-----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, CLthpL56PDrp3q+MM8OyQLxvXingnz9NNtZgOG93e+ax05rVwohka5uK886VLGQY FkRLmMCaqOyFudItpUptgg== 0000912057-96-005215.txt : 19960328 0000912057-96-005215.hdr.sgml : 19960328 ACCESSION NUMBER: 0000912057-96-005215 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960131 FILED AS OF DATE: 19960327 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TCW/DW 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: 1940 Act SEC FILE NUMBER: 811-06608 FILM NUMBER: 96538850 BUSINESS ADDRESS: STREET 1: TWO WORLD TRADE CENTER 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 N-30D 1 N-30D TCW/DW LATIN AMERICAN GROWTH FUND Two World Trade Center New York, New York 10048 DEAR SHAREHOLDER: - -------------------------------------------------------------------------------- The Latin American equity markets rallied in January as TCW/DW Latin American Growth Fund's fiscal year came to a close. During that month, the Fund's 10.49 percent total return was in line with that of the International Finance Corporation's Investable (IFCI) Latin America Total Return Index, which rose approximately 10 percent. Despite the difficulties experienced over the course of 1995, the Fund posted a positive total return of 1.39 percent for the fiscal year ended January 31, 1996. Over the same period, the IFCI Latin America Index posted a total return of approximately 9 percent. The accompanying chart illustrates the performance of a $10,000 investment in the Fund since inception (December 30, 1992) through the fiscal year ended January 31, 1996, versus the performance of a similar hypothetical investment in the issues comprising the IFCI Latin America Total Return Index. As of January 31, 1996, the Fund had net assets in excess of $261 million, with approximately 98 percent invested in Latin American equities. The largest country allocations at the end of the fiscal year were Mexico (approximately 32 percent of net assets), Brazil (approximately 32 percent), Chile (approximately 13 percent) and Argentina (approximately 12 percent). Given the investment adviser's positive outlook for the region's equity markets, the Fund ended the year with a cash position of less than two percent. The rally in Latin American stock markets in December and January came on the heels of a difficult year. With Mexico's fiscal and monetary austerity leading the way, slower rates of economic growth were posted in most countries throughout Latin America in 1995, resulting in zero gross domestic product growth for the region. However, TCW is encouraged that the resounding policy response across the region has been to remain on the long, difficult path toward modernization and economic liberalization, and to sustain efforts to restore investor confidence by moving forward with additional free-market reforms and privatizations. In addition to privatization, Mexico, Argentina, Peru and Brazil have maintained their commitments to balanced fiscal accounts and remained dedicated to open economies. Foreign exchange reserves are now higher than they were prior to the Mexican peso devaluation, and the region has turned its trade deficit into a surplus on the strength of export growth. The expectation for foreign direct investment in Latin America in 1996 is the highest in seven years. Multinational corporations, given their abilities to borrow at low rates of interest, are continuing to invest in faster-growing Latin American equities. As a result, TCW projects GDP growth of around 35 percent for the region in 1996, with corporate earnings growth rates expected in the high teens. Despite the adversity of the last 13 months, TCW believes that the longer-term outlook for Latin American equities is positive. THE MAJOR MARKETS MEXICO The Mexican stock market advanced 24 percent in U.S. dollar terms for the fiscal year ended January 31, 1996. Losses posted earlier in the year -- which are attributable in large part to the peso devaluation and the ensuing economic and financial crisis -- were reversed as the Mexican government demonstrated its willingness to adhere to the International Monetary Fund's austerity program, and avoided the wage/price inflation spiral many observers expected. Mexico also showed its ability to return to the international financial markets by raising over $1.9 billion through the issuance of U.S. dollar-denominated Cete (peso)-linked Eurobonds, and through the issuance of additional yen-denominated sovereign bonds. This enabled the Mexican government to prepay $700 million of its loan from the U.S. government. As a result of the peso devaluation and the decline in domestic consumption, Mexican exports increased over 30 percent in 1995 and the current account balance, which posted a deficit over 7.5 percent of gross domestic product in 1994, was reversed and ended the year in surplus. TCW's outlook for the Mexican equity market in 1996 is positive as we anticipate continued export-led growth and a recovery in domestic demand from currently very depressed levels as the year progresses. BRAZIL The Brazilian equity market gained 3.9 percent in U.S. dollar terms for the fiscal year. Following stellar performance in 1994, the Brazilian equity markets lagged the other major Latin equity markets as it too was hit hard by the Mexican peso devaluation and posted substantial losses during the first quarter of 1995. However, on the strength of robust gross domestic product growth, a decline in real interest rates (35 to 20 percent), and a continued decline in inflation to the lowest level in over 20 years, the Fund was able to regain many of these losses over the course of the year. In addition, watershed political events, including passage of legislation permitting the break up of state-owned monopolies and legislation permitting foreigners to own majority control in Brazilian companies, are expected to provide increased foreign investment and stimulus to the equity market. CHILE The Chilean market declined by 0.3 percent in U.S. dollar terms for the fiscal year. Because of Chile's high savings rate (approximately 30 percent of gross domestic product, the highest in the region) and its near balance in the current account, Chile was insulated from most of the negative effects of the Mexican crisis. Further positives include economic growth of approximately eight percent and export growth of nearly 40 percent (with non-copper exports growing by more than 30 percent). On the basis of this strong growth, the Chilean central bank slowly raised interest rates over the course of 1995. TCW believes that real interest rates (adjusted for inflation) have peaked at seven percent as economic growth is forecast to moderate in 1996. Corporate earnings growth is expected to approach 20 percent in 1996, driven by the local economy and investments in neighboring countries. ARGENTINA In Argentina, the stock market rose 33 percent in U.S. dollar terms for the fiscal year. In the months following the devaluation in Mexico, as fears mounted that a similar devaluation might occur in Argentina, Argentine banks saw approximately 18 percent of deposits leave the system (similar withdrawals led to the bank failures of the Great Depression in the United States). Later in the year, money returned to the banks because Argentina was able to maintain its currency policy (with the help of multinational financial aid), reduce its fiscal deficit and post a trade surplus as a result of strong export growth. The overwhelming reelection of President Carlos Menem was a clear vote of confidence in the country's economic and political policies. By the end of January 1996, Argentina had recouped its lost foreign reserves and bank deposits, resulting in optimism with regard to future economic growth. INVESTMENT STRATEGY During 1995, the Fund's investment adviser, TCW Fund Management, Inc. (TCW), followed an investment strategy focused on Mexican exporters, with a concentration on blue-chip companies and maintenance of a low cash position. After the devaluation of the Mexican peso, it was clear that the exporters would experience large increases in operating income and cash flow. In addition to exporters, the Fund looked for companies with low debt burdens and top-quality managements that could emerge from the Mexican economic crisis in a position of strength. Over the course of the fiscal year, the Fund's holdings in well known companies with good liquidity were increased as it became evident that investors were placing a premium on liquidity during a period dominated by continued volatility. This strategy paid off as second-tier companies generally underperformed the larger blue-chips. Finally, after the first quarter of 1995, when it became apparent that the region had survived the liquidity crisis, the Fund remained fully invested. Despite market volatility, TCW's outlook for the region remains positive, as economic fundamentals slowly improve and markets recover from their March lows. LOOKING AHEAD Going forward, we recognize the potential for short-term volatility as the Latin American markets respond to an ever-changing global economic landscape. With this in mind, TCW remains optimistic for several reasons. First, they expect strong earnings growth in 1996 -- in the neighborhood of 20 percent for the region as a whole. This forecast is predicated on a rebound in economic activity, currently led by exports and investment, with consumers contributing later in the year. Second, while domestic monetary policy is tight in many countries, TCW anticipates a trend toward easing. Real interest rates range from 7 to 20 percent for countries in which the Fund invests. Also, valuations are compelling, with price/earnings ratios at a fraction of earnings growth rates. We appreciate your support of TCW/DW Latin American Growth Fund and look forward to continuing to serve your investment needs and objectives. Very truly yours, [SIGNATURE] Charles A. Fiumefreddo CHAIRMAN OF THE BOARD TCW/DW LATIN AMERICAN GROWTH FUND PORTFOLIO OF INVESTMENTS JANUARY 31, 1996 - --------------------------------------------------------------------------------
SHARES VALUE - --------------- ------------- COMMON AND PREFERRED STOCKS, AND RIGHTS (98.2%) ARGENTINA (11.9%) AUTOMOTIVE 122,800 Ciadea S.A.*.................... $ 644,764 ------------- BANKS 93,976 Banco de Galicia y Buenos Aires S.A. (ADR).................... 2,408,135 63,905 Banco Frances del Rio de la Plata S.A. (ADR).............. 1,869,221 ------------- 4,277,356 ------------- BUILDING & CONSTRUCTION 136,479 Juan Minetti S.A................ 584,189 ------------- FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS 47,040 Buenos Aires Embotelladera S.A. (ADR)......................... 999,600 160,966 Molinos Rio de la Plata S.A.*... 1,456,888 93,034 Nobleza Piccardo S.A............ 370,312 ------------- 2,826,800 ------------- MULTI-INDUSTRY 1,391,976 Companhia Naviera Perez Compac S.A.C.F.I.M.F.A............... 8,784,247 286,800 Sociedad Commercial del Plata S.A........................... 1,003,900 ------------- 9,788,147 ------------- OIL & GAS 559,610 Astra Compania Argentina de Petroleo S.A.................. 1,080,155 93,650 Transportadora de Gas del Sur S.A. (ADR).................... 1,182,331 ------------- 2,262,486 ------------- OIL RELATED 143,399 Yacimientos Petroliferos Fiscales S.A. (ADR)........... 3,244,402 ------------- REAL ESTATE 242,078 Inversiones y Representacion S.A. (Class B)................ 702,096 ------------- TELECOMMUNICATIONS 256,103 Telecom Argentina Stet - France Telecom S.A................... 1,360,043 25,900 Telecom Argentina Stet - France Telecom S.A. (ADR)............ 1,382,413 124,925 Telefonica de Argentina S.A. (ADR)......................... 3,997,600 ------------- 6,740,056 ------------- TOTAL ARGENTINA................. 31,070,296 ------------- SHARES VALUE - --------------- ------------- BRAZIL (31.6%) BANKING 532,756,084 Banco Bradesco S.A. (Pref.)..... $ 6,101,092 11,437,453 Banco Bradesco S.A. (Rights)*... 50,287 4,700,200 Banco Itau S.A. (Pref.)......... 1,634,016 ------------- 7,785,395 ------------- BREWERY 16,681,964 Companhia Cervejaria Brahma (Pref.)*...................... 8,127,767 ------------- BUILDING MATERIALS 120,000 Companhia Cimento Portland Itau (Pref.)....................... 33,742 9,000,000 Duratex S.A. (Pref.)............ 409,509 ------------- 443,251 ------------- FINANCIAL SERVICES 2,807,000 Itausa Investimentos Itau S.A. (Pref.)....................... 1,894,294 ------------- FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS 1,760,000 Brasmotor S.A. (Pref.).......... 487,689 118,500 Companhia Souza Cruz Industria de Comercio S.A............... 884,509 127,137,939 Refrigeracao Parana S.A......... 337,995 ------------- 1,710,193 ------------- MACHINERY - DIVERSIFIED 3,190 Bardella S.A. Industrias Mecanicas (Pref.)............. 260,941 3,126,200 Confab Industrial S.A. (Pref.)....................... 1,246,644 ------------- 1,507,585 ------------- METALS & MINING 28,282,300 Companhia Vale do Rio Doce S.A. (Pref.)....................... 4,886,939 ------------- PAPER & FOREST PRODUCTS 207,598 Industria Klabin de Papel e Celulose (Pref.).............. 220,759 ------------- RETAIL - DEPARTMENT STORES 35,191,300 Lojas Americanas S.A. (Pref.)... 813,214 ------------- TELECOMMUNICATIONS 49,422,000 Telecomunicacoes Brasileiras S.A........................... 2,147,684 358,443,140 Telecomunicacoes Brasileiras S.A. (Pref.)......................... 19,974,592 68,305,300 Telecomunicacoes de Sao Paulo S.A. (Pref.)*................. 12,564,543 ------------- 34,686,819 ------------- TEXTILES 2,120,600 Companhia de Tecidos Norte de Minas......................... 921,529 -------------
TCW/DW LATIN AMERICAN GROWTH FUND PORTFOLIO OF INVESTMENTS JANUARY 31, 1996 (CONTINUED) - --------------------------------------------------------------------------------
SHARES VALUE - --------------- ------------- UTILITIES - ELECTRIC 19,372,338 Centrais Electricas Brasileiras S.A. (ADR).................... $ 5,902,819 30,526,403 Centrais Electricas Brasileiras S.A. (Pref.).................. 9,207,862 93,456 Companhia Energetica de Minas Gerais* (ADR) - 144A**........ 2,324,718 4,710,900 Light Participacoes S.A......... 435,999 4,710,900 Light-Servicos de Electricidade S.A........................... 1,517,314 ------------- 19,388,712 ------------- TOTAL BRAZIL.................... 82,386,457 ------------- CHILE (13.2%) BUILDING & CONSTRUCTION 88,700 Madeco S.A. (ADR)............... 2,394,900 129,906 Maderas y Sinteticos Sociedad Anonima Masisa (ADR).......... 2,581,882 ------------- 4,976,782 ------------- CHEMICALS 26,900 Quimica y Minera Chile S.A. (ADR)......................... 1,334,913 ------------- FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS 91,945 Compania Cervecerias Unidas S.A. (ADR)......................... 1,838,900 94,140 Embotelladora Andina S.A. (ADR)......................... 3,271,365 ------------- 5,110,265 ------------- INVESTMENT COMPANIES 84,525 Genesis Chile Fund Ltd.......... 3,592,313 1,624,300 The Five Arrows Chile Investment Trust Ltd..................... 4,742,956 ------------- 8,335,269 ------------- RETAIL - DEPARTMENT STORES 102,800 Santa Isabel S.A. (ADR)......... 2,351,550 ------------- TELECOMMUNICATIONS 29,200 Compania de Telecomunicaciones de Chile S.A. (ADR)........... 2,339,650 ------------- UTILITIES - ELECTRIC 41,100 Chilectra S.A. (ADR)............ 2,191,164 100,400 Chilgener S.A. (ADR)............ 2,359,400 94,100 Empresa Nacional de Electricidad Chile S.A. (ADS).............. 1,905,525 133,304 Enersis S.A. (ADR).............. 3,665,860 ------------- 10,121,949 ------------- TOTAL CHILE..................... 34,570,378 ------------- SHARES VALUE - --------------- ------------- COLOMBIA (4.7%) BANKING 291,763 Banco de Bogota................. $ 1,356,442 61,000 Banco Industrial Colombiano (ADR)......................... 1,090,375 ------------- 2,446,817 ------------- BUILDING & CONSTRUCTION 85,400 Cementos Diamante S.A. (ADR) - 144A**........................ 2,022,955 483,887 Compania de Cementos Argos S.A........................... 2,815,600 ------------- 4,838,555 ------------- FINANCIAL SERVICES 138,980 Compania Suramericana de Seguros S.A........................... 2,492,429 ------------- FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS 171,052 Compania Nacional de Chocolates S.A........................... 1,283,724 ------------- RETAIL 428,100 Almacenes Exito S.A............. 1,251,754 ------------- TOTAL COLOMBIA.................. 12,313,279 ------------- MEXICO (32.3%) AUTOMOTIVE 56,440 Corporacion Industrial San Luis S.A. de C. V. (Units)++....... 312,874 4,896,000 Industria Automotriz S.A. (B Shares)*...................... 731,739 ------------- 1,044,613 ------------- BANKING 935,500 Grupo Financiero Inbursa S.A. de C.V. (B Shares)............... 3,171,294 ------------- BUILDING & CONSTRUCTION 142,600 Empresas ICA Sociedad Controladora S.A. de C.V. (ADR)......................... 1,925,100 ------------- BUILDING MATERIALS 86,000 Apasco S.A. de C.V.............. 448,696 1,700,700 Cemex S.A. de C.V. (B Shares)... 6,955,308 882,080 Grupo Cementos de Chihuahua S.A. de C.V........................ 738,263 ------------- 8,142,267 ------------- CONGLOMERATES 1,456,899 Grupo Carso S.A. de C.V.*....... 10,115,155 599,341 Grupo Industria Alfa S.A. de C.V. (A Shares)............... 8,102,504 ------------- 18,217,659 -------------
TCW/DW LATIN AMERICAN GROWTH FUND PORTFOLIO OF INVESTMENTS JANUARY 31, 1996 (CONTINUED) - --------------------------------------------------------------------------------
SHARES VALUE - --------------- ------------- FOOD, BEVERAGE, TOBACCO & HOUSEHOLD PRODUCTS 14,400 Coca Cola FEMSA S.A. de C.V. (ADR)......................... $ 361,800 74,100 Empresas la Moderna S.A. de C.V. (ADR)......................... 1,333,800 778,400 Fomento Economico Mexicano S.A. de C.V. (B Shares)............ 2,189,250 245,846 Gruma S.A. de C.V. (B Shares)... 800,002 385,300 Grupo Industrial Bimbo S.A. de C.V. (Series A)............... 1,570,516 599,340 Grupo Industrial Maseca S.A. de C.V. (B2 Shares).............. 433,219 839,800 Jugos de Valle S.A. de C.V. (B Shares)....................... 1,198,084 71,070 Panamerican Beverages, Inc...... 2,807,265 ------------- 10,693,936 ------------- MEDIA GROUP 175,000 Grupo Televisa S.A. (GDR)....... 4,921,875 ------------- METALS & MINING 277,984 Tubos de Acero de Mexico S.A. de C.V. (ADR)*................... 2,258,620 ------------- MULTI-INDUSTRY 200,600 DESC S.A. de C.V. (Series B).... 812,212 ------------- PAPER & FOREST PRODUCTS 332,100 Kimberly-Clark de Mexico S.A. de C.V. (A Shares)............... 5,572,602 ------------- RETAIL 5,099,118 Cifra S.A. de C.V. (C Shares)*.. 6,470,892 ------------- TELECOMMUNICATIONS 578,873 Telefonos de Mexico S.A. de C.V. (Series L) (ADR).............. 19,609,323 ------------- SHARES VALUE - --------------- ------------- TRANSPORTATION 176,500 Transportacion Maritima Mexicana S.A. de C.V. (Series A) (ADR)......................... $ 1,456,125 ------------- TOTAL MEXICO.................... 84,296,518 ------------- PERU (4.5%) BREWERY 1,149,309 Cerveceria Backus & Johnston S.A........................... 1,781,307 ------------- CHEMICALS 474,847 Explosivos S.A.................. 766,207 ------------- DISTRIBUTION 378,372 Enrique Ferreyros S.A........... 472,363 ------------- FINANCIAL SERVICES 139,095 Credicorp Ltd. (ADR)............ 2,573,258 ------------- METALS & MINING 134,825 Companhia de Minas Buenaventura S.A. (C Shares)............... 1,061,425 ------------- TELECOMMUNICATIONS 2,270,420 CPT-Telefonica de Peru S.A. (B Shares)....................... 5,051,805 ------------- TOTAL PERU...................... 11,706,365 ------------- VENEZUELA (0.0%) UTILITIES - ELECTRIC 23,223 C.A. la Electricidad de Caracas S.A.C.A....................... 18,301 ------------- TOTAL COMMON AND PREFERRED STOCKS, AND RIGHTS (IDENTIFIED COST $247,336,708)(A)................. 98.2% 256,361,594 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES...................... 1.8 4,704,262 ----- ----------- NET ASSETS......................... 100.0% $261,065,856 ----- ----------- ----- ----------- - ------------------ ADR AMERICAN DEPOSITORY RECEIPT. ADS AMERICAN DEPOSITORY SHARES. GDR GLOBAL DEPOSITORY RECEIPT. * NON-INCOME PRODUCING SECURITY. ** RESALE IS RESTRICTED TO QUALIFIED INSTITUTIONAL INVESTORS. ++ CONSISTS OF MORE THAN ONE CLASS OF SECURITIES TRADED TOGETHER AS A UNIT; GENERALLY STOCKS WITH ATTACHED WARRANTS. (A) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES IS $255,416,965; THE AGGREGATE GROSS UNREALIZED APPRECIATION IS $29,915,409 AND THE AGGREGATE GROSS UNREALIZED DEPRECIATION IS $28,970,780, RESULTING IN NET UNREALIZED APPRECIATION OF $944,629.
SEE NOTES TO FINANCIAL STATEMENTS TCW/DW LATIN AMERICAN GROWTH FUND SUMMARY OF INVESTMENTS JANUARY 31, 1996 - --------------------------------------------------------------------------------
PERCENT OF INDUSTRY VALUE NET ASSETS - ------------------------------------------------------------------------------------------ ----------- ------------- Automotive................................................................................ $ 1,689,377 0.7% Banking................................................................................... 13,403,506 5.1 Banks..................................................................................... 4,277,356 1.6 Brewery................................................................................... 9,909,074 3.8 Building & Construction................................................................... 12,324,626 4.7 Building Materials........................................................................ 8,585,518 3.3 Chemicals................................................................................. 2,101,120 0.8 Conglomerates............................................................................. 18,217,659 7.0 Distribution.............................................................................. 472,363 0.2 Financial Services........................................................................ 6,959,981 2.7 Food, Beverage, Tobacco & Household Products.............................................. 21,624,918 8.2 Investment Companies...................................................................... 8,335,269 3.2 Machinery - Diversified................................................................... 1,507,585 0.6 Media Group............................................................................... 4,921,875 1.9 Metals & Mining........................................................................... 8,206,984 3.1 Multi-Industry............................................................................ 10,600,359 4.1 Oil & Gas................................................................................. 2,262,486 0.9 Oil Related............................................................................... 3,244,402 1.2 Paper & Forest Products................................................................... 5,793,361 2.2 Real Estate............................................................................... 702,096 0.3 Retail.................................................................................... 7,722,646 2.9 Retail - Department Stores................................................................ 3,164,764 1.2 Telecommunications........................................................................ 68,427,653 26.2 Textiles.................................................................................. 921,529 0.4 Transportation............................................................................ 1,456,125 0.6 Utilities - Electric...................................................................... 29,528,962 11.3 ----------- --- $256,361,594 98.2% ----------- --- ----------- ---
PERCENT OF TYPE OF INVESTMENT VALUE NET ASSETS - ------------------------------------------------------------------------------------------ ----------- ------------- Common Stocks............................................................................. $188,447,704 72.2% Preferred Stocks.......................................................................... 67,863,603 26.0 Rights.................................................................................... 50,287 0.0 ----------- --- $256,361,594 98.2% ----------- --- ----------- ---
SEE NOTES TO FINANCIAL STATEMENTS TCW/DW LATIN AMERICAN GROWTH FUND FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- Statement of Assets and Liabilities JANUARY 31, 1996 - -------------------------------------------------------------------------------- ASSETS: Investments in securities, at value (identified cost $247,336,708)........... $256,361,594 Cash....................................... 4,935,497 Receivable for: Shares of beneficial interest sold....... 634,158 Dividends................................ 199,528 Interest................................. 17,519 Deferred organizational expenses........... 75,057 Prepaid expenses and other assets.......... 58,888 ----------- TOTAL ASSETS....................... 262,282,241 ----------- LIABILITIES: Payable for: Plan of distribution fee................. 227,484 Shares of beneficial interest repurchased............................ 177,807 Management fee........................... 170,613 Investment advisory fee.................. 113,742 Investments purchased.................... 102,952 Accrued expenses and other payables........ 423,787 ----------- TOTAL LIABILITIES.................. 1,216,385 ----------- NET ASSETS: Paid-in-capital............................ 368,448,889 Net unrealized appreciation................ 9,022,124 Accumulated net investment loss............ (894,899) Accumulated net realized loss.............. (115,510,258) ----------- NET ASSETS......................... $261,065,856 ----------- ----------- NET ASSET VALUE PER SHARE, 27,546,662 shares outstanding (unlimited shares authorized of $.01 par value)............ $9.48 ----------- -----------
Statement of Operations FOR THE YEAR ENDED JANUARY 31, 1996 NET INVESTMENT INCOME: INCOME Dividends (net of $639,669 foreign withholding tax)..................... $ 5,525,949 Interest............................... 592,392 ----------- TOTAL INCOME....................... 6,118,341 ----------- EXPENSES Plan of distribution fee............... 2,580,274 Management fee......................... 1,935,206 Investment advisory fee................ 1,290,137 Custodian fees......................... 796,720 Transfer agent fees and expenses....... 752,768 Professional fees...................... 95,175 Registration fees...................... 64,141 Shareholder reports and notices........ 52,549 Trustees' fees and expenses............ 46,932 Organizational expenses................ 39,146 Other.................................. 29,711 ----------- TOTAL EXPENSES..................... 7,682,759 ----------- NET INVESTMENT LOSS................ (1,564,418) ----------- NET REALIZED AND UNREALIZED GAIN (LOSS): NET REALIZED LOSS ON: Investments.......................... (67,614,802) Foreign exchange transactions........ (619,051) ----------- TOTAL LOSS......................... (68,233,853) ----------- NET CHANGE IN UNREALIZED APPRECIATION/ DEPRECIATION ON: Investments.......................... 68,480,678 Net translation of other assets and liabilities denominated in foreign currencies......................... 45,977 ----------- TOTAL APPRECIATION................. 68,526,655 ----------- NET GAIN........................... 292,802 ----------- NET DECREASE....................... $(1,271,616) ----------- -----------
Statement of Changes in Net Assets - --------------------------------------------------------------------------------
FOR THE YEAR FOR THE YEAR ENDED ENDED JANUARY 31, JANUARY 31, 1996 1995 --------------- --------------- INCREASE (DECREASE) IN NET ASSETS: Operations: Net investment loss......................................................... $ (1,564,418) $ (5,488,643) Net realized loss........................................................... (68,233,853) (50,838,277) Net change in unrealized appreciation/depreciation.......................... 68,526,655 (131,066,806) --------------- --------------- Net decrease............................................................ (1,271,616) (187,393,726) Distributions from net realized gain.......................................... -- (8,954,749) Net increase (decrease) from transactions in shares of beneficial interest.... (32,436,582) 165,166,940 --------------- --------------- Total decrease.......................................................... (33,708,198) (31,181,535) NET ASSETS: Beginning of period........................................................... 294,774,054 325,955,589 --------------- --------------- END OF PERIOD (including accumulated net investment loss of $894,899 and $0, respectively)................................................................ $ 261,065,856 $ 294,774,054 --------------- --------------- --------------- ---------------
SEE NOTES TO FINANCIAL STATEMENTS TCW/DW LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1996 - -------------------------------------------------------------------------------- 1. ORGANIZATION AND ACCOUNTING POLICIES--TCW/DW 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. The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. The following is a summary of significant accounting policies: A. VALUATION OF INVESTMENTS--(1) an equity security listed or traded on the New York, American or other domestic or foreign stock exchange is valued at its latest sale price on that exchange prior to the time when assets are valued; if there were no sales that day, the security is valued at the latest bid price (in cases where securities are traded on more than one exchange; the securities are valued on the exchange designated as the primary market by the Adviser); (2) all other portfolio securities for which over-the-counter market quotations are readily available are valued at the latest available bid price prior to the time of valuation; (3) when market quotations are not readily available, including circumstances under which it is determined by the Adviser 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 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. 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 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. D. FORWARD FOREIGN CURRENCY CONTRACTS--The Fund may enter into forward foreign currency contracts which are valued daily at the appropriate exchange rates. The resultant unrealized exchange gains and TCW/DW LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1996 (CONTINUED) - -------------------------------------------------------------------------------- losses are included in the Statement of Operations as unrealized foreign currencies 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. E. 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. F. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS--The Fund records dividends and distributions to its shareholders on the ex-dividend date. The amount of dividends and distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations which may differ from generally accepted accounting principles. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature, such amounts are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences do not require reclassification. Dividends and distributions which exceed net investment income and net realized capital gains for financial reporting purposes but not for tax purposes are reported as dividends in excess of net investment income or distributions in excess of net realized capital gains. To the extent they exceed net investment income and net realized capital gains for tax purposes, they are reported as distributions of paid-in-capital. G. ORGANIZATIONAL EXPENSES--Dean Witter InterCapital Inc., an affiliate of Dean Witter Services Company Inc. (the "Manager"), paid the organizational expenses in the amount of approximately $244,000 which have been reimbursed in the amount of $200,000. Such expenses have been deferred and are being amortized on the straight-line method over a period not to exceed five years from the commencement of operations. 2. MANAGEMENT AGREEMENT--Pursuant to a Management Agreement, the Fund pays 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: 0.75% to the portion of daily net assets not exceeding $500 million and 0.72% to the portion of the daily net assets exceeding $500 million. Under the terms of the Management Agreement, the Manager maintains certain of the Fund's book and records and furnishes, at its own expense, office space, facilities, equipment, clerical, bookkeeping and certain legal services and pays the salaries of all personnel, including officers of the Fund who are employees of the Manager. The Manager also bears the cost of telephone services, heat, light, power and other utilities provided to the Fund. If, in any fiscal year, the Fund's total operating expenses, exclusive of tax, interest, brokerage fees, distribution fees and extraordinary expenses, exceed 2 1/2% of the first $30,000,000 of average daily net assets, 2% of the next $70,000,000 and 1 1/2% of any excess over $100,000,000, the Manager and the Adviser will reimburse the Fund, on a pro-rata basis, for the amount of such excess. Such amount, if any, will be calculated daily and credited on a monthly basis. 3. INVESTMENT ADVISORY AGREEMENT--Pursuant to an Investment Advisory Agreement with TCW Funds Management, Inc. (the "Adviser"), the Fund pays an advisory 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: 0.50% to the portion of daily net assets not exceeding $500 million and 0.48% to the portion of the daily net assets exceeding $500 million. TCW/DW LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1996 (CONTINUED) - -------------------------------------------------------------------------------- Under the terms of the Investment Advisory Agreement, the Fund has retained the Adviser to invest the Fund's assets, including placing orders for the purchase and sale of portfolio securities. The Adviser obtains and evaluates such information and advice relating to the economy, securities markets, and specific securities as it considers necessary or useful to continuously manage the assets of the Fund in a manner consistent with its investment objective. In addition, the Adviser pays the salaries of all personnel, including officers of the Fund, who are employees of the Adviser. 4. PLAN OF DISTRIBUTION--Shares of the Fund are distributed by Dean Witter Distributors Inc. (the "Distributor"), an affiliate of the Manager. The Fund has adopted a Plan of Distribution (the "Plan"), pursuant to Rule 12b-1 under the Act, pursuant to which the Fund pays the Distributor compensation, accrued daily and payable monthly, at an annual rate of 1.0% of the lesser of: (a) the average daily aggregate gross sales of the Fund's shares since the Fund's inception (not including reinvestment of dividend or capital gain distributions) less the average daily aggregate net asset value of the Fund's shares redeemed since the Fund's inception of the Plan upon which a contingent deferred sales charge has been imposed or upon which such charge has been waived; or (b) the Fund's average daily net assets. Amounts paid under the Plan are paid to the Distributor to compensate it for the services provided and the expenses borne by it and others in the distribution of the Fund's shares, including the payment of commissions for sales of the Fund's shares and incentive compensation to, and expenses of, the account executives of Dean Witter Reynolds Inc. ("DWR), an affiliate of the Manager and Distributor, and other employees or selected dealers who engage in or support distribution of the Fund's shares or who service shareholder accounts, including overhead and telephone expenses, printing and distribution of prospectuses and reports used in connection with the offering of the Fund's shares to other than current shareholders and preparation, printing and distribution of sales literature and advertising materials. In addition, the Distributor may be compensated under the Plan for its opportunity costs in advancing such amounts, which compensation would be in the form of a carrying charge on any unreimbursed expenses incurred by the Distributor. Provided that the Plan continues in effect, any cumulative expenses incurred but not yet recovered, may be recovered through future distribution fees from the Fund and contingent deferred sales charges from the Fund's shareholders. The Distributor has informed the Fund that for the year ended January 31, 1996, it received approximately $1,455,000 in contingent deferred sales charges from certain redemptions of the Fund's shares. The Fund's shareholders pay such charges which are not an expense of the Fund. 5. 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, 1996 aggregated $157,588,277 and $163,386,951, respectively. Dean Witter Trust Company, an affiliate of the Manager and Distributor, is the Fund's transfer agent. At January 31, 1996, the Fund had transfer agent fees and expenses payable of approximately $80,000. TCW/DW LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS JANUARY 31, 1996 (CONTINUED) - -------------------------------------------------------------------------------- 6. SHARES OF BENEFICIAL INTEREST--Transactions in shares of beneficial interest were as follows:
FOR THE YEAR ENDED FOR THE YEAR ENDED JANUARY 31, 1996 JANUARY 31, 1995 ---------------------------- ----------------------------- SHARES AMOUNT SHARES AMOUNT ------------ -------------- ------------ --------------- Sold............................................. 7,422,903 $ 63,325,768 18,877,547 $ 258,325,274 Reinvestment of distributions.................... -- -- 739,138 8,455,745 ------------ -------------- ------------ --------------- 7,422,903 63,325,768 19,616,685 266,781,019 Repurchased...................................... (11,407,729) (95,762,350) (8,388,944) (101,614,079) ------------ -------------- ------------ --------------- Net increase (decrease).......................... (3,984,826) $ (32,436,582) 11,227,741 $ 165,166,940 ------------ -------------- ------------ --------------- ------------ -------------- ------------ ---------------
7. FEDERAL INCOME TAX STATUS--At January 31, 1996, the Fund had a net capital loss carryover of approximately $96,914,000 of which $4,864,000 will be available through January 31, 2003 and $92,050,000 will be available through January 31, 2004 to offset future capital gains to the extent provided by regulations. 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 $10,456,000 and $60,000, respectively during fiscal 1996. As of January 31, 1996, the Fund had temporary book/tax differences primarily attributable to post-October losses, capital loss deferrals on wash sales and income from the mark-to-market of passive foreign investment companies. The Fund had permanent book/tax differences primarily attributable to foreign currency losses and a net operating loss. To reflect reclassifications arising from permanent book/tax differences for the year ended January 31, 1996, accumulated net investment loss was credited $669,519, paid-in-capital was charged $2,019,184 and accumulated net realized loss was credited $1,349,665. 8. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS--The Fund may enter into forward currency contracts ("forward contracts") to facilitate settlement of foreign currency denominated portfolio transactions or to manage foreign currency exposure associated with foreign currency denominated securities. Forward contracts involve elements of market risk in excess of the amounts reflected in the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in 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. The Fund is also permitted to write covered call options on portfolio securities and certain foreign currencies to hedge against a decline in the value of a security or the underlying currency of such security. At January 31, 1996, the Fund's cash balance consisted principally of interest bearing deposits with Chase Manhattan N.A., the Fund's custodian. TCW/DW 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, DECEMBER 30, 1992* --------------------------------------- THROUGH 1996 1995 1994 JANUARY 31, 1993 ------------------ -------- -------- ------------------ PER SHARE OPERATING PERFORMANCE: Net asset value, beginning of period..................... $ 9.35 $ 16.05 $ 9.56 $ 10.00 -------- -------- -------- ------- Net investment loss...................................... (0.06) (0.17 ) (0.04 ) (0.01) Net realized and unrealized gain (loss).................. 0.19 (6.21 ) 6.68 (0.43) -------- -------- -------- ------- Total from investment operations......................... 0.13 (6.38 ) 6.64 (0.44) Less distributions from net realized gain................ -- (0.32 ) (0.15 ) -- -------- -------- -------- ------- Net asset value, end of period........................... $ 9.48 $ 9.35 $ 16.05 $ 9.56 -------- -------- -------- ------- -------- -------- -------- ------- TOTAL INVESTMENT RETURN+................................. 1.39% (40.12 )% 69.49% (4.30)%(1) RATIOS TO AVERAGE NET ASSETS: Expenses................................................. 2.98% 2.87% 2.89% 3.08%(2) Net investment loss...................................... (0.61)% (1.46 )% (0.90 )% (1.08)%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands.................. $261,066 $294,774 $325,956 $69,611 Portfolio turnover rate.................................. 64% 145% 111% 1%(1) - -------------- * COMMENCEMENT OF OPERATIONS. + DOES NOT REFLECT THE DEDUCTION OF SALES CHARGE. (1) NOT ANNUALIZED. (2) ANNUALIZED.
SEE NOTES TO FINANCIAL STATEMENTS TCW/DW LATIN AMERICAN GROWTH FUND REPORT OF INDEPENDENT ACCOUNTANTS - -------------------------------------------------------------------------------- To the Shareholders and Trustees of TCW/DW Latin American Growth Fund In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of TCW/DW Latin American Growth Fund (the "Fund") at January 31, 1996, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the three years in the period then ended and for the period December 30, 1992 (commencement of operations) through January 31, 1993, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at January 31, 1996 by correspondence with the custodian and brokers and the application of alternative auditing procedures where confirmations from brokers were not received, provide a reasonable basis for the opinion expressed above. PRICE WATERHOUSE LLP 1177 Avenue of the Americas New York, New York 10036 March 13, 1996 TRUSTEES John C. Argue Richard M. DeMartini Charles A. Fiumefreddo John R. Haire Dr. Maunuel H. Johnson Paul Kolton Thomas E. Larkin, Jr. Michael E. Nugent John L. Schroeder Marc I. Stern OFFICERS Charles A. Fiumefreddo Chairman and Chief Executive Officer Sheldon Curtis Vice President, Secretary and General Counsel Micheal P. Reilly Vice President Thomas F. Caloia Treasurer TRANSFER AGENT Dean Witter Trust Company Harborside Financial Center - Plaza Two Jersey City, New Jersey 07311 INDEPENDENT ACCOUNTANTS Price Waterhouse LLP 1177 Avenue of the Americas New York, New York 10036 MANAGER Dean Witter Services Company Inc. ADVISER TCW Funds Management, Inc. 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. TCW DW LATIN AMERICAN GROWTH FUND [Graphic] ANNUAL REPORT JANUARY 31, 1996 TCW/DW LATIN AMERICAN GROWTH FUND GROWTH OF $10,000 DATE TOTAL IFC ---- ----- --- December 30, 1992 $10,000 $10,000 January 31, 1993 $ 9,570 $ 9,707 January 31, 1994 $16,220 $18,233 January 31, 1995 $ 9,712 $12,253 January 31, 1996 $ 9,657(3) $13,297 AVERAGE ANNUAL TOTAL RETURNS 1 YEAR LIFE OF FUND ------ ------------ 1.39 (1) -0.50 (1) -3.61 (2) -1.12 (2) Fund IFC (4) ------- ------- Past performance is not predictive of future returns. __________________________________________________________ (1) Figure shown assumes reinvestment of all distributions and does not reflect the deduction of any sales charges. (2) Figure shown assumes the deduction of the maximum applicable contingent deferred sales charge (CDSC) (1 Year-5%, since inception 2%). See the Fund's current prospectus for complete details on fees and sales charges. (3) Closing value after the deduction of a 2% CDSC, assuming a complete redemption on January 31, 1996. (4) The International Finance Corporation's Investable Latin America Total Return Index is a broad, neutral and historically consistent benchmark for the Latin American Markets. The Index, which includes Argentina, Brazil, Chile, Columbia, Mexico and Venezuela, reflects restrictions on foreign investment. No single market is dramatically overweighted. The Index is unmanaged and should not be considered an investment. -----END PRIVACY-ENHANCED MESSAGE-----