MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC, N-30D, 1999-12-29

MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC
N-30D, 1999-12-29

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<PAGE>

MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND TWO WORLD TRADE CENTER,
INC. NEW YORK, NEW YORK 10048
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1999

DEAR SHAREHOLDER:

During the twelve-month period ended October 31, 1999, the European equity
markets produced strong returns, rebounding from the correction brought on by
the Asian and emerging-market crisis of mid-1998.

MARKET OVERVIEW

In the months following the launch of the euro on January 1, 1999, the European
Central Bank established its credibility with the financial markets. The
political environment in Europe was generally calm during the fiscal year, with
no major changes in political orientation and stable, centrist governments in
most countries. The NATO action in Kosovo had a temporary negative effect on the
valuation of the euro and on investor confidence, but ultimately had a limited
impact. On the economic front, the period was characterized by improving data on
all fronts. The relative weakness of the euro helped the exporting sectors of
the region's economy; unemployment fell in most countries, albeit from high
levels; and the first-quarter reduction in interest rates by the European
Central Bank, coupled with historically low levels of inflation, created a
stable economic environment.

Against this backdrop, earnings for European companies generally met analysts'
forecasts. Takeover and merger activity ran at unprecedented levels in many key
industries, especially in the banking, telecommunications, oil and retail
sectors. The creation of the single European market and the accompanying
adoption of the euro were the primary drivers of much of this activity, as
companies are now compelled to operate on a Europe-wide scale. IPO and
privatization activity also continued at high levels.

PERFORMANCE AND PORTFOLIO

For the twelve-month period ended October 31, 1999, Morgan Stanley Dean Witter
European Growth Fund's Class B shares produced a total return of 15.84 percent,
versus 10.72 percent for the Lipper European Region Funds average and 24.91
percent for the Morgan Stanley Capital International (MSCI) World Index. For the
same period, the Fund's Class A, C and D shares posted total returns of 16.75
percent, 15.87 percent and 16.93 percent, respectively. The performance of the
Fund's

<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
LETTER TO THE SHAREHOLDERS OCTOBER 31, 1999, CONTINUED

four share classes varies because each class has different expenses. (The total
return figures shown assume the reinvestment of all distributions and do not
reflect the deduction of any applicable sales charges.) The accompanying chart
compares the Fund's performance to that of the Lipper and MSCI indexes.

Concentration in growth sectors of the markets, most notably telecom operators,
telecom equipment suppliers, technology stocks and quality financials, helped
the Fund to outperform its Lipper benchmark. The Fund's emphasis on individual
stock selection also contributed to its strong relative performance. Sector
rotation was strong during the period, with a pronounced cyclical rally in the
markets in the first half in sectors in which the Fund is underweighted, such as
steel, chemicals and pulp and paper.

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 fiscal year were as follows: 47.0 percent in the eurozone (the
11 countries that have adopted the euro as a common currency), 27.0 percent in
the United Kingdom, 10.2 percent in Switzerland and 10.3 percent in Sweden. The
remaining 5.5 percent of net assets were invested in cash and equivalents.

LOOKING AHEAD

Morgan Stanley Dean Witter Investment Management Inc., the Fund's sub-advisor,
maintains a positive outlook for the European equity markets. The sub-advisor
believes that all major European economies should see accelerated growth in
2000, provided that inflation and interest rates remain at moderate levels as
anticipated. The sub-advisor expects to see the European markets buoyed by
strong corporate earnings, valuations that are reasonable in a global context
and continued merger and acquisition activity.

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>
[SIGNATURE] [SIGNATURE]
Charles A. Fiumefreddo Mitchell M. Merin
CHAIRMAN OF THE BOARD PRESIDENT
</TABLE>

2
<PAGE>

MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND
INC.
FUND PERFORMANCE OCTOBER 31, 1999

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
GROWTH OF $10,000 -- CLASS B SHARES FUND MSCI (4) LIPPER (5)
<S> <C> <C> <C>
01-Jun-90 $10,000 $10,000 $10,000
31-Oct-90 $9,230 $8,805 $9,230
31-Oct-91 $9,353 $10,192 $9,452
31-Oct-92 $9,129 $9,659 $8,903
31-Oct-93 $12,666 $12,267 $11,216
31-Oct-94 $14,643 $13,206 $12,507
31-Oct-95 $17,108 $14,459 $13,741
31-Oct-96 $20,918 $16,814 $16,137
31-Oct-97 $24,976 $19,635 $19,692
31-Oct-98 $28,891 $22,630 $22,880
31-Oct-99 $33,468 (3) $28,269 $25,333
</TABLE>

PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. PERFORMANCE FOR
CLASS A, CLASS C, AND CLASS D SHARES WILL VARY FROM THE PERFORMANCE OF
CLASS B SHARES SHOWN ABOVE DUE TO DIFFERENCES IN SALES CHARGES AND EXPENSES.

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
----------------------------------------------------------------------------------------------
CLASS B SHARES* CLASS A SHARES+
-------------------------------------------- ---------------------------------------------
PERIOD ENDED 10/31/99 PERIOD ENDED 10/31/99
------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
1 Year 15.84%(1) 10.84%(2) 1 Year 16.75%(1) 10.62%(2)
5 Years 17.98 (1) 17.77 (2) Since Inception (7/28/97) 14.09 (1) 11.40 (2)
Since Inception (6/1/90) 13.69 (1) 13.69 (2)
</TABLE>

<TABLE>
<CAPTION>
CLASS C SHARES++ CLASS D SHARES#
--------------------------------------------- ---------------------------------------------
PERIOD ENDED 10/31/99 PERIOD ENDED 10/31/99
------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
1 Year 15.87%(1) 14.87%(2) 1 Year 16.93%(1)
Since Inception (7/28/97) 13.23 (1) 13.23 (2) Since Inception (7/28/97) 14.91 (1)
</TABLE>

- ------------------------
(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.
(3) Closing value assuming a complete redemption on October 31, 1999.
(4) The Morgan Stanley Capital International World Index (MSCI) 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.
(5) The Lipper European Region Funds Average tracks the performance of the
funds which primarily invest in equity securities whose primary trading
markets or operations are concentrated in the European region or a single
country within this region, as reported by Lipper Inc.
* The maximum contingent deferred sales charge (CDSC) for Class B is 5.0%.
The CDSC declines to 0% after six years.
+ The maximum front-end sales charge for Class A is 5.25%.
++ The maximum CDSC for Class C shares is 1% for shares redeemed within one
year of purchase.
# Class D shares have no sales charge.

3
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1999

<TABLE>
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS AND RIGHTS (94.9%)
FINLAND (3.3%)
TELECOMMUNICATIONS EQUIPMENT
619,300 Nokia Oyj (A Shares).............................................................. $ 71,065,310
--------------
FRANCE (18.3%)
BROADCASTING
92,376 Societe Television Francaise 1.................................................... 29,031,079
--------------
BUILDING MATERIALS/DIY CHAINS
66,600 Castorama Dubois Investissement................................................... 20,003,315
--------------
E.D.P. SERVICES
57,100 Cap Gemini S.A.................................................................... 8,671,343
--------------
FOOD CHAINS
257,806 Carrefour S.A..................................................................... 47,851,269
--------------
INTEGRATED OIL COMPANIES
359,065 Elf Aquitaine S.A................................................................. 53,013,793
--------------
INTERNATIONAL BANKS
589,196 Banque Nationale de Paris......................................................... 51,884,070
--------------
MOTOR VEHICLES
380,310 Renault S.A....................................................................... 19,732,886
--------------
MULTI-LINE INSURANCE
235,900 Axa............................................................................... 33,361,417
--------------
MULTI-SECTOR COMPANIES
325,430 Vivendi........................................................................... 24,727,450
--------------
OTHER PHARMACEUTICALS
302,244 Sanofi-Synthelabo S.A............................................................. 13,371,417
--------------
OTHER TELECOMMUNICATIONS
371,300 France Telecom S.A................................................................ 35,965,978
--------------
TELECOMMUNICATIONS EQUIPMENT
363,808 Alcatel........................................................................... 56,975,280
--------------

TOTAL FRANCE...................................................................... 394,589,297
--------------

GERMANY (11.7%)
APPAREL
166,485 Hugo Boss AG (Pref.).............................................................. 22,298,035
--------------
BANKING
536,950 Deutsche Bank AG (Registered Shares).............................................. 38,619,441
--------------
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMPUTER SOFTWARE
87,140 SAP AG............................................................................ $ 32,458,318
123,009 Software AG....................................................................... 5,299,278
--------------
37,757,596
--------------
DIVERSIFIED MANUFACTURING
225,310 Mannesmann AG..................................................................... 35,522,983
--------------
MAJOR PHARMACEUTICALS
977,844 Hoechst AG........................................................................ 43,157,155
--------------
MOTOR VEHICLES
471,390 Volkswagen AG..................................................................... 27,938,588
--------------
SHOE MANUFACTURING
135,000 Adidas-Salomon AG................................................................. 9,795,125
--------------
TELECOMMUNICATIONS
787,490 Deutsche Telekom AG............................................................... 36,292,280
--------------

TOTAL GERMANY..................................................................... 251,381,203
--------------

ITALY (2.0%)
BROADCASTING
2,131,956 Mediaset SpA*..................................................................... 21,336,944
--------------
INTERNATIONAL BANKS
1,929,600 Unicredito Italiano SpA........................................................... 9,055,555
--------------
PRINTING/FORMS
8,256,300 Seat Pagine Gialle SpA............................................................ 11,798,112
--------------

TOTAL ITALY....................................................................... 42,190,611
--------------

NETHERLANDS (6.5%)
ALCOHOLIC BEVERAGES
234,900 Heineken NV....................................................................... 12,012,211
--------------
DIVERSIFIED ELECTRONIC PRODUCTS
481,206 Koninklijke (Royal) Philips Electronics NV........................................ 49,479,285
--------------
DIVERSIFIED FINANCIAL SERVICES
649,900 Fortis (NL) NV.................................................................... 22,432,636
--------------
E.D.P. SERVICES
305,500 Getronics NV...................................................................... 15,271,346
--------------
FINANCIAL PUBLISHING/SERVICES
766,000 Wolters Kluwer NV................................................................. 25,664,556
--------------
FOOD CHAINS
723,500 Laurus NV......................................................................... 16,137,516
--------------

TOTAL NETHERLANDS................................................................. 140,997,550
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1999, CONTINUED

<TABLE>
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SPAIN (5.2%)
ADVERTISING
380,000 Telefonica Publicidad e Informacion, S.A.......................................... $ 8,315,521
--------------
E.D.P. SERVICES
1,326,100 Amadeus Global Travel Distribution S.A............................................ 7,957,494
--------------
INTERNATIONAL BANKS
911,400 Argentaria, Caja Postal y Banco Hipotecario de Espana, S.A........................ 20,280,528
236,896 Banco Popular Espanol S.A......................................................... 15,989,153
--------------
36,269,681
--------------
TELECOMMUNICATIONS
3,560,884 Telefonica S.A.*.................................................................. 58,733,021
--------------

TOTAL SPAIN....................................................................... 111,275,717
--------------
SWEDEN (10.3%)
CLOTHING/SHOE/ACCESSORY STORES
421,140 Hennes & Mauritz AB (B Shares).................................................... 11,215,275
--------------
DIVERSIFIED COMMERCIAL SERVICES
2,852,500 Securitas AB (Series "B" Free).................................................... 42,414,806
--------------
INDUSTRIAL MACHINERY/COMPONENTS
2,178,000 Assa Abloy AB (Series B).......................................................... 24,289,075
--------------
INTERNATIONAL BANKS
3,598,500 Nordbanken Holding AB............................................................. 21,052,067
--------------
LIFE INSURANCE
456,860 Skandia Forsakrings AB............................................................ 10,189,813
--------------
MAJOR PHARMACEUTICALS
1,091,708 AstraZeneca PLC................................................................... 49,430,763
--------------
TELECOMMUNICATIONS EQUIPMENT
1,504,100 Ericsson (L.M.) Telephone Co. AB (Series "B" Free)................................ 62,695,276
--------------

TOTAL SWEDEN...................................................................... 221,287,075
--------------
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SWITZERLAND (10.2%)
DIVERSIFIED COMMERCIAL SERVICES
30,110 Adecco S.A. (Registered Shares)................................................... $ 18,283,262
--------------
INTERNATIONAL BANKS
111,040 UBS AG (Registered Shares)*....................................................... 32,362,647
--------------
MAJOR PHARMACEUTICALS
14,941 Novartis AG (Registered Shares)................................................... 22,386,463
5,361 Roche Holdings AG................................................................. 64,471,512
--------------
86,857,975
--------------
PACKAGED FOODS
25,682 Nestle S.A. (Registered Shares)................................................... 49,618,900
--------------
TOBACCO
17,010 Compagnie Financiere Richemont AG (Series A)...................................... 32,551,173
--------------

TOTAL SWITZERLAND................................................................. 219,673,957
--------------

UNITED KINGDOM (27.0%)
ADVERTISING
3,208,243 Aegis Group PLC................................................................... 8,438,962
--------------
AEROSPACE
2,922,059 British Aerospace PLC............................................................. 17,077,740
1,563,760 Smiths Industries PLC............................................................. 21,093,590
--------------
38,171,330
--------------
ALCOHOLIC BEVERAGES
3,928,400 Allied Domecq PLC................................................................. 22,087,350
263,791 Bass PLC.......................................................................... 2,899,097
--------------
24,986,447
--------------
AUTO PARTS: O.E.M.
2,751,410 BBA Group PLC..................................................................... 19,224,102
--------------
BOOKS/MAGAZINES
1,535,408 EMAP PLC.......................................................................... 19,941,265
--------------
CABLE TELEVISION
762,356 Telewest Communications PLC*...................................................... 3,261,748
69,305 Telewest Communications PLC (Rights)*............................................. 53,778
--------------
3,315,526
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1999, CONTINUED

<TABLE>
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
CATALOG/SPECIALTY DISTRIBUTION
2,224,600 Great Universal Stores PLC........................................................ $ 16,896,460
--------------
CELLULAR TELEPHONE
9,280,700 Vodafone AirTouch PLC............................................................. 43,178,642
--------------
DIVERSIFIED FINANCIAL SERVICES
1,748,500 HSBC Holdings PLC................................................................. 21,544,632
1,269,000 Lloyds TSB Group PLC.............................................................. 17,555,676
--------------
39,100,308
--------------
FOOD CHAINS
3,666,900 Morrison (W.M.) Supermarkets PLC.................................................. 8,500,021
--------------
INTEGRATED OIL COMPANIES
7,863,668 BP Amoco PLC...................................................................... 76,339,074
--------------
INTERNATIONAL BANKS
1,361,100 Barclays PLC...................................................................... 41,687,390
--------------
INTERNET SERVICES
644,000 Freeserve PLC..................................................................... 1,471,643
--------------
LIFE INSURANCE
2,996,800 Prudential Corp. PLC.............................................................. 47,025,726
--------------
MAJOR PHARMACEUTICALS
641,325 Glaxo Wellcome PLC................................................................ 18,935,916
1,111,481 SmithKline Beecham PLC............................................................ 14,325,834
--------------
33,261,750
--------------
MOVIES/ENTERTAINMENT
761,274 Flextech PLC*..................................................................... 11,016,632
--------------
MULTI-SECTOR COMPANIES
3,531,600 General Electric Co. PLC.......................................................... 38,406,362
--------------
OIL/GAS TRANSMISSION
5,180,800 BG PLC............................................................................ 28,766,962
--------------
OTHER SPECIALTY STORES
1,316,740 Kingfisher PLC.................................................................... 14,384,568
--------------
RESTAURANTS
3,946,836 Granada Group PLC................................................................. 31,210,158
--------------
TELECOMMUNICATIONS
1,984,500 British Telecommunications PLC.................................................... 36,001,887
--------------

TOTAL UNITED KINGDOM.............................................................. 581,325,215
--------------

UNITED STATES (0.4%)
OTHER TELECOMMUNICATIONS
124,900 NTL Inc.*......................................................................... 9,414,337
--------------

TOTAL COMMON AND PREFERRED STOCKS AND RIGHTS
(IDENTIFIED COST $1,612,765,955).................................................. 2,043,200,272
--------------
</TABLE>

<TABLE>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
- ----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT (a) (5.0%)
U.S. GOVERNMENT AGENCY
$ 108,500 Federal Home Loan Mortgage Corp. 5.16% due 11/01/99 (AMORTIZED COST
$108,500,000)................................................................... $ 108,500,000
--------------
</TABLE>

<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(IDENTIFIED COST $1,721,265,955) (b).................................................... 99.9% 2,151,700,272

CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.......................................... 0.1 1,873,410
----- ---------------

NET ASSETS.............................................................................. 100.0% $ 2,153,573,682
----- ---------------
----- ---------------
</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 $474,214,918 and the
aggregate gross unrealized depreciation is $43,780,601, resulting in net
unrealized appreciation of $430,434,317.

FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCTOBER 31, 1999:

<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS TO IN DELIVERY APPRECIATION/
RECEIVE EXCHANGE FOR DATE (DEPRECIATION)
- -----------------------------------------------------
<S> <C> <C> <C>
$ 1,523,092 EUR 1,450,563 11/01/99 $ (6,673)
GBP 203,004 $ 332,216 11/02/99 1,523
-------
Net unrealized depreciation.... $ (5,150)
=======
</TABLE>

CURRENCY ABBREVIATIONS:

<TABLE>
<S> <C>
EUR Euro.
GBP British Pound.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
SUMMARY OF INVESTMENTS OCTOBER 31, 1999

<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Advertising..................................................................... $ 16,754,483 0.8%
Aerospace....................................................................... 38,171,330 1.8
Alcoholic Beverages............................................................. 36,998,659 1.7
Apparel......................................................................... 22,298,035 1.0
Auto Parts: O.E.M............................................................... 19,224,102 0.9
Banking......................................................................... 38,619,442 1.8
Books/Magazines................................................................. 19,941,265 0.9
Broadcasting.................................................................... 50,368,023 2.3
Building Materials/DIY Chains................................................... 20,003,315 0.9
Cable Television................................................................ 3,315,526 0.2
Catalog/Specialty Distribution.................................................. 16,896,460 0.8
Cellular Telephone.............................................................. 43,178,642 2.0
Clothing/Shoe/Accessory Stores.................................................. 11,215,275 0.5
Computer Software............................................................... 37,757,597 1.8
Diversified Commercial Services................................................. 60,698,068 2.8
Diversified Electronic Products................................................. 49,479,285 2.3
Diversified Financial Services.................................................. 61,532,944 2.9
Diversified Manufacturing....................................................... 35,522,983 1.6
E.D.P. Services................................................................. 31,900,183 1.5
Financial Publishing/Services................................................... 25,664,556 1.2
Food Chains..................................................................... 72,488,805 3.5
Industrial Machinery/Components................................................. 24,289,075 1.1
Integrated Oil Companies........................................................ 129,352,866 6.0
International Banks............................................................. 192,311,409 8.9
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>

Internet Services............................................................... $ 1,471,643 0.1%
Life Insurance.................................................................. 57,215,539 2.7
Major Pharmaceuticals........................................................... 212,707,642 9.9
Motor Vehicles.................................................................. 47,671,474 2.2
Movies/Entertainment............................................................ 11,016,632 0.5
Multi-Line Insurance............................................................ 33,361,417 1.5
Multi-Sector Companies.......................................................... 63,133,812 2.9
Oil/Gas Transmission............................................................ 28,766,962 1.3
Other Pharmaceuticals........................................................... 13,371,417 0.6
Other Specialty Stores.......................................................... 14,384,568 0.7
Other Telecommunications........................................................ 45,380,316 2.1
Packaged Foods.................................................................. 49,618,900 2.3
Printing/Forms.................................................................. 11,798,112 0.5
Restaurants..................................................................... 31,210,158 1.4
Shoe Manufacturing.............................................................. 9,795,125 0.5
Telecommunications.............................................................. 131,027,188 6.1
Telecommunications Equipment.................................................... 190,735,866 8.9
Tobacco......................................................................... 32,551,173 1.5
U.S. Government Agency.......................................................... 108,500,000 5.0
-------------- -----
$2,151,700,272 99.9%
-------------- -----
-------------- -----
</TABLE>

<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Common Stocks................................................................... $2,020,848,459 93.9%
Preferred Stocks................................................................ 22,298,035 1.0
Rights.......................................................................... 53,778 0.0
Short-Term Investments.......................................................... 108,500,000 5.0
-------------- -----
$2,151,700,272 99.9%
-------------- -----
-------------- -----
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL STATEMENTS

STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999

<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value
(identified cost $1,721,265,955).......................................................... $2,151,700,272
Cash........................................................................................ 663,564
Receivable for:
Foreign withholding taxes reclaimed..................................................... 3,319,528
Dividends............................................................................... 1,702,259
Investments sold........................................................................ 1,529,764
Capital stock sold...................................................................... 1,442,354
Prepaid expenses and other assets........................................................... 114,069
--------------
TOTAL ASSETS........................................................................... 2,160,471,810
--------------
LIABILITIES:
Payable for:
Plan of distribution fee................................................................ 1,776,870
Investment management fee............................................................... 1,635,535
Capital stock repurchased............................................................... 1,570,202
Investments purchased................................................................... 1,407,783
Accrued expenses and other payables......................................................... 507,738
--------------
TOTAL LIABILITIES...................................................................... 6,898,128
--------------
NET ASSETS............................................................................. $2,153,573,682
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................. $1,415,594,802
Net unrealized appreciation................................................................. 430,423,663
Accumulated net investment loss............................................................. (52,758)
Accumulated undistributed net realized gain................................................. 307,607,975
--------------
NET ASSETS............................................................................. $2,153,573,682
==============
CLASS A SHARES:
Net Assets.................................................................................. $26,599,770
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 1,285,285
NET ASSET VALUE PER SHARE.............................................................. $20.70
==============
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE)...................................... $21.85
==============
CLASS B SHARES:
Net Assets.................................................................................. $2,090,105,907
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 102,406,099
NET ASSET VALUE PER SHARE.............................................................. $20.41
==============
CLASS C SHARES:
Net Assets.................................................................................. $31,211,288
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 1,531,534
NET ASSET VALUE PER SHARE.............................................................. $20.38
==============
CLASS D SHARES:
Net Assets.................................................................................. $5,656,717
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 268,687
NET ASSET VALUE PER SHARE.............................................................. $21.05
==============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1999

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

INCOME
Dividends (net of $4,856,198 foreign withholding tax)......................................... $ 37,262,829
Interest...................................................................................... 2,643,120
------------

TOTAL INCOME............................................................................. 39,905,949
------------

EXPENSES
Plan of distribution fee (Class A shares)..................................................... 51,051
Plan of distribution fee (Class B shares)..................................................... 21,619,519
Plan of distribution fee (Class C shares)..................................................... 300,136
Investment management fee..................................................................... 20,191,808
Transfer agent fees and expenses.............................................................. 2,595,175
Custodian fees................................................................................ 1,512,611
Registration fees............................................................................. 251,038
Shareholder reports and notices............................................................... 249,204
Professional fees............................................................................. 122,464
Directors' fees and expenses.................................................................. 15,894
Other......................................................................................... 45,108
------------

TOTAL EXPENSES........................................................................... 46,954,008
------------

NET INVESTMENT LOSS...................................................................... (7,048,059)
------------

NET REALIZED AND UNREALIZED GAIN:
Net realized gain/loss on:
Investments............................................................................... 307,863,489
Foreign exchange transactions............................................................. (2,407,675)
------------

NET GAIN................................................................................. 305,455,814
------------
Net change in unrealized appreciation/depreciation on:
Investments............................................................................... 26,850,307
Translation of forward foreign currency contracts, other assets and liabilities
denominated in foreign currencies....................................................... (246,547)
------------

NET APPRECIATION......................................................................... 26,603,760
------------

NET GAIN................................................................................. 332,059,574
------------

NET INCREASE.................................................................................. $325,011,515
============
</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>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1999 OCTOBER 31, 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>

INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
Net investment loss..................................................... $ (7,048,059) $ (5,255,213)
Net realized gain....................................................... 305,455,814 203,754,608
Net change in unrealized appreciation................................... 26,603,760 39,913,912
-------------- --------------

NET INCREASE....................................................... 325,011,515 238,413,307
-------------- --------------

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 (decrease) from capital stock transactions................. (66,440,382) 309,793,888
-------------- --------------

NET INCREASE....................................................... 55,334,899 386,009,239

NET ASSETS:
Beginning of period..................................................... 2,098,238,783 1,712,229,544
-------------- --------------

END OF PERIOD
(INCLUDING NET INVESTMENT LOSSES OF $52,758 AND $53,755,
RESPECTIVELY)....................................................... $2,153,573,682 $2,098,238,783
============== ==============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1999

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

11
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1999, 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.

12
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1999, 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.
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.

13
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1999, 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% of the portion of 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% 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% of the
portion of daily net assets exceeding $500 million but not exceeding
$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 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

14
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1999, CONTINUED

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, Sub-Advisor, and Distributor and other selected
broker-dealers for their opportunity costs in advancing such amounts, which
compensation would be in the form of a carrying charge on any unreimbursed
expenses.

In the case of Class B shares, provided that the Plan continues in effect, any
cumulative expenses incurred by the Distributor but not yet recovered may be
recovered through the payment of future distribution fees from the Fund pursuant
to the Plan and contingent deferred sales charges paid by investors upon
redemption of Class B shares. Although there is no legal obligation for the Fund
to pay expenses incurred in excess of payments made to the Distributor under the
Plan and the proceeds of contingent deferred sales charges paid by investors
upon redemption of shares, if for any reason the Plan is terminated, the
Directors 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 $25,111,962 at October 31, 1999.

In the case of Class A shares and Class C shares, expenses incurred pursuant to
the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily
net assets of Class A or Class C, respectively, will not be reimbursed by the
Fund through payments in any subsequent year, except that expenses representing
a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or

15
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1999, CONTINUED

other selected broker-dealer representatives may be reimbursed in the subsequent
calendar year. For the year ended October 31, 1999, the distribution fee was
accrued for Class A shares and Class C shares at the annual rate of 0.23% and
1.0%, respectively.

The Distributor has informed the Fund that for the year ended October 31, 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 $1,254, $3,310,739
and $41,175, respectively and received $122,548 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 year ended October 31, 1999 aggregated
$1,201,086,900 and $1,519,977,519, respectively.

For the year ended October 31, 1999 the Fund incurred brokerage commissions of
$7,129 with Morgan Stanley & Co., Inc., an affiliate of the Investment Manager,
Sub-Advisor, and Distributor for portfolio transactions executed on behalf of
the Fund.

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 year ended October 31, 1999 included
in Directors' fees and expenses in the Statement of Operations amounted to
$5,573. At October 31, 1999 the Fund had an accrued pension liability of $52,758
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 and permanent book/tax
differences attributable to foreign currency losses and a net operating loss. To
reflect reclassifications arising from the permanent differences,
paid-in-capital was charged $9,462,499, accumulated undistributed net realized
gain was credited $2,413,443 and accumulated net investment loss was credited
$7,049,056.

16
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 1999, CONTINUED

6. CAPITAL STOCK

Transactions in capital stock were as follows:

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 1999 OCTOBER 31, 1998
---------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold............................................................. 8,696,899 $ 172,249,883 972,628 $ 19,445,361
Reinvestment of dividends and distributions...................... 75,390 1,463,319 13,548 229,902
Redeemed......................................................... (8,213,688) (163,395,904) (360,375) (6,702,611)
----------- --------------- ----------- ---------------
Net increase - Class A........................................... 558,601 10,317,298 625,801 12,972,652
----------- --------------- ----------- ---------------

CLASS B SHARES
Sold............................................................. 50,876,749 1,001,144,838 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......................................................... (64,608,413) (1,273,856,469) (58,362,589) (1,150,703,310)
----------- --------------- ----------- ---------------
Net increase (decrease) - Class B................................ (4,067,349) (86,480,285) 13,808,199 271,481,989
----------- --------------- ----------- ---------------

CLASS C SHARES
Sold............................................................. 3,770,574 73,985,576 2,310,164 46,726,072
Reinvestment of dividends and distributions...................... 123,351 2,373,265 17,786 301,660
Redeemed......................................................... (3,509,767) (68,955,477) (1,337,353) (26,487,758)
----------- --------------- ----------- ---------------
Net increase - Class C........................................... 384,158 7,403,364 990,597 20,539,974
----------- --------------- ----------- ---------------

CLASS D SHARES
Sold............................................................. 4,603,603 92,675,179 2,115,452 39,819,014
Reinvestment of dividends and distributions...................... 5,981 117,940 231 3,921
Redeemed......................................................... (4,471,436) (90,473,878) (1,987,563) (35,023,662)
----------- --------------- ----------- ---------------
Net increase - Class D........................................... 138,148 2,319,241 128,120 4,799,273
----------- --------------- ----------- ---------------
Net increase (decrease) in Fund.................................. (2,986,442) $ (66,440,382) 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 OCTOBER 31, 1999, CONTINUED

At October 31, 1999, there were outstanding forward contracts used to facilitate
settlement of foreign currency denominated portfolio transactions.

At October 31, 1999, investments in securities of issuers in the United Kingdom
represented 27.0% 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 YEAR FOR THE YEAR JULY 28, 1997*
ENDED ENDED THROUGH
OCTOBER 31, 1999 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)................... 0.10 0.08 (0.02)
Net realized and unrealized gain (loss)........ 3.03 2.70 (0.16)
----------- ----------- -----------

Total income (loss) from investment operations.... 3.13 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.................... $ 20.70 $ 19.45 $ 18.46
=========== =========== ===========

TOTAL RETURN+..................................... 16.75% 16.50% (0.97)%(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses.......................................... 1.36%(3) 1.44%(3) 1.48 %(2)

Net investment income (loss)...................... 0.44%(3) 0.40%(3) (0.33)%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands........... $26,600 $14,133 $1,862

Portfolio turnover rate........................... 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 YEAR ENDED OCTOBER 31
----------------------------------------------------------
1999++ 1998++ 1997*++ 1996 1995
- ---------------------------------------------------------------------------------------------------------

<S> <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
------ ------ ------ ------ ------

Income (loss) for investment operations:
Net investment income (loss).............. (0.07) (0.05) 0.04 0.02 0.02
Net realized and unrealized gain.......... 3.02 2.69 3.02 3.03 2.00
------ ------ ------ ------ ------

Total income from investment operations...... 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......................... (1.88) (1.57) (1.28) (0.73) (1.07)
------ ------ ------ ------ ------

Total dividends and distributions............ (1.88) (1.73) (1.39) (0.73) (1.07)
------ ------ ------ ------ ------

Net asset value, end of period............... $20.41 $19.34 $18.43 $16.76 $14.44
====== ====== ====== ====== ======

TOTAL RETURN+................................ 15.84 % 15.67 % 19.40% 22.27% 16.83%

RATIOS TO AVERAGE NET ASSETS:
Expenses..................................... 2.13 %(1) 2.10 %(1) 2.06% 2.13% 2.23%

Net investment income (loss)................. (0.33)%(1) (0.26)%(1) 0.22% 0.14% 0.13%

SUPPLEMENTAL DATA:
Net assets, end of period, in millions....... $2,090 $2,059 $1,707 $1,228 $868

Portfolio turnover rate...................... 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) 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

<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............................ (0.05) (0.08) (0.04)
Net realized and unrealized gain (loss)........ 3.00 2.71 (0.17)
----------- ----------- -----------

Total income (loss) from investment operations.... 2.95 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.................... $ 20.38 $ 19.31 $ 18.43
=========== =========== ===========

TOTAL RETURN+..................................... 15.87 % 15.57 % (1.13)%(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses.......................................... 2.13 %(3) 2.19 %(3) 2.24 %(2)

Net investment loss............................... (0.33)%(3) (0.35)%(3) (0.76)%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands........... $31,211 $22,159 $2,889

Portfolio turnover rate........................... 56 % 50 % 44 %
</TABLE>

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

SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL HIGHLIGHTS, CONTINUED

<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.......................... 0.13 0.16 0.02
Net realized and unrealized gain (loss)........ 3.08 2.89 (0.19)
----------- ----------- -----------

Total income (loss) from investment operations.... 3.21 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.................... $ 21.05 $ 19.72 $ 18.47
=========== =========== ===========

TOTAL RETURN+..................................... 16.93% 18.12% (0.91)%(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses.......................................... 1.13%(3) 1.19%(3) 1.23 %(2)

Net investment income............................. 0.67%(3) 0.65%(3) 0.33 %(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands........... $5,657 $2,575 $45

Portfolio turnover rate........................... 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>

MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND
INC.
REPORT OF INDEPENDENT ACCOUNTANTS

TO THE SHAREHOLDERS AND BOARD OF DIRECTORS
OF MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.

In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Morgan Stanley Dean Witter European
Growth Fund Inc. (the "Fund") at October 31, 1999, the results of its operations
for the year then ended, the changes in its net assets for each of the two years
in the period then ended and the financial highlights for each of the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
October 31, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.

PricewaterhouseCoopers LLP
1177 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
DECEMBER 20, 1999

1999 FEDERAL TAX NOTICE (UNAUDITED)

During the year ended October 31, 1999, the Fund paid to its
shareholders $1.88 per share from long-term capital gains.

23
<PAGE>

DIRECTORS

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

OFFICERS

Charles A. Fiumefreddo
Chairman and Chief Executive Officer

Mitchell M. Merin
President

Barry Fink
Vice President, Secretary and General Counsel

Thomas F. Caloia
Treasurer

TRANSFER AGENT

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

INDEPENDENT ACCOUNTANTS

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

INVESTMENT MANAGER

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

SUB-ADVISOR

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

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.

MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND

[GRAPHIC]

ANNUAL REPORT
OCTOBER 31, 1999