension liability of
$53,203 which is included in accrued expenses in the Statement of Assets and
Liabilities.
5. FEDERAL INCOME TAX STATUS
As of October 31, 1999, 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, 2000 (UNAUDITED) CONTINUED
6. CAPITAL STOCK
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
APRIL 30, 2000 OCTOBER 31, 1999
--------------------------- ----------------------------
(UNAUDITED)
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ---------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold............................................................. 5,123,493 $ 113,751,118 8,696,899 $ 172,249,883
Reinvestment of dividends and distributions...................... 165,479 3,493,261 75,390 1,463,319
Redeemed......................................................... (4,583,932) (103,367,363) (8,213,688) (163,395,904)
----------- ------------- ----------- ---------------
Net increase - Class A........................................... 705,040 13,877,016 558,601 10,317,298
----------- ------------- ----------- ---------------
CLASS B SHARES
Sold............................................................. 20,307,628 444,687,108 50,876,749 1,001,144,838
Reinvestment of dividends and distributions...................... 13,398,700 278,023,037 9,664,315 186,231,346
Redeemed......................................................... (21,815,591) (477,384,404) (64,608,413) (1,273,856,469)
----------- ------------- ----------- ---------------
Net increase (decrease) - Class B................................ 11,890,737 245,325,741 (4,067,349) (86,480,285)
----------- ------------- ----------- ---------------
CLASS C SHARES
Sold............................................................. 1,112,840 24,308,453 3,770,574 73,985,576
Reinvestment of dividends and distributions...................... 214,720 4,451,145 123,351 2,373,265
Redeemed......................................................... (698,416) (15,346,878) (3,509,767) (68,955,477)
----------- ------------- ----------- ---------------
Net increase - Class C........................................... 629,144 13,412,720 384,158 7,403,364
----------- ------------- ----------- ---------------
CLASS D SHARES
Sold............................................................. 2,870,318 65,357,222 4,603,603 92,675,179
Reinvestment of dividends and distributions...................... 9,111 196,155 5,981 117,940
Redeemed......................................................... (1,794,513) (41,002,270) (4,471,436) (90,473,878)
----------- ------------- ----------- ---------------
Net increase - Class D........................................... 1,084,916 24,551,107 138,148 2,319,241
----------- ------------- ----------- ---------------
Net increase (decrease) in Fund.................................. 14,309,837 $ 297,166,584 (2,986,442) $ (66,440,382)
=========== ============= =========== ===============
</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, 2000 (UNAUDITED) CONTINUED
At April 30, 2000, there were outstanding forward contracts used to facilitate
settlement of foreign currency denominated portfolio transactions.
At April 30, 2000, investments in securities of issuers in the United Kingdom
represented 31.9% 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 PERIOD
FOR THE SIX FOR THE YEAR FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED ENDED THROUGH
APRIL 30, 2000 OCTOBER 31, 1999 OCTOBER 31, 1998 OCTOBER 31, 1997
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(UNAUDITED)
CLASS A SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period.... $ 20.70 $ 19.45 $ 18.46 $18.64
------- ------- ------- ------
Income (loss) from investment
operations:
Net investment income (loss)......... -- 0.10 0.08 (0.02)
Net realized and unrealized gain
(loss)............................... 4.05 3.03 2.70 (0.16)
------- ------- ------- ------
Total income (loss) from investment
operations............................. 4.05 3.13 2.78 (0.18)
------- ------- ------- ------
Less dividends and distributions from:
Net investment income................ -- -- (0.22) --
Net realized gain.................... (2.92) (1.88) (1.57) --
------- ------- ------- ------
Total dividends and distributions....... (2.92) (1.88) (1.79) --
------- ------- ------- ------
Net asset value, end of period.......... $ 21.83 $ 20.70 $ 19.45 $18.46
======= ======= ======= ======
TOTAL RETURN+........................... 20.10%(1) 16.75% 16.50% (0.97)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................ 1.27%(2)(3) 1.36%(3) 1.44%(3) 1.48 %(2)
Net investment income (loss)............ 0.00%(2)(3) 0.44%(3) 0.40%(3) (0.33)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands.............................. $43,458 $26,600 $14,133 $1,862
Portfolio turnover rate................. 32% 56% 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
19
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR ENDED OCTOBER 31
MONTHS ENDED ------------------------------------------------------------
APRIL 30, 2000++ 1999++ 1998++ 1997*++ 1996 1995
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
(UNAUDITED)
CLASS B SHARES
SELECTED PER SHARE DATA:
Net asset value, beginning of period.... $20.41 $19.34 $18.43 $16.76 $14.44 $13.49
------ ------ ------ ------ ------ ------
Income (loss) for investment operations:
Net investment income (loss)......... (0.08) (0.07) (0.05) 0.04 0.02 0.02
Net realized and unrealized gain..... 3.99 3.02 2.69 3.02 3.03 2.00
------ ------ ------ ------ ------ ------
Total income from investment
operations............................. 3.91 2.95 2.64 3.06 3.05 2.02
------ ------ ------ ------ ------ ------
Less dividends and distributions from:
Net investment income................ -- -- (0.16) (0.11) -- --
Net realized gain.................... (2.92) (1.88) (1.57) (1.28) (0.73) (1.07)
------ ------ ------ ------ ------ ------
Total dividends and distributions....... (2.92) (1.88) (1.73) (1.39) (0.73) (1.07)
------ ------ ------ ------ ------ ------
Net asset value, end of period.......... $21.40 $20.41 $19.34 $18.43 $16.76 $14.44
====== ====== ====== ====== ====== ======
TOTAL RETURN+........................... 19.66 %(1) 15.84 % 15.67 % 19.40% 22.27% 16.83%
RATIOS TO AVERAGE NET ASSETS:
Expenses................................ 2.05 %(2)(3) 2.13 %(3) 2.10 %(3) 2.06% 2.13% 2.23%
Net investment income (loss)............ (0.78)%(2)(3) (0.33)%(3) (0.26)%(3) 0.22% 0.14% 0.13%
SUPPLEMENTAL DATA:
Net assets, end of period, in
millions............................... $2,446 $2,090 $2,059 $1,707 $1,228 $868
Portfolio turnover rate................. 32 % 56 % 50 % 44% 49% 61%
</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
20
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED ENDED THROUGH
APRIL 30, 2000 OCTOBER 31, 1999 OCTOBER 31, 1998 OCTOBER 31, 1997
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(UNAUDITED)
CLASS C SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period.... $ 20.38 $ 19.31 $ 18.43 $18.64
------- ------- ------- ------
Income (loss) from investment
operations:
Net investment loss.................. (0.08) (0.05) (0.08) (0.04)
Net realized and unrealized gain
(loss)............................... 3.99 3.00 2.71 (0.17)
------- ------- ------- ------
Total income (loss) from investment
operations............................. 3.91 2.95 2.63 (0.21)
------- ------- ------- ------
Less dividends and distributions from:
Net investment income................ -- -- (0.18) --
Net realized gain.................... (2.92) (1.88) (1.57) --
------- ------- ------- ------
Total dividends and distributions....... (2.92) (1.88) (1.75) --
------- ------- ------- ------
Net asset value, end of period.......... $ 21.37 $ 20.38 $ 19.31 $18.43
======= ======= ======= ======
TOTAL RETURN+........................... 19.63 %(1) 15.87 % 15.57 % (1.13)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................ 2.05 %(2)(3) 2.13 %(3) 2.19 %(3) 2.24 %(2)
Net investment loss..................... (0.78)%(2)(3) (0.33)%(3) (0.35)%(3) (0.76)%(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands.............................. $46,179 $31,211 $22,159 $2,889
Portfolio turnover rate................. 32 % 56 % 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
21
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL HIGHLIGHTS, CONTINUED
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX FOR THE YEAR FOR THE YEAR JULY 28, 1997*
MONTHS ENDED ENDED ENDED THROUGH
APRIL 30, 2000 OCTOBER 31, 1999 OCTOBER 31, 1998 OCTOBER 31, 1997
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(UNAUDITED)
CLASS D SHARES++
SELECTED PER SHARE DATA:
Net asset value, beginning of period.... $ 21.05 $19.72 $18.47 $18.64
------- ------ ------ ------
Income (loss) from investment
operations:
Net investment income................ 0.04 0.13 0.16 0.02
Net realized and unrealized gain
(loss)............................... 4.11 3.08 2.89 (0.19)
------- ------ ------ ------
Total income (loss) from investment
operations............................. 4.15 3.21 3.05 (0.17)
------- ------ ------ ------
Less dividends and distributions from:
Net investment income................ -- -- (0.23) --
Net realized gain.................... (2.92) (1.88) (1.57) --
------- ------ ------ ------
Total dividends and distributions....... (2.92) (1.88) (1.80) --
------- ------ ------ ------
Net asset value, end of period.......... $ 22.28 $21.05 $19.72 $18.47
======= ====== ====== ======
TOTAL RETURN+........................... 20.20%(1) 16.93% 18.12% (0.91)%(1)
RATIOS TO AVERAGE NET ASSETS:
Expenses................................ 1.05%(2)(3) 1.13%(3) 1.19%(3) 1.23 %(2)
Net investment income................... 0.22%(2)(3) 0.67%(3) 0.65%(3) 0.33 %(2)
SUPPLEMENTAL DATA:
Net assets, end of period, in
thousands.............................. $30,163 $5,657 $2,575 $45
Portfolio turnover rate................. 32% 56% 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
22
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
---------------------------
DIRECTORS
Michael Bozic
Charles A. Fiumefreddo MORGAN STANLEY
Edwin J. Garn DEAN WITTER
Wayne E. Hedien EUROPEAN
Dr. Manuel H. Johnson GROWTH FUND
Michael E. Nugent
Philip J. Purcell
John L. Schroeder
OFFICERS
Charles A. Fiumefreddo
Chairman and Chief Executive Officer
Mitchell M. Merin
President
[PHOTO]
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 SEMIANNUAL REPORT
New York, New York 10020 APRIL 30, 2000
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 accompanied by an effective prospectus. Read the
prospectus carefully before investing.
