-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DfEq1oBa8r8dQtv/HbYoTQkOyJw21ovPYQ5GGfHdqm2rc5ZYyZpStefLogpwfkpm WOl403oLzcZzYzRC/f2jHw== 0000912057-01-506788.txt : 20010410 0000912057-01-506788.hdr.sgml : 20010410 ACCESSION NUMBER: 0000912057-01-506788 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010131 FILED AS OF DATE: 20010403 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND CENTRAL INDEX KEY: 0000885410 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 136993838 STATE OF INCORPORATION: MA FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-06608 FILM NUMBER: 1594484 BUSINESS ADDRESS: STREET 1: TWO WORLD TRADE CENTER STREET 2: 72ND FL CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2123922550 MAIL ADDRESS: STREET 1: TWO WORLD TRADE CENTER STREET 2: 72ND FLOOR CITY: NEW YORK STATE: NY ZIP: 10048 FORMER COMPANY: FORMER CONFORMED NAME: TCW/DW LATIN AMERICAN GROWTH FUND DATE OF NAME CHANGE: 19920929 N-30D 1 a2042421zn-30d.txt N-30D MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND TWO WORLD TRADE CENTER, LETTER TO THE SHAREHOLDERS JANUARY 31, 2001 NEW YORK, NEW YORK 10048 DEAR SHAREHOLDER: Following a rally toward the end of 1999, most Latin American equity markets witnessed volatile monthly performances throughout the 12-month period ended January 31, 2001. Sentiment was dampened by fears of a hard landing in the United States and sharp declines in global equity markets. Heightened risk aversion, as witnessed in severe declines of the Nasdaq Composite Index and high-yield bonds, hurt the demand for risky assets, including Latin American stocks. The region's markets were also hurt by rising oil prices. While higher crude oil prices benefit individual oil-exporting countries such as Mexico and Venezuela, slower global economic growth that could result from higher crude-oil prices would clearly be a negative development for the region. Also, the prices of many globally traded products like pulp, paper and steel were negatively affected by the weakness of the euro, which was reflected in the stock prices of Latin American makers of these products. In addition, the delayed outcome of the U.S. presidential election contributed to the volatility witnessed in the Latin American markets. Finally, concerns about Argentina's ability to satisfy the prerequisites of the International Monetary Fund (IMF) for an expanded financing facility weighed heavily on the region's currencies. MEXICO The Mexican equity market gained 1.9 percent during the 12 months ended January 31, 2001. After a very difficult first half, Mexican stock prices staged a modest recovery as the decisive, uncontested victory by the opposition PAN (National Action Party) candidate strengthened investor confidence in the country's democracy and therefore improved Mexico's political risk profile. Meanwhile, economic data continued to show robust expansion, with GDP advancing 7.5 percent in the first three quarters of 2000. Therefore, investors were encouraged by the Bank of Mexico's proactive moves to tighten monetary policy in an effort to slow Mexico's growth and thereby reduce its vulnerability to a possible sharp slowdown in the U.S. economy. Investors have now MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND LETTER TO THE SHAREHOLDERS JANUARY 31, 2001, CONTINUED shifted their focus to President Fox's effort to get a tax reform bill through Congress, which could serve as the trigger for Standard & Poor's to upgrade Mexico's foreign debt to an investment-grade rating. BRAZIL Brazilian stock prices ended the period up 4.6 percent in U.S. dollar terms. Brazil's outperformance relative to most other Latin American equity markets was attributable to its central bank's steady easing of monetary policy. A key factor behind that easing has been the Cardoso administration's commitment to fiscal restraint, which led to a surplus in excess of the IMF target. At the same time, Brazil's current-account deficit improved. Most economic indicators in Brazil have also been supportive of equity prices, including data showing consumer confidence at its highest level since April 1997 and a drop in the unemployment rate. On the political front, however, tensions have increased within the government's three-party congressional coalition from disputes over leadership posts. ARGENTINA The Argentine equity market fell 6.7 percent during the period under review as a result of increased concerns about the country's ability to meet its IMF fiscal deficit targets. The market rebounded strongly in January 2000 as investors focused on the government's ability to implement the structural reforms demanded by the IMF in exchange for an expanded financing facility. The country's fiscal deficit reached $6.6 billion in 2000, thus complying with the IMF's modified target of $6.7 billion. Although actual IMF support amounts to only about $14 billion of the $40 billion package, the overall financial resources announced should give Argentina the wherewithal to meet its financing needs in 2001. While the Argentine economy remains stalled, the most recent data regarding industrial production, construction activity and supermarket sales portend a gradual recovery. CHILE Chilean stocks declined 12.0 percent during the year, hurt by weakness in its currency and rising oil prices. Although interest rates remained unchanged in the first half of the year, a more benign inflation outlook allowed the central bank to cut interest rates by a total of 75 basis points by the end 2 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND LETTER TO THE SHAREHOLDERS JANUARY 31, 2001, CONTINUED of January. While the latest figures showed the economy growing at an annual rate of 5.8 percent, domestic demand remains weak and December's industrial production registered the worst monthly performance in 15 months. PERU Peruvian equity prices fell 23.5 percent during the 12 months ended January 31, 2001, hurt by the controversy surrounding the sharply criticized presidential election. However, President Fujimori surprised the markets in November as corruption allegations surrounding the recent elections led to his unexpected resignation. Nevertheless, the political situation remains tenuous, with Alejandro Toledo leading the presidential election polls in advance of the April contest. Meanwhile, economic growth appears to have slowed in recent months, prompting the government to lower its GDP forecast for 2001 from 3.0 percent to 2.5 percent. COLOMBIA Colombian equities were the worst performers in the region, falling 37.1 percent during the period under review. The Pastrana administration's bold initiative calling for a referendum to dissolve Congress backfired, as the opposition party was able to pursue aggressively corruption allegations against the administration. Despite a recent truce between the two main parties, the political crisis has called into question the government's ability to achieve fiscal targets agreed upon with the IMF, prompting Standard & Poor's to cut the country's long-term foreign currency sovereign rating. On the positive side, recent economic data point to a recovery in domestic demand. VENEZUELA With volatile monthly performances, Venezuelan stock prices rose 34.1 percent during the year. Most of the gains can be attributed to takeover speculation surrounding its telephone company, CANTV, and AES Corporation's (Applied Energy Services) hostile bid for Electricidad de Caracas. Venezuelan stocks reacted very little to the landslide reelection of President Chavez, instead focusing on concerns regarding his economic policy. Economic and political risks remained high as President Chavez presented a 2001 fiscal budget with large (and unsustainable) government expenditures -- particularly given the recent decline in oil prices. Although Venezuela's GDP growth registered a strong 5.6 percent during the fourth quarter of 2000, the government has made virtually no progress in reducing the country's dependence on oil revenues. 3 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND LETTER TO THE SHAREHOLDERS JANUARY 31, 2001, CONTINUED PERFORMANCE For the 12-month period ended January 31, 2001, Morgan Stanley Dean Witter Latin American Growth Fund's Class B shares posted a total return of -3.43 percent compared to 0.37 percent for the Standard & Poor's/IFCI Latin America Index. For the same period, the Fund's Class A, C and D shares had negative total returns of 2.62 percent, 3.42 percent and 2.37 percent, respectively. The performance of the Fund's four share classes varies because of differing expenses. Total return figures assume the reinvestment of all distributions but do not reflect the deduction of any applicable sales charges. The accompanying chart compares the performance of the Fund to that of the S&P/ IFCI Index. According to TCW Investment Management Company (TCW), the Fund's sub-advisor, the Fund's underperformance relative to its benchmark can be attributed primarily to the Fund's overweighted position in Mexican equities, where concerns about recently elected President Fox, as well as the potential impact of a hard landing by the U.S. economy, resulted in lagging stock prices. Stock selection in Chile and Mexico also contributed to the underperformance, while the Brazilian stock selection made a positive contribution. PORTFOLIO STRATEGY During its fiscal year, the Fund continued to focus on companies exhibiting strong and reliable cash flow generation, as well as companies with low leverage and quality management. The Fund's largest industry exposure continued to be telecommunications, where earnings growth is being driven by increased subscribers of both fixed and cellular telephony and by greater usage of both the Internet and business data networks. The Fund also grew its exposure to the financial sector, as declining interest rates and increased financial intermediation in the region augured well for banking stocks. At the same time, the Fund reduced its exposure to industrial companies whose exports appeared vulnerable to a slowdown in global demand. The Fund maintained an overweighted position in Mexico, given its prospects for strong economic growth, which has translated into double-digit corporate earnings growth. In addition, the Fox administration's commitment to orthodox economic policies was viewed as likely to result in a Standard & Poor's upgrade of Mexico's sovereign debt rating to investment grade, thereby reducing the risk associated with Mexican equities and lowering the cost of financing for high-quality Mexican corporate borrowers. The Fund also maintained an overweighted position in Brazilian stocks as local interest rates continued to decline reflecting the fiscal restraint of the government. With declining 4 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND LETTER TO THE SHAREHOLDERS JANUARY 31, 2001, CONTINUED interest rates, economic recovery has gained steam. The Fund held a neutral weighting in the Argentine market, where the government was able to forestall a potential liquidity crisis by availing itself of an IMF-led financial support package. The Fund has an underweighted position in Chile, where valuations remain uncompelling and access to local shares is limited by an onerous withholding-tax regime for foreign portfolio investment. The Fund also maintained an underweighted position in Venezuela and exited the smaller markets of Peru and Colombia, where the political risk was deemed unacceptably high. LOOKING AHEAD Despite the sharp declines witnessed in Latin America's equity markets during much of 2000, TCW believes that fundamentals in the large markets of Mexico and Brazil remain reasonably solid. TCW's forecast for economic growth on the order of 3 to 4 percent in the coming year may translate into double-digit earnings growth, and may prove supportive of equity prices over the longer term. In the coming months, however, the region's stock markets are likely to continue taking their cues from external developments, including the behavior of oil prices, U.S. interest rates, global economic growth and world equity markets. We appreciate your ongoing support of Morgan Stanley Dean Witter Latin American Growth Fund and look forward to continuing to serve your investment needs and objectives. Very truly yours, [/S/ CHARLES A. FIUMEFREDDO] [/S/ MITCHELL M. MERIN] CHARLES A. FIUMEFREDDO MITCHELL M. MERIN CHAIRMAN OF THE BOARD PRESIDENT 5 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FUND PERFORMANCE JANUARY 31, 2001 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC GROWTH OF $10,000 -- CLASS B SHARES ($ in Thousands)
FUND IFCI(4) December 1992 $10,000 $10,000 December 1992 $9,980 $10,000 January 1993 $9,570 $9,707 April 1993 $9,480 $10,047 July 1993 $10,200 $11,051 October 1993 $11,800 $13,041 January 1994 $16,220 $18,234 April 1994 $12,572 $15,046 July 1994 $12,610 $16,017 October 1994 $14,209 $18,351 January 1995 $9,712 $12,253 April 1995 $8,829 $11,761 July 1995 $9,172 $12,683 October 1995 $8,268 $11,488 January 1996 $9,847 $13,254 April 1996 $9,940 $13,427 July 1996 $10,148 $13,405 October 1996 $10,439 $13,773 January 1997 $11,914 $15,509 April 1997 $13,077 $17,013 July 1997 $16,079 $20,967 October 1997 $12,942 $16,893 January 1998 $12,558 $16,232 April 1998 $13,856 $17,996 July 1998 $11,924 $15,466 October 1998 $8,985 $11,774 January 1999 $7,520 $10,477 April 1999 $10,792 $15,393 July 1999 $9,868 $14,417 October 1999 $9,888 $14,527 January 2000 $12,423 $18,458 April 2000 $11,976 $18,049 July 2000 $12,132 $18,338 October 2000 $11,197 $17,050 January 2001 $11,997(3) $18,450
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.
AVERAGE ANNUAL TOTAL RETURNS ------------------------------------------------------------------------------------------------------------------------------ CLASS A SHARES* CLASS B SHARES** ---------------------------------------------------------- --------------------------------------------------------------- PERIOD ENDED 1/31/01 PERIOD ENDED 1/31/01 ------------------------------ ----------------------------------- 1 Year (2.62)%(1) (7.73)%(2) 1 Year (3.43)%(1) (8.26)%(2) Since Inception (7/28/97) (6.77)%(1) (8.19)%(2) 5 Years 4.03 %(1) 3.69 %(2) Since Inception (12/30/92) 2.28 %(1) 2.28 %(2)
CLASS C SHARES+ CLASS D SHARES++ ------------------------------------------------------ ------------------------------------------------------------------- PERIOD ENDED 1/31/01 PERIOD ENDED 1/31/01 -------------------------- ----------------------------------- 1 Year (3.42)%(1) (4.39)%(2) 1 Year (2.37)%(1) Since Inception (7/28/97) (7.51)%(1) (7.51)%(2) Since Inception (7/28/97) (6.61)%(1)
- ------------------------ (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 January 31, 2001. (4) The S&P/IFCI Latin America Index is a broad, neutral and historically consistent benchmark for the Latin American markets. The Index includes selected securities from Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela reflecting restrictions on foreign investment, market capitalization, and liquidity. 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. 6 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND PORTFOLIO OF INVESTMENTS JANUARY 31, 2001
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- COMMON AND PREFERRED STOCKS (94.2%) ARGENTINA (5.7%) BEVERAGES: ALCOHOLIC 62,780 Quilmes Industrial (Quinsa) S.A. (ADR) (Pref.)....................................... $ 709,414 ------------ MAJOR TELECOMMUNICATIONS 57,120 Telecom Argentina Stet - France Telecom S.A. (Class B) (ADR)......................... 1,272,633 ------------ OIL & GAS PRODUCTION 89,915 Perez Companc S.A. (Class B) (ADR)................................................... 1,637,352 ------------ REGIONAL BANKS 12,725 Banco Frances S.A. (ADR)............................................................. 394,984 51,057 Grupo Financiero Galicia S.A. (Class B) (ADR)*....................................... 1,056,242 ------------ 1,451,226 ------------ STEEL 523,600 Siderca S.A.I.C...................................................................... 1,193,999 ------------ TOTAL ARGENTINA...................................................................... 6,264,624 ------------ BRAZIL (44.9%) BEVERAGES: ALCOHOLIC 150,435 Companhia de Bebidas das Americas (ADR).............................................. 4,317,485 ------------ ELECTRIC UTILITIES 69,908 Companhia Energetica de Minas Gerais S.A. (ADR) (Pref.).............................. 1,256,163 113,320 Companhia Paranaense de Energia - Copel (ADR) (Pref.)................................ 1,133,200 ------------ 2,389,363 ------------ FOOD RETAIL 54,320 Companhia Brasileira de Distribuicao Grupo Pao de Acucar (ADR) (Pref.)............... 1,939,224 ------------ INTEGRATED OIL 214,830 Petroleo Brasileiro S.A. (Pref.)..................................................... 5,969,921 ------------ MAJOR TELECOMMUNICATIONS 60,810 Telecomunicacoes Brasileiras S.A. (ADR) (Pref.)...................................... 4,772,977 ------------ OIL & GAS PRODUCTION 141,640 Petroleo Brasileiro S.A. (ADR)*...................................................... 4,005,579 ------------ OTHER METALS/MINERALS 154,418 Companhia Vale do Rio Doce (Class A) (Pref.)......................................... 4,133,735 15,230 Companhia Vale do Rio Doce S.A. (Class A) (ADR) (Pref.).............................. 410,905 266,358 Companhia Vale do Rio Doce S.A. (Debentures)*........................................ -- ------------ 4,544,640 ------------ REGIONAL BANKS 544,889,904 Banco Bradesco S.A. (Pref.).......................................................... 3,768,914
SEE NOTES TO FINANCIAL STATEMENTS 7 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND PORTFOLIO OF INVESTMENTS JANUARY 31, 2001, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- 59,220,560 Banco Itau S.A. (Pref.).............................................................. $ 5,600,728 74,195 Uniao de Bancos Brasileiros S.A. (GDR) (Pref.) (Units)++............................. 2,255,528 ------------ 11,625,170 ------------ SPECIALTY TELECOMMUNICATIONS 37,590,000 Brasil Telecom Participacoes S.A..................................................... 417,455 32,085 Brasil Telecom Participacoes S.A. (ADR) (Pref.)...................................... 2,040,606 57,418 Embratel Participacoes S.A. (ADR) (Pref.)............................................ 958,306 13,152,000 Tele Norte Leste Participacoes S.A................................................... 266,775 151,363 Tele Norte Leste Participacoes S.A. (ADR) (Pref.).................................... 3,746,234 ------------ 7,429,376 ------------ STEEL 24,402,000 Companhia Siderurgica Nacional S.A................................................... 915,694 125,900 Usinas Siderurgicas de Minas Gerais S.A. (Class A) (Pref.)........................... 759,741 ------------ 1,675,435 ------------ WIRELESS COMMUNICATIONS 35,330 Telesp Celular Participacoes S.A. (ADR) (Pref.)...................................... 952,144 ------------ TOTAL BRAZIL......................................................................... 49,621,314 ------------ CHILE (3.7%) BEVERAGES: ALCOHOLIC 29,350 Compania Cervecerias Unidas S.A. (ADR)............................................... 767,503 14,550 Vina Concha Y Toro S.A. (ADR)........................................................ 611,100 ------------ 1,378,603 ------------ BEVERAGES: NON-ALCOHOLIC 57,520 Embotelladora Andina S.A. (Series A) (ADR)........................................... 926,072 ------------ FOOD RETAIL 21,140 Distribucion Y Servicio D&S S.A. (ADR)............................................... 357,266 ------------ MAJOR TELECOMMUNICATIONS 91,448 Cia de Telecommunicaciones de Chile S.A. (Series A) (ADR)*........................... 1,452,194 ------------ TOTAL CHILE.......................................................................... 4,114,135 ------------ MEXICO (39.1%) BEVERAGES: ALCOHOLIC 1,307,830 Grupo Modelo S.A. de C.V. (Series C)................................................. 3,612,566 ------------ BEVERAGES: NON-ALCOHOLIC 36,880 Fomento Economico Mexicano, S.A. de C.V. (ADR)....................................... 1,176,472 ------------ BROADCASTING 103,165 Grupo Televisa S.A. (GDR) (Units)++*................................................. 5,519,327 ------------
SEE NOTES TO FINANCIAL STATEMENTS 8 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND PORTFOLIO OF INVESTMENTS JANUARY 31, 2001, CONTINUED
NUMBER OF SHARES VALUE - ---------------------------------------------------------------------------------------------------------------- CONSTRUCTION MATERIALS 53,094 Cemex S.A. de C.V. (ADR)............................................................. $ 1,134,088 ------------ FOOD: SPECIALTY/CANDY 626,178 Grupo Bimbo S.A. de C.V. (Series A).................................................. 848,638 ------------ HOUSEHOLD/PERSONAL CARE 524,100 Kimberly-Clark de Mexico S.A. de C.V. (A Shares)..................................... 1,388,599 ------------ MAJOR TELECOMMUNICATIONS 313,353 Telefonos de Mexico S.A. de C.V. (Series L) (ADR).................................... 17,005,667 ------------ OTHER METALS/MINERALS 298,400 Nueva Grupo Mexico S.A............................................................... 966,265 ------------ REGIONAL BANKS 2,296,890 Grupo Financiero Banamex Accival, SA de C.V. (O Shares)*............................. 4,443,601 ------------ SPECIALTY STORES 3,268,118 Wal-Mart de Mexico S.A. de C.V. (Series C)*.......................................... 7,100,194 ------------ TOTAL MEXICO......................................................................... 43,195,417 ------------ VENEZUELA (0.8%) MAJOR TELECOMMUNICATIONS 38,345 Compania Anomina Nacional Telefonos de Venezuela (CANTV) (Class D) (ADR)............. 943,287 ------------
TOTAL INVESTMENTS (COST $80,245,445)(a)..................................................................... 94.2% 104,138,777 OTHER ASSETS IN EXCESS OF LIABILITIES..................................................... 5.8 6,377,236 ----- ------------- NET ASSETS................................................................................ 100.0% $ 110,516,013 ----- ------------- ----- -------------
- --------------------- ADR American Depository Receipt. GDR Global Depository Receipt. * Non-income producing security. ++ Consists of one or more class of securities traded together as a unit; stocks with attached warrants. (a) The aggregate cost for federal income tax purposes approximates the aggregate cost for book purposes. The aggregate gross unrealized appreciation is $28,978,153 and the aggregate gross unrealized depreciation is $5,084,821, resulting in net unrealized appreciation of $23,893,332. SEE NOTES TO FINANCIAL STATEMENTS 9 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND SUMMARY OF INVESTMENTS JANUARY 31, 2001
PERCENT OF INDUSTRY VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ Beverages: Alcoholic.............................................................. $ 10,018,068 9.1% Beverages: Non-Alcoholic.......................................................... 2,102,544 1.9 Broadcasting...................................................................... 5,519,327 5.0 Construction Materials............................................................ 1,134,088 1.0 Electric Utilities................................................................ 2,389,363 2.2 Food Retail....................................................................... 2,296,490 2.1 Food: Specialty/Candy............................................................. 848,638 0.8 Household/Personal Care........................................................... 1,388,599 1.2 Integrated Oil.................................................................... 5,969,921 5.4 Major Telecommunications.......................................................... 25,446,758 23.0 Oil & Gas Production.............................................................. 5,642,931 5.1 Other Metals/Minerals............................................................. 5,510,905 5.0 Regional Banks.................................................................... 17,519,997 15.8 Specialty Stores.................................................................. 7,100,194 6.4 Specialty Telecommunications...................................................... 7,429,376 6.7 Steel............................................................................. 2,869,434 2.6 Wireless Communications........................................................... 952,144 0.9 ------------ ----- $104,138,777 94.2% ------------ ----- ------------ -----
PERCENT OF TYPE OF INVESTMENT VALUE NET ASSETS - ------------------------------------------------------------------------------------------------------------ Common Stocks..................................................................... $ 63,731,037 57.7% Preferred Stocks.................................................................. 40,407,740 36.5 ------------ ----- $104,138,777 94.2% ------------ ----- ------------ -----
SEE NOTES TO FINANCIAL STATEMENTS 10 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES JANUARY 31, 2001 ASSETS: Investments in securities, at value (cost $80,245,445)........................................ $104,138,777 Cash.......................................................................................... 5,544,911 Receivable for: Dividends................................................................................. 589,954 Investments sold.......................................................................... 460,849 Shares of beneficial interest sold........................................................ 101,183 Interest.................................................................................. 15,907 Prepaid expenses and other assets............................................................. 44,894 ------------ TOTAL ASSETS............................................................................. 110,896,475 ------------ LIABILITIES: Payable for: Investment management fee................................................................. 117,784 Plan of distribution fee.................................................................. 86,225 Shares of beneficial interest repurchased................................................. 79,769 Accrued expenses and other payables........................................................... 96,684 ------------ TOTAL LIABILITIES........................................................................ 380,462 ------------ NET ASSETS............................................................................... $110,516,013 ============ COMPOSITION OF NET ASSETS: Paid-in-capital............................................................................... $176,503,804 Net unrealized appreciation................................................................... 23,890,523 Accumulated net investment loss............................................................... (68,882) Accumulated net realized loss................................................................. (89,809,432) ------------ NET ASSETS............................................................................... $110,516,013 ============ CLASS A SHARES: Net Assets.................................................................................... $936,482 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 78,689 NET ASSET VALUE PER SHARE................................................................ $11.90 ============ MAXIMUM OFFERING PRICE PER SHARE, (NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE).......................................... $12.56 ============ CLASS B SHARES: Net Assets.................................................................................... $ 99,430,636 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 8,605,478 NET ASSET VALUE PER SHARE................................................................ $11.55 ============ CLASS C SHARES: Net Assets.................................................................................... $887,199 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 76,652 NET ASSET VALUE PER SHARE................................................................ $11.57 ============ CLASS D SHARES: Net Assets.................................................................................... $9,261,696 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE)..................................... 773,961 NET ASSET VALUE PER SHARE................................................................ $11.97 ============
STATEMENT OF OPERATIONS FOR THE YEAR ENDED JANUARY 31, 2001 NET INVESTMENT LOSS: INCOME Dividends (net of $330,626 foreign withholding tax)........................................... $ 2,347,227 Interest...................................................................................... 153,219 ------------ TOTAL INCOME............................................................................. 2,500,446 ------------ EXPENSES Investment management fee..................................................................... 1,552,969 Plan of distribution fee (Class A shares)..................................................... 1,906 Plan of distribution fee (Class B shares)..................................................... 1,167,074 Plan of distribution fee (Class C shares)..................................................... 9,579 Transfer agent fees and expenses.............................................................. 320,468 Custodian fees................................................................................ 73,772 Shareholder reports and notices............................................................... 71,862 Professional fees............................................................................. 60,313 Registration fees............................................................................. 54,849 Foreign exchange provisional tax.............................................................. 48,656 Trustees' fees and expenses................................................................... 12,708 Other......................................................................................... 8,753 ------------ TOTAL EXPENSES........................................................................... 3,382,909 ------------ NET INVESTMENT LOSS...................................................................... (882,463) ------------ NET REALIZED AND UNREALIZED GAIN (LOSS): Net realized gain/loss on: Investments............................................................................... 11,785,590 Foreign exchange transactions............................................................. (107,302) ------------ NET GAIN................................................................................. 11,678,288 ------------ Net change in unrealized appreciation/ depreciation on: Investments............................................................................... (16,955,911) Translation of forward foreign currency contracts, other assets and liabilities denominated in foreign currencies....................................................... (8,505) ------------ NET DEPRECIATION......................................................................... (16,964,416) ------------ NET LOSS................................................................................. (5,286,128) ------------ NET DECREASE.................................................................................. $ (6,168,591) ============
SEE NOTES TO FINANCIAL STATEMENTS 11 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FINANCIAL STATEMENTS, CONTINUED STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR FOR THE YEAR ENDED ENDED JANUARY 31, 2001 JANUARY 31, 2000 - ------------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment loss..................................................... $ (882,463) $ (789,755) Net realized gain....................................................... 11,678,288 10,213,576 Net change in unrealized appreciation................................... (16,964,416) 51,729,529 ------------ ------------ NET INCREASE (DECREASE)............................................ (6,168,591) 61,153,350 ------------ ------------ Net decrease from transactions in shares of beneficial interest......... (22,128,668) (28,450,098) ------------ ------------ NET INCREASE (DECREASE)............................................ (28,297,259) 32,703,252 NET ASSETS: Beginning of period..................................................... 138,813,272 106,110,020 ------------ ------------ END OF PERIOD (INCLUDING ACCUMULATED NET INVESTMENT LOSSES OF $68,882 AND $303,731, RESPECTIVELY)............................................. $110,516,013 $138,813,272 ============ ============
SEE NOTES TO FINANCIAL STATEMENTS 12 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2001 1. ORGANIZATION AND ACCOUNTING POLICIES Morgan Stanley Dean Witter Latin American Growth Fund (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified, open-end management investment company. The Fund's investment objective is long-term capital appreciation. The Fund seeks to achieve its objective by investing primarily in equity securities of Latin American issuers. The Fund was organized as a Massachusetts business trust on February 25, 1992 and commenced operations on December 30, 1992. 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 portfolio security listed or traded on the New York or American Stock Exchange, NASDAQ, or other exchange is valued at its latest sale price, 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 a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market pursuant to procedures adopted by the Trustees); (2) all other portfolio securities for which over-the-counter market quotations are readily available are valued at the latest available bid price; (3) 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 TCW Investment Management Company (the "Sub-Advisor") that sale or 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 Trustees (valuation of debt securities for which market quotations are not readily available may be based upon current market prices of securities which are comparable in coupon, rating and 13 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2001, CONTINUED maturity or an appropriate matrix utilizing similar factors); and (4) 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. 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 as realized and unrealized gain/loss on foreign exchange transactions. Pursuant to U.S. Federal income tax regulations, certain foreign exchange gains/losses included in realized and unrealized gain/loss are included in or are a reduction of ordinary income for federal income tax purposes. The Fund does not isolate that portion of the results of operations arising as a result of changes in the foreign exchange rates from the changes in the market prices of the securities. E. FORWARD 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 foreign currency gain or loss. 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. 14 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2001, CONTINUED F. FEDERAL INCOME TAX STATUS -- It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required. G. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- The Fund records dividends and distributions to its shareholders on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. Dividends and distributions which exceed net investment income and net realized capital gains for 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: 1.25% to the portion of daily net assets not exceeding $500 million and 1.20% to the portion of the daily net assets exceeding $500 million. Under a Sub-Advisory Agreement between the Investment Manager and the Sub-Advisor, 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. 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 the inception of the Fund (not 15 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2001, CONTINUED including reinvestment of dividend 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 Trustees will consider at that time the manner in which to treat such expenses. The Distributor has advised the Fund that such excess amounts totaled $21,295,307 at January 31, 2001. In the case of Class A shares and Class C shares, expenses incurred pursuant to the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily net assets of Class A or Class C, respectively, will not be reimbursed by the Fund through payments in any subsequent year, except that expenses representing a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other selected broker-dealer representatives may be reimbursed in the subsequent calendar year. For the year ended January 31, 2001, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.19% and 1.0%, respectively. The Distributor has informed the Fund that for the year ended January 31, 2001, it received contingent deferred sales charges from certain redemptions of the Fund's Class B shares and Class C shares of $148,014 and $23,373, respectively and received $6,890 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 January 31, 2001 aggregated $53,051,554 and $77,839,981, respectively. 16 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2001, CONTINUED For the year ended January 31, 2001, the Fund incurred brokerage commissions of $24,112 with Morgan Stanley & Co., Inc., an affiliate of the Investment Manager and Distributor, for the portfolio transactions executed on behalf of the Fund. Morgan Stanley Dean Witter Trust FSB, an affiliate of the Investment Manager and Distributor, is the Fund's transfer agent. At January 31, 2001, the Fund had transfer agent fees and expenses payable of approximately $2,100. 5. SHARES OF BENEFICIAL INTEREST Transactions in shares of beneficial interest were as follows:
FOR THE YEAR FOR THE YEAR ENDED ENDED JANUARY 31, 2001 JANUARY 31, 2000 --------------------------- ------------------------- SHARES AMOUNT SHARES AMOUNT ----------- -------------- ----------- ------------ CLASS A SHARES Sold............................................................. 541,846 $ 6,412,961 903,814 $ 9,285,862 Redeemed......................................................... (524,401) (6,097,164) (850,499) (8,815,570) ---------- ------------- ---------- ------------ Net increase - Class A........................................... 17,445 315,797 53,315 470,292 ---------- ------------- ---------- ------------ CLASS B SHARES Sold............................................................. 1,370,159 17,649,840 1,854,204 19,260,542 Redeemed......................................................... (4,161,466) (49,590,950) (5,056,135) (48,993,518) ---------- ------------- ---------- ------------ Net decrease - Class B........................................... (2,791,307) (31,941,110) (3,201,931) (29,732,976) ---------- ------------- ---------- ------------ CLASS C SHARES Sold............................................................. 62,537 796,624 59,774 653,992 Redeemed......................................................... (50,442) (583,241) (46,151) (464,154) ---------- ------------- ---------- ------------ Net increase - Class C........................................... 12,095 213,383 13,623 189,838 ---------- ------------- ---------- ------------ CLASS D SHARES Sold............................................................. 947,876 11,879,492 119,896 1,532,077 Redeemed......................................................... (221,713) (2,596,230) (72,756) (909,329) ---------- ------------- ---------- ------------ Net increase - Class D........................................... 726,163 9,283,262 47,140 622,748 ---------- ------------- ---------- ------------ Net decrease in Fund............................................. (2,035,604) $ (22,128,668) (3,087,853) $(28,450,098) ========== ============= ========== ============
6. FEDERAL INCOME TAX STATUS During the year ended January 31, 2001, the Fund utilized approximately $12,318,000 of its net capital loss carryover. At January 31, 2001, the Fund had a net capital loss carryover of approximately $87,018,000, which may be used to offset future capital gains to the extent provided by regulations, which is available through January 31 of the following years:
AMOUNT IN THOUSANDS - ---------------------------------------- 2004 2005 2007 2008 - ------- -------- -------- -------- $61,221 $19,839 $3,058 $2,900 ======= ======= ====== ======
17 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2001, CONTINUED Capital and foreign currency losses incurred after October 31 ("post-October" losses) within the taxable year are deemed to arise on the first business day of the Fund's next taxable year. The Fund incurred and will elect to defer net capital and foreign currency losses of approximately $1,078,000 and $69,000, respectively during fiscal 2001. As of January 31, 2001, the Fund had temporary book/tax differences attributable to post-October losses and capital loss deferrals on wash sales and permanent book/tax differences attributable to a net operating loss, foreign currency losses and tax adjustments on passive foreign investment companies sold by the Fund. To reflect reclassification arising from the permanent differences, paid- in-capital was charged $952,138, accumulated net realized loss was charged $165,174 and accumulated net investment loss was credited $1,117,312. 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 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. At January 31, 2001, there were no outstanding forward contracts. At January 31, 2001, the Fund's cash balance consisted principally of interest bearing deposits with Chase Manhattan Bank N.A., the Fund's custodian. At January 31, 2001, investment in securities of issuers in Brazil and Mexico represented 44.9% and 39.1% of net assets, respectively. 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 these regions. 18 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FINANCIAL HIGHLIGHTS Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:
FOR THE PERIOD FOR THE YEAR ENDED JANUARY 31, JULY 28, 1997* ---------------------------------- THROUGH 2001 2000 1999 JANUARY 31, 1998 - ------------------------------------------------------------------------------------------------------------------ CLASS A SHARES++ SELECTED PER SHARE DATA: Net asset value, beginning of period........................ $12.26 $ 7.33 $12.14 $15.22 ------ ------ ------ ------ Income (loss) from investment operations: Net investment income (loss)............................. 0.00 (0.01) 0.15 (0.07) Net realized and unrealized gain (loss).................. (0.36) 4.94 (4.96) (3.01) ------ ------ ------ ------ Total income (loss) from investment operations.............. (0.36) 4.93 (4.81) (3.08) ------ ------ ------ ------ Net asset value, end of period.............................. $11.90 $12.26 $ 7.33 $12.14 ====== ====== ====== ====== TOTAL RETURN+............................................... (2.62)% 66.71% (39.62)% (20.24)%(1) RATIOS TO AVERAGE NET ASSETS: Expenses.................................................... 1.96 %(3) 2.28%(3) 2.21 %(3) 2.15 %(2) Net investment income (loss)................................ 0.05 %(3) 0.16%(3) 1.26 %(3) (1.04)%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands..................... $936 $751 $58 $110 Portfolio turnover rate..................................... 44 % 59% 27 % 30 %
- --------------------- * 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 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FINANCIAL HIGHLIGHTS, CONTINUED
FOR THE YEAR ENDED JANUARY 31, --------------------------------------------------------------------- 2001++ 2000++ 1999++ 1998*++ 1997 - --------------------------------------------------------------------------------------------------------------------- CLASS B SHARES SELECTED PER SHARE DATA: Net asset value, beginning of period.......... $11.99 $ 7.24 $12.09 $11.47 $ 9.48 ------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income (loss)............... (0.09) (0.06) 0.05 (0.09) (0.04) Net realized and unrealized gain (loss).... (0.35) 4.81 (4.90) 0.71 2.03 ------- -------- -------- -------- -------- Total income (loss) from investment operations................................... (0.44) 4.75 (4.85) 0.62 1.99 ------- -------- -------- -------- -------- Net asset value, end of period................ $11.55 $11.99 $ 7.24 $12.09 $11.47 ======= ======== ======== ======== ======== TOTAL RETURN+................................. (3.43)% 65.19 % (40.12)% 5.41 % 20.99 % RATIOS TO AVERAGE NET ASSETS: Expenses...................................... 2.77 %(1) 3.06 %(1) 2.98 %(1) 2.81 % 2.78 % Net investment income (loss).................. (0.76)%(1) (0.62)%(1) 0.49 %(1) (0.64)% (0.29)% SUPPLEMENTAL DATA: Net assets, end of period, in thousands....... $99,431 $136,699 $105,678 $272,710 $270,843 Portfolio turnover rate....................... 44 % 59 % 27 % 30 % 29 %
- --------------------- * 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 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FINANCIAL HIGHLIGHTS, CONTINUED
FOR THE PERIOD FOR THE YEAR ENDED JANUARY 31, JULY 28, 1997* ---------------------------------- THROUGH 2001 2000 1999 JANUARY 31, 1998 - ------------------------------------------------------------------------------------------------------------------------------- CLASS C SHARES++ SELECTED PER SHARE DATA: Net asset value, beginning of period.................................. $12.02 $ 7.24 $12.10 $15.22 ------ ------ ------ ------ Income (loss) from investment operations: Net investment income (loss)....................................... (0.09) (0.06) 0.06 (0.12) Net realized and unrealized gain (loss)............................ (0.36) 4.84 (4.92) (3.00) ------ ------ ------ ------ Total income (loss) from investment operations........................ (0.45) 4.78 (4.86) (3.12) ------ ------ ------ ------ Net asset value, end of period........................................ $11.57 $12.02 $ 7.24 $12.10 ====== ====== ====== ====== TOTAL RETURN+......................................................... (3.42)% 65.47 % (40.17)% (20.50)%(1) RATIOS TO AVERAGE NET ASSETS: Expenses.............................................................. 2.77 %(3) 2.95 %(3) 2.98 %(3) 2.91 %(2) Net investment income (loss).......................................... (0.76)%(3) (0.51)%(3) 0.49 %(3) (1.76)%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands............................... $887 $776 $369 $792 Portfolio turnover rate............................................... 44 % 59 % 27 % 30 %
- --------------------- * The date shares were first issued. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses. SEE NOTES TO FINANCIAL STATEMENTS 21 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FINANCIAL HIGHLIGHTS, CONTINUED
FOR THE PERIOD FOR THE YEAR ENDED JANUARY 31, JULY 28, 1997* ---------------------------------- THROUGH 2001 2000 1999 JANUARY 31, 1998 - ------------------------------------------------------------------------------------------------------------------------------- CLASS D SHARES++ SELECTED PER SHARE DATA: Net asset value, beginning of period.................................. $12.30 $ 7.35 $12.16 $15.22 ------ ------ ------ ------ Income (loss) from investment operations: Net investment income (loss)....................................... 0.00 (0.02) 0.16 (0.04) Net realized and unrealized gain (loss)............................ (0.33) 4.97 (4.97) (3.02) ------ ------ ------ ------ Total income (loss) from investment operations........................ (0.33) 4.95 (4.81) (3.06) ------ ------ ------ ------ Net asset value, end of period........................................ $11.97 $12.30 $ 7.35 $12.16 ====== ====== ====== ====== TOTAL RETURN+......................................................... (2.37)% 66.80% (39.56)% (20.11)%(1) RATIOS TO AVERAGE NET ASSETS: Expenses.............................................................. 1.77 %(3) 2.06%(3) 1.98 %(3) 1.86 %(2) Net investment income (loss).......................................... 0.24 %(3) 0.38%(3) 1.49 %(3) (0.52)%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands............................... $9,262 $588 $5 $8 Portfolio turnover rate............................................... 44 % 59% 27 % 30 %
- --------------------- * 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 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND We have audited the accompanying statement of assets and liabilities of Morgan Stanley Dean Witter Latin American Growth Fund (the "Fund"), including the portfolio of investments, as of January 31, 2001, 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 January 31, 2000 and the financial highlights for each of the respective stated periods ended January 31, 2000 were audited by other independent accountants whose report, dated March 14, 2000, 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 January 31, 2001, by correspondence with the custodian. 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 Latin American Growth Fund as of January 31, 2001, 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 MARCH 13, 2001 23 TRUSTEES 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 Michael P. Reilly Vice President 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 TCW Investment Management Company 865 South Figueroa Street, Suite 1800 Los Angeles, California 90017 This report is submitted for the general information of shareholders of the Fund. For more detailed information about the Fund, its officers and trustees, fees, expenses and other pertinent information, please see the prospectus of the Fund. This report is not authorized for distribution to 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 LATIN AMERICAN GROWTH FUND ANNUAL REPORT JANUARY 31, 2001 -----END PRIVACY-ENHANCED MESSAGE-----