MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC, N-30D, 2000-12-29

MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC
N-30D, 2000-12-29

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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, 2000

DEAR SHAREHOLDER:

The 12-month period ended October 31, 2000, started with extraordinary strength
in the stock markets of Europe and beyond. The global equity bull run
accelerated sharply at that time, stimulated by the arrival of new-economy names
into the arena and the potential for companies to tap into the Internet for
growth. The group of stocks where this potential was considered present --
technology, media, software and telecommunications -- strongly outperformed
their peers in the early part of the period. By the beginning of March, however,
the valuation differential between these sectors and the rest of the market had
reached extremes the fundamentals could no longer justify. Since that time the
markets have witnessed the steady unwinding of this valuation gap. Leadership of
the markets changed hands frequently in the second and third quarters of 2000,
with value stocks significantly outperforming growth issues during the second
half of the fiscal year.

The euro has remained weak against the U.S. dollar and has failed to rally
appreciably, despite attempts by the European Central Bank to stay this decline
through intervention. Evidence of slowing global economic growth rates and high
oil prices will make it harder for European companies to increase earnings next
year at a pace equal to that seen so far in 2000.

PERFORMANCE

For the 12-month period ended October 31, 2000, Morgan Stanley Dean Witter
European Growth Fund's Class B shares produced a total return of 10.05 percent
compared to 1.09 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 10.92 percent, 10.11 percent and 11.19 percent, respectively.
The performance of the Fund's four share classes varies because each has
different expenses. The total return figures given assume the reinvestment of
all

<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
LETTER TO THE SHAREHOLDERS OCTOBER 31, 2000, CONTINUED

distributions but do not reflect the deduction of any applicable sales charges.
The accompanying chart compares the Fund's performance to that of the MSCI
index.

PORTFOLIO STRATEGY

During the fiscal year, the Fund maintained its concentration in mid- and
large-capitalization growth stocks, continuing to use an investment process
driven by stock-specific considerations. At the start of the period, the Fund's
growth-stock emphasis gave rise to significant weightings in the technology,
media and telecommunications sectors. This emphasis generated strong investment
returns from November to February, when the market favored stocks that were seen
as being tied into the new economy. As valuation anomalies between these stocks
and the rest of the market became evident, the Fund took profits in some of the
best-performing names. Morgan Stanley Dean Witter Investment Management Inc.,
the Fund's sub-advisor, reduced the Fund's positions in information technology
consultancy companies, telecommunications equipment suppliers and
telecommunications operators and redeployed proceeds from these sales in
more-defensive growth sectors such as pharmaceuticals, oil and food
manufacturing.

The European equity markets corrected sharply during the second quarter of 2000.
Since then, they have traded largely sideways in local currency terms but have
fallen when measured in U.S. dollars and have exhibited a notable increase in
volatility. The sub-advisor has responded to this more-volatile environment by
continuing to reposition the Fund's portfolio away from growth companies with
high valuations into more defensive growth stocks. Morgan Stanley Dean Witter
Investment Management believes that these companies will be better insulated
against the uncertainty currently plaguing the technology sector. The Fund has
pursued this strategy by increasing its holdings in companies that the
sub-advisor believes demonstrate a clear competitive superiority in their
respective markets.

As of October 31, 2000, the Fund's regional weightings were as follows: 38.5
percent of net assets in the 11 eurozone countries, 38.9 percent in the United
Kingdom, 10.5 percent in Switzerland, 7.8 percent in Sweden and 0.4 percent in
Denmark. The remaining 3.9 percent was invested in cash.

LOOKING AHEAD

Although Morgan Stanley Dean Witter Investment Management anticipates further
market volatility in the near term, it remains optimistic about the outlook for
European equities in 2001. The sub-advisor anticipates that the coming year
could bring about an environment in which central banks in

2
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
LETTER TO THE SHAREHOLDERS OCTOBER 31, 2000, CONTINUED

Europe and the United States move away from a tightening bias, oil prices fall
from their current high levels and economies show signs of a soft rather than a
hard landing. There is evidence that cash at the investor level is higher than
normal and that mutual fund demand for equities is still strong, albeit not near
the high levels seen in the first quarter of this year. Valuation pressures seem
to be easing as technology, media, software and telecommunications stocks fall
toward more realistic levels. Any combination of these factors would likely make
for a healthy environment for equities in 2001.

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,

[/S/ CHARLES A. FIUMEFREDDO] [/S/ MITCHELL M. MERIN]
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
CHAIRMAN OF THE BOARD PRESIDENT

3
<PAGE>

MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FUND PERFORMANCE OCTOBER 31, 2000

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

GROWTH OF $10,000--CLASS B SHARES
($ in Thousands)

<TABLE>
<CAPTION>
FUND MSCI(4)
OCTOBER 1990 $10,000 $10,000
OCTOBER 1991 $10,133 $11,575
OCTOBER 1992 $9,891 $10,970
<S> <C> <C>
October 1993 $13,723 $13,932
October 1994 $15,865 $14,998
October 1995 $18,535 $16,420
October 1996 $22,663 $19,096
October 1997 $27,060 $22,299
October 1998 $31,301 $25,701
October 1999 $36,260 $32,105
October 2000 $39,905(3) $32,456
</TABLE>

PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS. INVESTMENT RETURN AND
PRINCIPAL VALUE WILL FLUCTUATE. WHEN YOU SELL FUND SHARES, THEY MAY BE WORTH
LESS THAN THEIR ORIGINAL COST. 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 A SHARES* CLASS B SHARES**
-------------------------------------------- ---------------------------------------------
PERIOD ENDED 10/31/00 PERIOD ENDED 10/31/00
------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
1 Year 10.92%(1) 5.10%(2) 1 Year 10.05%(1) 5.23%(2)
Since Inception (7/28/97) 13.10%(1) 11.25%(2) 5 Years 16.57%(1) 16.36%(2)
10 Years 14.84%(1) 14.84%(2)
</TABLE>

<TABLE>
<CAPTION>
CLASS C SHARES+ CLASS D SHARES#
--------------------------------------------- ---------------------------------------------
PERIOD ENDED 10/31/00 PERIOD ENDED 10/31/00
------------------------- -------------------------
<S> <C> <C> <C> <C> <C>
1 Year 10.11%(1) 9.15%(2) 1 Year 11.19%(1)
Since Inception (7/28/97) 12.26%(1) 12.26%(2) Since Inception (7/28/97) 13.74%(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, 2000.
(4) The Morgan Stanley Capital International (MSCI) World Index measures
performance from a diverse range of global stock markets including
securities representative of the market structure of 22 developed market
countries in North America, Europe, and the Asia/Pacific region. 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 include any expenses, fees or
charges. The Index is unmanaged and should not be considered an investment.
* The maximum front-end sales charge for Class A is 5.25%.
** The maximum contingent deferred sales charge (CDSC) for Class B is 5.0%.
The CDSC declines to 0% after six years.
+ The maximum contingent deferred sales charge for Class C shares is 1% for
shares redeemed within one year of purchase.
# Class D shares have no sales charge.

4
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000

SHARES VALUE
----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMON AND PREFERRED STOCKS (96.1%)
DENMARK (0.4%)
SPECIALTY TELECOMMUNICATIONS
202,430 Tele Danmark AS.................................................................... $ 9,584,426
--------------

FINLAND (4.9%)
TELECOMMUNICATION EQUIPMENT
2,808,115 Nokia Oyj.......................................................................... 115,618,123
--------------
FRANCE (12.3%)
BROADCASTING
160,900 Societe Television Francaise 1..................................................... 8,784,678
--------------
ELECTRONICS/APPLIANCES
146,753 Thomson Multimedia*................................................................ 6,728,830
--------------
HOME IMPROVEMENT CHAINS
116,600 Castorama Dubois Investissement.................................................... 23,721,612
--------------
MAJOR BANKS
538,796 BNP Paribas S.A.................................................................... 46,481,155
--------------
MULTI-LINE INSURANCE
329,540 AXA................................................................................ 43,650,737
--------------
OIL REFINING/MARKETING
472,070 Total Fina Elf..................................................................... 67,580,720
--------------
PHARMACEUTICALS: MAJOR
725,261 Aventis S.A........................................................................ 52,344,625
--------------
SEMICONDUCTORS
531,360 STMicroelectronics NV.............................................................. 26,822,519
--------------
TELECOMMUNICATION EQUIPMENT
225,450 Alcatel............................................................................ 13,763,788
--------------
TOTAL FRANCE....................................................................... 289,878,664
--------------
GERMANY (2.3%)
APPAREL/FOOTWEAR
92,563 Hugo Boss AG (Pref.)............................................................... 23,421,383
--------------
MAJOR BANKS
623,270 Dresdner Bank AG................................................................... 25,905,248
--------------
PACKAGED SOFTWARE
51,764 Software AG........................................................................ 3,757,965
--------------

TOTAL GERMANY...................................................................... 53,084,596
--------------
<CAPTION>

SHARES VALUE
----------------------------------------------------------------------------------------------------------------
<C> <S> <C>

ITALY (3.6%)
INTEGRATED OIL
6,167,790 ENI SpA............................................................................ $ 33,412,509
--------------
MAJOR BANKS
3,470,180 Banca Intesa SpA................................................................... 14,408,531
3,744,490 Unicredito Italiano SpA............................................................ 19,076,679
--------------
33,485,210
--------------
MAJOR TELECOMMUNICATIONS
1,576,180 Telecom Italia SpA................................................................. 18,268,265
--------------

TOTAL ITALY........................................................................ 85,165,984
--------------

NETHERLANDS (11.3%)
APPAREL/FOOTWEAR
126,632 Gucci Group NV..................................................................... 12,365,172
--------------
BEVERAGES: ALCOHOLIC
313,030 Heineken NV........................................................................ 17,010,802
--------------
ELECTRONIC EQUIPMENT/INSTRUMENTS
2,057,800 Koninklijke (Royal) Philips Electronics NV......................................... 80,916,443
--------------
ELECTRONIC PRODUCTION EQUIPMENT
980,500 ASM Lithography Holding NV*........................................................ 26,816,196
--------------
FINANCIAL CONGLOMERATES
839,650 Fortis (NL) NV..................................................................... 25,666,085
--------------
FOOD RETAIL
1,067,648 Koninklijke Ahold NV............................................................... 31,030,861
--------------
INFORMATION TECHNOLOGY SERVICES
1,981,360 Getronics NV....................................................................... 22,291,439
--------------
INTEGRATED OIL
864,600 Royal Dutch Petroleum Co........................................................... 51,308,476
--------------

TOTAL NETHERLANDS.................................................................. 267,405,474
--------------

PORTUGAL (0.4%)
MAJOR TELECOMMUNICATIONS
1,175,980 Portugal Telecom, S.A. (Registered Shares)......................................... 10,484,508
--------------

SPAIN (3.7%)
ADVERTISING/MARKETING SERVICES
403,220 Telefonica Publicidad e Information, S.A........................................... 2,738,993
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

SHARES VALUE
----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
MAJOR BANKS
2,192,110 Banco Bilbao Vizcaya Argentaria, S.A............................................... $ 29,222,734
--------------
MAJOR TELECOMMUNICATIONS
1,872,831 Telefonica S.A.*................................................................... 35,732,261
--------------
OTHER CONSUMER SERVICES
2,463,020 Amadeus Global Travel Distribution S.A. (A Shares)*................................ 20,139,703
--------------

TOTAL SPAIN........................................................................ 87,833,691
--------------

SWEDEN (7.8%)
INDUSTRIAL MACHINERY
2,473,826 Assa Abloy AB (Series B)........................................................... 45,513,847
--------------
MISCELLANEOUS COMMERCIAL SERVICES
2,088,580 Securitas AB (Series "B" Free)..................................................... 44,482,306
--------------
REGIONAL BANKS
5,768,170 Nordbanken Holding AB.............................................................. 43,256,949
--------------
TELECOMMUNICATION EQUIPMENT
3,838,450 Telefonaktiebolaget LM Ericsson AB (Series "B" Free)............................... 51,046,280
--------------
TOTAL SWEDEN....................................................................... 184,299,382
--------------
SWITZERLAND (10.5%)
FOOD: MAJOR DIVERSIFIED
33,147 Nestle S.A. (Registered Shares).................................................... 68,679,817
--------------
HOUSEHOLD/PERSONAL CARE
13,550 Givaudan (Registered Shares)*...................................................... 3,248,443
--------------
MAJOR BANKS
353,020 UBS AG (Registered Shares)......................................................... 48,894,193
--------------
OTHER CONSUMER SPECIALTIES
10,618 Compagnie Financiere Richemont AG (Series A)....................................... 29,530,537
--------------
PERSONNEL SERVICES
26,380 Adecco S.A. (Registered Shares).................................................... 18,239,148
--------------
<CAPTION>

SHARES VALUE
----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
PHARMACEUTICALS: MAJOR
23,756 Novartis AG (Registered Shares).................................................... $ 36,034,382
4,605 Roche Holdings AG.................................................................. 42,059,239
--------------
78,093,621
--------------

TOTAL SWITZERLAND.................................................................. 246,685,759
--------------

UNITED KINGDOM (38.9%)
ADVERTISING/MARKETING SERVICES
1,906,610 WPP Group PLC...................................................................... 25,577,697
--------------
AUTO PARTS: O.E.M.
1,136,413 BBA Group PLC...................................................................... 6,238,209
--------------
BEVERAGES: ALCOHOLIC
4,385,770 Allied Domecq PLC.................................................................. 22,659,930
4,309,160 Diageo PLC......................................................................... 40,653,484
--------------
63,313,414
--------------
CABLE/SATELLITE T V
3,448,259 Telewest Communications PLC*....................................................... 5,701,151
--------------
CATALOG/SPECIALTY DISTRIBUTION
3,470,400 Great Universal Stores PLC......................................................... 23,957,657
--------------
FOOD RETAIL
7,178,570 Tesco PLC.......................................................................... 27,355,113
--------------
FOOD: SPECIALTY/CANDY
4,301,900 Cadbury Schweppes PLC.............................................................. 26,578,334
--------------
HOUSEHOLD/PERSONAL CARE
1,426,970 Reckitt Benckiser PLC.............................................................. 18,749,983
--------------
INDUSTRIAL CONGLOMERATES
2,681,699 Smiths Industries PLC.............................................................. 28,702,798
--------------
INTEGRATED OIL
4,164,618 BP Amoco PLC....................................................................... 35,303,481
--------------
LIFE/HEALTH INSURANCE
4,442,940 Prudential Corp.................................................................... 59,732,134
--------------
MAJOR BANKS
1,852,770 Barclays PLC....................................................................... 52,989,066
--------------
MAJOR TELECOMMUNICATIONS
7,180,580 British Telecommunications PLC..................................................... 84,145,081
--------------
MISCELLANEOUS COMMERCIAL SERVICES
4,234,706 Rentokil Initial PLC............................................................... 9,765,135
--------------
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
PORTFOLIO OF INVESTMENTS OCTOBER 31, 2000, CONTINUED

SHARES VALUE
----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
OIL & GAS PIPELINES
2,474,975 BG Group PLC....................................................................... $ 9,906,899
2,360,075 Lattice Group PLC*................................................................. 5,031,541
--------------
14,938,440
--------------
PHARMACEUTICALS: MAJOR
1,129,078 AstraZeneca PLC.................................................................... 53,287,153
1,747,515 Glaxo Wellcome PLC................................................................. 50,282,913
3,434,721 SmithKline Beecham PLC............................................................. 44,334,245
--------------
147,904,311
--------------
PUBLISHING: BOOKS/MAGAZINES
1,079,298 EMAP PLC........................................................................... 12,678,978
4,715,460 Reed International PLC............................................................. 43,563,358
--------------
56,242,336
--------------
REGIONAL BANKS
6,741,470 Egg PLC*........................................................................... 11,121,513
--------------
RESTAURANTS
4,247,403 Granada Compass PLC*............................................................... 36,590,451
--------------
TOBACCO
1,711,450 Imperial Tobacco Group PLC......................................................... 16,779,104
--------------
WIRELESS COMMUNICATIONS
39,730,979 Vodafone AirTouch PLC.............................................................. 165,230,623
--------------

TOTAL UNITED KINGDOM............................................................... 916,916,031
--------------

TOTAL COMMON AND PREFERRED STOCKS
(COST $1,989,633,161).............................................................. 2,266,956,638
--------------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT IN
THOUSANDS VALUE
----------------------------------------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT (a) (2.2%)
U.S. GOVERNMENT AGENCY
$ 51,500 Student Loan Mortgage Assoc. 6.45% due 11/01/00 (COST $51,500,000)................. $ 51,500,000
--------------
</TABLE>

<TABLE>
<S> <C> <C>
TOTAL INVESTMENTS
(COST $2,041,133,161) (b)............................................................... 98.3% 2,318,456,638

OTHER ASSETS IN EXCESS OF LIABILITIES................................................... 1.7 41,292,157
----- ---------------

NET ASSETS.............................................................................. 100.0% $ 2,359,748,795
----- ---------------
----- ---------------
</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 the
aggregate cost for book purposes. The aggregate gross unrealized
appreciation is $368,521,829 and the aggregate gross unrealized
depreciation is $91,198,352, resulting in net unrealized appreciation of
$277,323,477.

FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT OCTOBER 31, 2000:

<TABLE>
<CAPTION>
UNREALIZED
CONTRACTS IN EXCHANGE DELIVERY APPRECIATION
TO DELIVER FOR DATE (DEPRECIATION)
-----------------------------------------------------------------
<S> <C> <C> <C>
CHF 18,039,942 $ 9,997,197 11/01/2000 $ (37,257 )
EUR 3,663,993 $ 3,092,410 11/01/2000 (18,686 )
GBP 10,277,764 $ 14,934,618 11/02/2000 28,778
CHF 81,000,000 EUR 53,344,924 12/04/2000 160,739
SEK 1,365,000,000 EUR 160,505,150 12/04/2000 (371,222 )
GBP 86,000,000 EUR 148,126,204 12/04/2000 1,166,222
----------
Net unrealized appreciation............... $ 928,574
==========
</TABLE>

CURRENCY ABBREVIATIONS:
------------------------

<TABLE>
<S> <C>
GBP British Pound.
EUR Euro.
CHF Swiss Franc.
SEK Swedish Krona.
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
SUMMARY OF INVESTMENTS OCTOBER 31, 2000

<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Advertising/Marketing Services..................................................
$ 28,316,690 1.2%
Apparel/Footwear................................................................ 35,786,555 1.5
Auto Parts: O.E.M............................................................... 6,238,209 0.3
Beverages: Alcoholic............................................................ 80,324,216 3.4
Broadcasting.................................................................... 8,784,678 0.4
Cable/Satellite Tv.............................................................. 5,701,151 0.2
Catalog/Specialty Distribution.................................................. 23,957,657 1.0
Electronic Equipment/Instruments................................................ 80,916,443 3.4
Electronic Production Equipment................................................. 26,816,196 1.1
Electronics/Appliances.......................................................... 6,728,830 0.3
Financial Conglomerates......................................................... 25,666,085 1.1
Food Retail..................................................................... 58,385,974 2.5
Food: Major Diversified......................................................... 68,679,817 2.9
Food: Specialty/Candy........................................................... 26,578,334 1.1
Home Improvement Chains......................................................... 23,721,612 1.0
Household/Personal Care......................................................... 21,998,426 0.9
Industrial Conglomerates........................................................ 28,702,798 1.2
Industrial Machinery............................................................ 45,513,847 1.9
Information Technology Services................................................. 22,291,439 0.9
Integrated Oil.................................................................. 120,024,466 5.1
Life/Health Insurance........................................................... 59,732,134 2.5
Major Banks..................................................................... 236,977,606 10.1
Major Telecommunications........................................................ 148,630,115 6.3
Miscellaneous Commercial Services............................................... 54,247,441 2.3
Multi-Line Insurance............................................................ 43,650,737 1.8
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Oil & Gas Pipelines............................................................. $ 14,938,440 0.6%
Oil Refining/Marketing.......................................................... 67,580,720 2.9
Other Consumer Services......................................................... 20,139,703 0.9
Other Consumer Specialties...................................................... 29,530,537 1.3
Packaged Software............................................................... 3,757,965 0.2
Personnel Services.............................................................. 18,239,148 0.8
Pharmaceuticals: Major.......................................................... 278,342,557 11.8
Publishing: Books/Magazines..................................................... 56,242,336 2.4
Regional Banks.................................................................. 54,378,462 2.3
Restaurants..................................................................... 36,590,451 1.6
Semiconductors.................................................................. 26,822,519 1.1
Specialty Telecommunications.................................................... 9,584,426 0.4
Telecommunication Equipment..................................................... 180,428,191 7.7
Tobacco......................................................................... 16,779,104 0.7
U.S. Government Agency.......................................................... 51,500,000 2.2
Wireless Communications......................................................... 165,230,623 7.0
-------------- -----
$2,318,456,638 98.3%
-------------- -----
-------------- -----
</TABLE>

<TABLE>
<CAPTION>
PERCENT OF
TYPE OF INVESTMENT VALUE NET ASSETS
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks................................................................... $2,243,535,255 95.1%
Preferred Stocks................................................................ 23,421,383 1.0
Short-Term Investment........................................................... 51,500,000 2.2
-------------- -----
$2,318,456,638 98.3%
-------------- -----
-------------- -----
</TABLE>

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

STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000

<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $2,041,133,161)................................... $2,318,456,638
Unrealized appreciation on open forward foreign currency contracts.......................... 928,574
Cash........................................................................................ 1,135,113
Receivable for:
Investments sold........................................................................ 32,829,773
Capital stock sold...................................................................... 8,885,857
Foreign withholding taxes reclaimed..................................................... 3,506,227
Dividends............................................................................... 2,332,109
Prepaid expenses and other assets........................................................... 45,761
--------------
TOTAL ASSETS........................................................................... 2,368,120,052
--------------
LIABILITIES:
Payable for:
Capital stock repurchased............................................................... 3,747,247
Plan of distribution fee................................................................ 1,945,217
Investment management fee............................................................... 1,830,149
Investments purchased................................................................... 494,497
Accrued expenses and other payables......................................................... 354,147
--------------
TOTAL LIABILITIES...................................................................... 8,371,257
--------------
NET ASSETS............................................................................. $2,359,748,795
==============
COMPOSITION OF NET ASSETS:
Paid-in-capital............................................................................. $1,712,609,761
Net unrealized appreciation................................................................. 278,236,875
Accumulated net investment loss............................................................. (1,008,937)
Accumulated undistributed net realized gain................................................. 369,911,096
--------------
NET ASSETS............................................................................. $2,359,748,795
==============
CLASS A SHARES:
Net Assets.................................................................................. $ 53,011,520
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 2,628,669
NET ASSET VALUE PER SHARE.............................................................. $20.17
==============
MAXIMUM OFFERING PRICE PER SHARE,
(NET ASSET VALUE PLUS 5.54% OF NET
ASSET VALUE)......................................................................... $21.29
==============
CLASS B SHARES:
Net Assets.................................................................................. $2,205,835,311
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 111,995,317
NET ASSET VALUE PER SHARE.............................................................. $19.70
==============
CLASS C SHARES:
Net Assets.................................................................................. $46,886,457
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 2,383,996
NET ASSET VALUE PER SHARE.............................................................. $19.67
==============
CLASS D SHARES:
Net Assets.................................................................................. $54,015,507
Shares Outstanding (500,000,000 AUTHORIZED, $.01 PAR VALUE)................................. 2,620,966

NET ASSET VALUE PER SHARE.............................................................. $20.61
==============
</TABLE>

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 2000

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

INCOME
Dividends (net of $4,517,811 foreign withholding tax)........................................ $ 32,470,619
Interest..................................................................................... 5,822,376
-------------

TOTAL INCOME............................................................................ 38,292,995
-------------

EXPENSES
Plan of distribution fee (Class A shares).................................................... 100,207
Plan of distribution fee (Class B shares).................................................... 24,004,815
Plan of distribution fee (Class C shares).................................................... 451,553
Investment management fee.................................................................... 22,704,253
Transfer agent fees and expenses............................................................. 2,495,314
Custodian fees............................................................................... 850,344
Registration fees............................................................................ 210,162
Shareholder reports and notices.............................................................. 184,453
Professional fees............................................................................ 72,577
Directors' fees and expenses................................................................. 16,935
Other........................................................................................ 39,359
-------------

TOTAL EXPENSES.......................................................................... 51,129,972
-------------

NET INVESTMENT LOSS..................................................................... (12,836,977)
-------------

NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments.............................................................................. 384,385,292
Foreign exchange transactions............................................................ (2,227,080)
-------------

NET GAIN................................................................................ 382,158,212
-------------
Net change in unrealized appreciation/ depreciation on:
Investments.............................................................................. (153,110,840)
Translation of forward foreign currency contracts, other assets and liabilities
denominated in foreign currencies...................................................... 924,052
-------------

NET DEPRECIATION........................................................................ (152,186,788)
-------------

NET GAIN................................................................................ 229,971,424
-------------

NET INCREASE................................................................................. $ 217,134,447
=============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL STATEMENTS, CONTINUED

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:

OPERATIONS:
Net investment loss..................................................... $ (12,836,977) $ (7,048,059)
Net realized gain....................................................... 382,158,212 305,455,814
Net change in unrealized appreciation................................... (152,186,788) 26,603,760
-------------- --------------

NET INCREASE....................................................... 217,134,447 325,011,515
-------------- --------------

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................. 297,014,959 (66,440,382)
-------------- --------------

NET INCREASE....................................................... 206,175,113 55,334,899

NET ASSETS:
Beginning of period..................................................... 2,153,573,682 2,098,238,783
-------------- --------------

END OF PERIOD
(INCLUDING ACCUMULATED NET INVESTMENT LOSSES OF $1,008,937 AND
$52,758, RESPECTIVELY).............................................. $2,359,748,795 $2,153,573,682
============== ==============
</TABLE>

SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000

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 or American Stock Exchange, NASDAQ, or other 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; (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 be
based upon current

11
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED

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, 2000, 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 ("forward contracts") are translated at the exchange rates prevailing
at the end of the period; and (2) purchases, sales, income and expenses are
translated at the exchange rates prevailing on the respective dates of such
transactions. The resultant exchange gains and losses are included in the
Statement of Operations. Pursuant to U.S. Federal income tax regulations,
certain foreign exchange gains/losses included in realized and unrealized
gain/loss are included in or are a reduction of ordinary income for federal
income tax purposes. The Fund does not isolate that portion of the results of
operations arising as a result of changes in the foreign exchange rates from the
changes in the market prices of the securities.

F. FORWARD FOREIGN CURRENCY CONTRACTS -- The Fund may enter into forward
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 tax purposes are reported as distributions of paid-in-capital.

2. INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS

Pursuant to an Investment Management Agreement, the Fund pays the Investment
Manager a management fee, accrued daily and payable monthly, by applying the
following annual rates to the net assets of the Fund determined as of the close
of each business day: 0.95% of the portion of net

13
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED

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 exceeding $2 billion. Effective May 1, 2000, the Agreement was
amended to reduce the annual rate to 0.825% of the portion of daily net assets
in excess of $3 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 daily
aggregate net asset value of the Class B shares redeemed since the Fund's
inception upon which a contingent deferred sales charge has been imposed or
waived; or (b) the average daily net assets of Class B; and (iii) Class C -- up
to 1.0% of the average daily net assets of Class C.

In the case of Class 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
$22,980,324 at October 31, 2000.

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,

14
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED

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 year
ended October 31, 2000, the distribution fee was accrued for Class A shares and
Class C shares at the annual rate of 0.24% and 1.0%, respectively.

The Distributor has informed the Fund that for the year ended October 31, 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 $12,210, $2,333,913
and $16,692, respectively and received $206,909 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, 2000 aggregated
$1,698,155,848 and $1,703,128,517, respectively.

Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager,
Sub-Advisor, and Distributor, is the Fund's transfer agent. At October 31, 2000,
the Fund had transfer agent fees and expenses payable of approximately $11,000.

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, 2000 included
in Directors' fees and expenses in the Statement of Operations amounted to
$6,017. At October 31, 2000 the Fund had an accrued pension liability of $53,198
which is included in accrued expenses in the Statement of Assets and
Liabilities.

5. FEDERAL INCOME TAX STATUS

As of October 31, 2000, the Fund had temporary book/tax differences attributable
to capital loss deferrals on wash sales and open forward foreign currency
exchange contracts and permanent book/ tax differences attributable to foreign
currency losses and a net operating loss. To reflect reclassifications arising
from the permanent differences, accumulated undistributed net realized gain was
charged and accumulated net investment loss was credited $11,880,798.

15
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED

6. CAPITAL STOCK

Transactions in capital stock were as follows:

<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
OCTOBER 31, 2000 OCTOBER 31, 1999
--------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- ----------- ---------------
<S> <C> <C> <C> <C>
CLASS A SHARES
Sold............................................................. 9,831,909 $ 212,913,208 8,696,899 $ 172,249,883
Reinvestment of distributions.................................... 165,479 3,493,262 75,390 1,463,319
Redeemed......................................................... (8,654,004) (189,592,160) (8,213,688) (163,395,904)
----------- ------------- ----------- ---------------
Net increase - Class A........................................... 1,343,384 26,814,310 558,601 10,317,298
----------- ------------- ----------- ---------------

CLASS B SHARES
Sold............................................................. 34,398,308 740,610,384 50,876,749 1,001,144,838
Reinvestment of distributions.................................... 13,398,700 278,023,036 9,664,315 186,231,346
Redeemed......................................................... (38,207,790) (818,408,228) (64,608,413) (1,273,856,469)
----------- ------------- ----------- ---------------
Net increase (decrease) - Class B................................ 9,589,218 200,225,192 (4,067,349) (86,480,285)
----------- ------------- ----------- ---------------

CLASS C SHARES
Sold............................................................. 2,218,481 47,339,290 3,770,574 73,985,576
Reinvestment of distributions.................................... 214,720 4,451,146 123,351 2,373,265
Redeemed......................................................... (1,580,739) (33,627,627) (3,509,767) (68,955,477)
----------- ------------- ----------- ---------------
Net increase - Class C........................................... 852,462 18,162,809 384,158 7,403,364
----------- ------------- ----------- ---------------

CLASS D SHARES
Sold............................................................. 4,670,385 103,903,462 4,603,603 92,675,179
Reinvestment of distributions.................................... 9,111 196,155 5,981 117,940
Redeemed......................................................... (2,327,217) (52,286,969) (4,471,436) (90,473,878)
----------- ------------- ----------- ---------------
Net increase - Class D........................................... 2,352,279 51,812,648 138,148 2,319,241
----------- ------------- ----------- ---------------
Net increase (decrease) in Fund.................................. 14,137,343 $ 297,014,959 (2,986,442) $ (66,440,382)
=========== ============= =========== ===============
</TABLE>

7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS

The Fund may enter into 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.

16
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
NOTES TO FINANCIAL STATEMENTS OCTOBER 31, 2000, CONTINUED

At October 31, 2000, there were outstanding forward contracts.

At October 31, 2000, investments in securities of issuers in the United Kingdom
represented 38.9% 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.

17
<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 ENDED OCTOBER 31 JULY 28, 1997*
------------------------------- THROUGH
2000 1999 1998 OCTOBER 31, 1997
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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)............................. 0.05 0.10 0.08 (0.02)
Net realized and unrealized gain (loss).................. 2.34 3.03 2.70 (0.16)
------- ------- ------- --------

Total income (loss) from investment operations.............. 2.39 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.............................. $ 20.17 $ 20.70 $ 19.45 $ 18.46
======= ======= ======= ========

TOTAL RETURN+............................................... 10.92% 16.75% 16.50% (0.97)%(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 1.29%(3) 1.36%(3) 1.44%(3) 1.48%(2)

Net investment income (loss)................................ 0.23%(3) 0.44%(3) 0.40%(3) (0.33)%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $53,012 $26,600 $14,133 $1,862

Portfolio turnover rate..................................... 71% 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
18
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL HIGHLIGHTS, CONTINUED

<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31
---------------------------------------------------------
2000++ 1999++ 1998++ 1997*++ 1996
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CLASS B SHARES

SELECTED PER SHARE DATA:

Net asset value, beginning of period........................ $20.41 $19.34 $18.43 $ 16.76 $14.44
------ ------ ------ ------- ------

Income (loss) from investment operations:
Net investment income (loss)............................. (0.11) (0.07) (0.05) 0.04 0.02
Net realized and unrealized gain......................... 2.32 3.02 2.69 3.02 3.03
------ ------ ------ ------- ------

Total income from investment operations..................... 2.21 2.95 2.64 3.06 3.05
------ ------ ------ ------- ------

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)
------ ------ ------ ------- ------

Total dividends and distributions........................... (2.92) (1.88) (1.73) (1.39) (0.73)
------ ------ ------ ------- ------

Net asset value, end of period.............................. $19.70 $20.41 $19.34 $ 18.43 $16.76
====== ====== ====== ======= ======

TOTAL RETURN+............................................... 10.05 % 15.84 % 15.67 % 19.40% 22.27%

RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 2.05 %(1) 2.13 %(1) 2.10 %(1) 2.06% 2.13%

Net investment income (loss)................................ (0.53)%(1) (0.33)%(1) (0.26)%(1) 0.22% 0.14%

SUPPLEMENTAL DATA:
Net assets, end of period, in millions...................... $2,206 $2,090 $2,059 $1,707 $1,228

Portfolio turnover rate..................................... 71% 56% 50% 44% 49%
</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
19
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL HIGHLIGHTS, CONTINUED

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...................................... (0.11) (0.05) (0.08) (0.04)
Net realized and unrealized gain (loss).................. 2.32 3.00 2.71 (0.17)
------- ------- ------- -------

Total income (loss) from investment operations.............. 2.21 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.............................. $ 19.67 $ 20.38 $ 19.31 $ 18.43
======= ======= ======= =======

TOTAL RETURN+............................................... 10.11 % 15.87 % 15.57 % (1.13)%(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 2.05 %(3) 2.13 %(3) 2.19 %(3) 2.24 %(2)

Net investment loss......................................... (0.53)%(3) (0.33)%(3) (0.35)%(3) (0.76)%(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $46,886 $31,211 $22,159 $2,889

Portfolio turnover rate..................................... 71% 56% 50% 44%
</TABLE>

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

SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
FINANCIAL HIGHLIGHTS, CONTINUED

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.................................... 0.12 0.13 0.16 0.02
Net realized and unrealized gain (loss).................. 2.36 3.08 2.89 (0.19)
------- ------- ------- -------

Total income (loss) from investment operations.............. 2.48 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.............................. $ 20.61 $ 21.05 $ 19.72 $ 18.47
======= ======= ======= =======

TOTAL RETURN+............................................... 11.19% 16.93% 18.12% (0.91)%(1)

RATIOS TO AVERAGE NET ASSETS:
Expenses.................................................... 1.05%(3) 1.13%(3) 1.19%(3) 1.23 %(2)

Net investment income....................................... 0.47%(3) 0.67%(3) 0.65%(3) 0.33 %(2)

SUPPLEMENTAL DATA:
Net assets, end of period, in thousands..................... $54,016 $5,657 $2,575 $45

Portfolio turnover rate..................................... 71% 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
21
<PAGE>

MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying statement of assets and liabilities of Morgan
Stanley Dean Witter European Growth Fund Inc. (the "Fund"), including the
portfolio of investments, as of October 31, 2000, and the related statements of
operations and changes in net assets, and the financial highlights for the year
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit. The statement of changes in net assets for the year ended October 31,
1999 and the financial highlights for each of the respective stated periods
ended October 31, 1999 were audited by other independent accountants whose
report, dated December 20, 1999, expressed an unqualified opinion on that
statement and financial highlights.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 2000, by correspondence with the custodian
and brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Morgan
Stanley Dean Witter European Growth Fund Inc. as of October 31, 2000, the
results of its operations, the changes in its net assets, and the financial
highlights for the year then ended, in conformity with accounting principles
generally accepted in the United States of America.

Deloitte & Touche LLP
NEW YORK, NEW YORK
DECEMBER 14, 2000

2000 FEDERAL TAX NOTICE (UNAUDITED)

During the fiscal year ended October 31, 2000, the Fund paid to
its shareholders $2.92 per share from long-term capital gains.

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MORGAN STANLEY DEAN WITTER EUROPEAN GROWTH FUND INC.
CHANGE IN INDEPENDENT ACCOUNTANTS

On July 1, 2000 PricewaterhouseCoopers LLP resigned as independent accountants
of the Fund.

The reports of PricewaterhouseCoopers LLP on the financial statements of the
Fund for the past two fiscal years contained no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principle.

In connection with its audits for the two most recent fiscal years and through
July 1, 2000, there have been no disagreements with PricewaterhouseCoopers LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of PricewaterhouseCoopers LLP would have caused them to make
reference thereto in their report on the financial statements for such years.

The Fund, with the approval of its Board of Directors and its Audit Committee,
engaged Deloitte & Touche LLP as its new independent auditors as of July 1,
2000.

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DIRECTORS
Michael Bozic
Charles A. Fiumefreddo
Edwin J. Garn
Wayne E. Hedien
James F. Higgins
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 AUDITORS
Deloitte & Touche LLP
Two World Financial Center
New York, New York 10281

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 Distributors Inc., member NASD.

MORGAN STANLEY
DEAN WITTER
EUROPEAN
GROWTH FUND

ANNUAL REPORT
OCTOBER 31, 2000