-----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, GuI6+ZDy4pHdmTpISI6jSBBt10vieGKsK4luS5QBExoeVxH9Q9bCWWz7yVUxKiJm YoEYPCKX0imbcFrPAxvR4w== 0000950123-99-009013.txt : 19991018 0000950123-99-009013.hdr.sgml : 19991018 ACCESSION NUMBER: 0000950123-99-009013 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990731 FILED AS OF DATE: 19991001 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: 99721471 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 SEMI-ANNUAL REPORT 1 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND Two World Trade Center LETTER TO THE SHAREHOLDERS July 31, 1999 New York, New York 10048 DEAR SHAREHOLDER: We are pleased to present the semiannual letter of Morgan Stanley Dean Witter Latin American Growth Fund, formerly TCW/DW Latin American Growth Fund, for the six-month period ended July 31, 1999. At a special meeting held on June 8, 1999, shareholders of TCW/DW Latin American Growth Fund approved several proposals related to an overall consolidation of the TCW/DW Family of Funds and the Morgan Stanley Dean Witter Family of Funds. Accordingly, on June 28, 1999, TCW/DW Latin American Growth Fund became part of the Morgan Stanley Dean Witter Family of Funds and was renamed Morgan Stanley Dean Witter Latin American Growth Fund. Among the proposals approved by shareholders were a new investment management agreement between the Fund and Morgan Stanley Dean Witter Advisors Inc. (MSDW Advisors) and a new sub-advisory agreement between MSDW Advisors and TCW Funds Management, Inc. (TCW). Under the new investment management agreement mentioned above, MSDW Advisors serves as the investment manager for the Fund. The advisory fee rate that MSDW Advisors charges the Fund is identical to the total aggregate fee rate that was in effect under the previous management and advisory agreements. In return for the services that TCW will render under the new sub-advisory agreement, MSDW Advisors will pay TCW monthly compensation equal to 40 percent of the compensation it receives under the new investment management agreement. MARKET OVERVIEW Although the Latin American equity markets began the year on a turbulent note with a devaluation of the Brazilian real, most of the region's markets rebounded quickly, due to proactive efforts by Brazilian authorities to restore investor confidence. Stock prices continued to rally on the back of reviving commodity prices and lower interest rates, which created a more optimistic outlook for both economic growth and earnings 2 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND LETTER TO THE SHAREHOLDERS July 31, 1999, continued growth in the year 2000. Later in the period, however, the markets underwent a pullback as commodity prices returned to March levels and the region braced itself for an expected U.S. federal-funds rate hike at the end of June. Fears of higher U.S. interest rates and increased concerns about the potential effect of the millennium computer bug on the Latin American economies have resulted in lower portfolio investment flows into the region. In general, the improving global growth outlook has been a positive factor for Latin America, but not a big enough one to result in a significant economic rebound to date. TCW is anticipating an acceleration of regional economic growth in the fourth quarter of this year and into the early 2000. Mexico Mexican stock prices surged 40.1 percent in U.S. dollar terms during the six months ended July 31, 1999. The market was bolstered by strong corporate earnings results and continued favorable macroeconomic developments. Despite lackluster top-line growth stemming from subdued domestic demand, companies benefited from lower debt-servicing costs and margin expansions resulting from cost-cutting measures. The dramatic interest-rate declines seen in the first quarter of 1999 are expected to translate into stronger economic growth in the second half of the year, setting the stage for a pickup in earnings growth. Equity prices were also supported by Mexico's announcement of an IMF standby loan that, together with other multilateral financing, will provide nearly $17 billion to refinance the country's public external debt amortizations through the year 2000. This financing package reduces Mexico's vulnerability to rising U.S. interest rates and international capital flows. Moreover, Moody's announced that it was revising Mexico's sovereign debt rating outlook from stable to positive. Brazil Brazilian stock prices were up 49.7 percent in U.S. dollar terms during the six-month period under review, aided by a currency appreciation of 13.8 percent. With the currency floating freely, the Brazilian government has begun to design a new macroeconomic policy. Since then, the relatively stable currency and declining inflation rate have allowed the central bank to cut overnight interest rates in half. Going forward, the central bank will likely begin inflation targeting, with further interest-rate declines possible to the extent that inflation remains subdued. Although the Brazilian economy remains weak, the IMF revised its 1999 GDP forecast upward. 2 3 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND LETTER TO THE SHAREHOLDERS July 31, 1999, continued Argentina In Argentina, the market rallied 27.1 percent in U.S. dollar terms during the six months ended July 31, 1999. The market's strength was attributable to a cash bid by Repsol of Spain (not held by the Fund) for 85 percent of YPF's shares at a price significantly above the market price. (YPF shares represented approximately 5.7 percent of the Fund's net assets before TCW took profits in May.) With YPF's 35-40 percent weighting in the market, as measured by the International Finance Corporation, the bid and eventual delisting of YPF was a significant event for the Argentine stock market. Because of the attractiveness of the offer, most shareholders tendered their shares. A portion of the current shareholders were then expected to reinvest their cash proceeds into other Argentine equities, an expectation that caused other share prices to rally. While the Argentine economy appears to have stabilized, there are few signs of recovery. Interest rates are low and liquidity abundant, but banks are reluctant to increase their loan portfolios. An increased focus has been placed on the presidential elections due in late October. Chile, Peru, Colombia and Venezuela With respect to the Fund's smaller Latin American holdings, Chilean equities rose 33.3 percent during the six months under review, driven by takeover news on the key electric utilities. The market rallied despite a continued slowdown in economic activity. Monetary easing appears to be the policy choice to stimulate economic activity, with the central bank lowering real short-term interest rates from 7.75 percent to 5.0 percent during the period. Officials also prepared an economic stimulus package that will amount to roughly 0.5 percent of GDP and take effect this year and next. Peruvian stock prices gained 21.6 percent during the period under review. President Fujimori's cabinet reshuffling, together with an announcement of fiscal measures designed to jump-start the economy, have helped boost his sagging popularity despite continued sluggish economic growth. Certain sectors of the economy, including fishing and agriculture, have rebounded from last year's El Nino-induced lows, but the manufacturing and consumer segments of the economy remain stalled. Colombian stocks posted the region's only declines during the period, falling 4.9 percent in U.S. dollar terms. Both of the major rating agencies placed the country's investment-grade foreign debt rating on review for a downgrade, citing the inability of the government to reduce the fiscal deficit below 3 percent of GDP. In June a series of negative developments led the central bank to devalue the peso through a 10 percent shift in the currency's prescribed trading band. The Colombian government signaled that it would request a $3 billion (in U.S. dollars) financial assistance package from the IMF. The government has also unveiled a package of economic reforms designed to reduce the fiscal deficit 3 4 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND LETTER TO THE SHAREHOLDERS July 31, 1999, continued substantially over the next several years; however; the administration's low popularity and unsuccessful peace initiatives will make passage through Congress difficult. Despite volatile monthly performances, Venezuelan stock prices rose 6.0 percent during the six months ended July 31, 1999. Early in the year, low oil prices, a large fiscal deficit and questions regarding the political policy of newly elected President Chavez caused investors to shy away from Venezuelan securities. Oil prices, which have averaged $15.40 in the first half of this year and reached a near-term high of $20.97 on July 29, are expected to have a favorable impact on the government's fiscal accounts. High oil prices also assure strong trade and current-account surpluses in spite of the continued lofty valuation of the Venezuelan currency. PERFORMANCE For the six-month period ended July 31, 1999, the Fund's Class B shares posted a total return of 31.22 percent, compared to 34.12 percent for the Lipper Latin American Funds Average and 37.61 percent for the International Finance Corporation's Investable Latin America Total Return Index. For the same period, the Fund's Class A, C and D shares had total returns of 31.65 percent, 31.49 percent and 31.84 percent, respectively. The performance of the Fund's four share classes varies because of differing expenses. The Fund's underperformance relative to its benchmarks during the period under review was primarily due to the portfolio's defensive posture in the wake of Brazil's currency devaluation. PORTFOLIO STRATEGY During the first half of the Fund's fiscal year, TCW maintained an overweighted position in Mexico, given the prospects for moderate (3 percent) economic growth this year and next, which is expected to translate into double-digit corporate earnings growth. In the second quarter of this year, the Fund also adopted an overweighted position in Brazilian stocks, based on expectations of a rebound in economic growth toward the end of this year. The Fund maintained a neutral position in Peru, where the economy has begun to show signs of recovery, as well as in Argentina, where the economic recession and political concerns have largely been discounted by equity prices. The Fund maintained an underweighted position in Chile, where valuations remain uncompelling, and in Venezuela and Colombia, where the prospects for equities have been dimmed by the significant political risk. With respect to sector weightings, the Fund continued to focus on blue-chip companies exhibiting strong, reliable cash-flow generation and companies with low leverage and quality management. As a result, telecommunications and consumer nondurables were areas of emphasis. In addition, the Fund's 4 5 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND LETTER TO THE SHAREHOLDERS July 31, 1999, continued industry weightings were somewhat modified to reflect the improved outlook for global growth, particularly in Japan and the rest of Asia. Specifically, after largely avoiding deeply cyclical companies in 1998 the Fund initiated positions in certain companies in the areas of steel, pulp and paper and petrochemicals. LOOKING AHEAD In conclusion, TCW notes several reasons for a cautious outlook regarding the Latin American markets. Rising U.S. interest rates, concerns about the millennium bug, and political risk may result in lower portfolio investment inflows into the region in the near term. However, in the intermediate term we are optimistic, noting that a global economic recovery and stable commodity prices are typically favorable for the Latin American economies. TCW forecasts a rebound in the region's economic growth from a contraction of 0.5 percent in 1999 to 3.5 percent growth in 2000. Furthermore, foreign direct investment continues to flow into the region as multinational companies identify quality companies with favorable growth prospects at values that are attractive. On May 1, 1999, Mitchell M. Merin was named President of the Morgan Stanley Dean Witter Funds. Mr. Merin is the President and Chief Operating Officer of Asset Management for Morgan Stanley Dean Witter & Co. and President, Chief Executive Officer and Director of Morgan Stanley Dean Witter Advisors Inc., the Fund's investment manager. He also serves as Chairman, Chief Executive Officer and Director of the Fund's distributor and transfer agent. 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 6 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND RESULTS OF SPECIAL MEETING (unaudited) * * * On June 8, 1999, a special meeting of the Fund's shareholders was held for the purpose of voting on three separate matters, the results of which were as follows: (1) APPROVAL OF A NEW INVESTMENT MANAGEMENT AGREEMENT BETWEEN THE FUND AND MORGAN STANLEY DEAN WITTER ADVISORS INC.: For..................................................... 6,138,541 Against................................................. 255,989 Abstain................................................. 591,337
(2) APPROVAL OF A NEW SUB-ADVISORY AGREEMENT BETWEEN MORGAN STANLEY DEAN WITTER ADVISORS INC. AND TCW FUNDS MANAGEMENT, INC.: For..................................................... 6,104,447 Against................................................. 276,784 Abstain................................................. 604,636
(3) ELECTION OF TRUSTEES: Michael Bozic For..................... 6,508,402 Withheld................ 477,465 Charles A. Fiumefreddo For..................... 6,507,439 Withheld................ 478,428 Edwin J. Garn For..................... 6,519,415 Withheld................ 466,452 Wayne E. Hedien For..................... 6,523,235 Withheld................ 462,632 Manuel H. Johnson For..................... 6,507,609 Withheld................ 478,258 Michael E. Nugent For..................... 6,531,209 Withheld................ 454,658 Philip J. Purcell For..................... 6,532,424 Withheld................ 453,443 John L. Schroeder For..................... 6,497,105 Withheld................ 488,762
6 7 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FUND PERFORMANCE July 31, 1999 AVERAGE ANNUAL TOTAL RETURNS - --------------------------------------------------------------------------------
CLASS A* - ------------------------------------------------- PERIOD ENDED 7/31/99 - -------------------------- Since Inception (7/28/97) (20.31)(1) (22.42)(2) 1 Year (16.59)(1) (20.97)(2)
CLASS C++ - ------------------------------------------------- PERIOD ENDED 7/31/99 - -------------------------- Since Inception (7/28/97) (20.85)(1) (20.85)(2) 1 Year (17.07)(1) (17.90)(2)
CLASS B+ - ------------------------------------------------- PERIOD ENDED 7/31/99 - -------------------------- Since Inception (12/30/92) (0.20)(1) (0.20)(2) 1 Year (17.25)(1) (21.39)(2) 5 Years (4.79)(1) (5.17)(2)
CLASS D# - ------------------------------------------------- PERIOD ENDED 7/31/99 - -------------------------- Since Inception (7/28/97) (20.15)(1) 1 Year (16.47)(1)
- --------------------- 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 reinvestment of all distributions and the deduction of the maximum applicable sales charge. See the Fund's current prospectus for complete details on fees and sales charges. * The maximum front-end sales charge for Class A is 5.25%. + The maximum CDSC for Class B is 5.0%. The CDSC declines to 0% after six years. ++ The maximum CDSC for Class C shares is 1% for shares redeemed within one year of purchase. # Class D shares have no sales charge.
7 8 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND PORTFOLIO OF INVESTMENTS July 31, 1999 (unaudited)
NUMBER OF SHARES VALUE - ---------------------------------------------------------------- COMMON AND PREFERRED STOCKS (97.3%) ARGENTINA (8.5%) Alcoholic Beverages 73,700 Quilmes Industrial S.A. (ADR).................... $ 769,244 ------------ Banking 67,148 Banco de Galicia y Buenos Aires S.A. de C.V. (ADR).................... 1,091,155 42,240 Banco Frances del Rio de La Plata S.A. (ADR)...... 707,520 ------------ 1,798,675 ------------ Building Materials 129,695 Juan Minetti S.A.*........ 339,937 ------------ Diversified Financial Services 276,280 CEI Citicorp Holdings S.A.*.................... 704,796 ------------ Oil & Gas Production 462,824 Perez Companc S.A. (Class B)....................... 2,616,002 ------------ Oil/Gas Transmission 49,680 Transportadora de Gas del Sur S.A. (ADR)........... 428,490 ------------ Real Estate 156,089 Inversiones y Representaciones S.A. (Class B)................ 441,909 ------------ Telecommunications 63,020 Telecom Argentina Stet - France Telecom S.A. (ADR).................... 1,693,662 56,735 Telefonica de Argentina S.A. (ADR)............... 1,641,769 ------------ 3,335,431 ------------ TOTAL ARGENTINA........... 10,434,484 ------------ BRAZIL (32.9%) Alcoholic Beverages 4,134,900 Companhia Cervejaria Brahma (Pref.)........... 2,406,448 ------------
NUMBER OF SHARES VALUE - ---------------------------------------------------------------- Banking 281,900,000 Banco Bradesco S.A. (Pref.).................. $ 1,343,869 11,750,000 Banco do Estado de Sao Paulo S.A. (Pref.)....... 406,430 2,685,356 Banco Itau S.A. (Pref.)... 1,302,487 ------------ 3,052,786 ------------ Cellular Telephone 268,758,140 Telemig Celular Participacoes S.A. (Pref.)*................. 345,631 65,690 Telesp Celular Participacoes S.A. (ADR).................... 1,707,940 30,822,000 Telesudeste Celular Participacoes S.A.*...... 74,321 30,530 Telesudeste Celular Participacoes S.A. (ADR).................... 751,801 ------------ 2,879,693 ------------ Electric Utilities 91,440,000 Centrais Eletricas Brasileiras S.A. (Class B) (Pref.)............... 1,540,896 2,352,400,000 Companhia de Electricidade do Estado Rio de Janeiro.................. 495,517 76,133 Companhia Energetica de Minas Gerais S.A. (Pref.) (ADR).................... 1,294,261 117,340,000 Companhia Paranaense de Energia - Copel (Class B) (Pref.).................. 792,891 ------------ 4,123,565 ------------ Integrated Oil Companies 25,939,000 Petroleo Brasileiro S.A. (Pref.).................. 3,702,490 ------------ Multi-Sector Companies 2,431,600 Itausa Investimentos Itau S.A. (Pref.)............. 1,199,625 ------------ Other Metals/Minerals 170,008 Companhia Vale do Rio Doce (Class A) (Pref.)........ 3,336,077 266,358 Companhia Vale do Rio Doce S.A. 12/31/99 (Debentures)*............ -- ------------ 3,336,077 ------------
SEE NOTES TO FINANCIAL STATEMENTS 8 9 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND PORTFOLIO OF INVESTMENTS July 31, 1999 (unaudited) continued
NUMBER OF SHARES VALUE - ---------------------------------------------------------------- Other Telecommunications 156,808,140 Embratel Participacoes S.A. (Pref.)*............ $ 1,694,988 13,120 Tele Centro Sul Participacoes S.A. (ADR).................... 699,460 189,678,140 Tele Centro Sul Participacoes S.A. (Pref.)*................. 2,039,776 20,752,000 Tele Norte Leste Participacoes S.A.*...... 177,151 153,477,469 Tele Norte Leste Participacoes S.A. (Pref.)*................. 2,492,733 232,208,140 Telesp Participacoes S.A. (Pref.)*................. 4,183,351 ------------ 11,287,459 ------------ Paper 32,670 Aracruz Celulose S.A. (ADR).................... 620,730 41,220,000 Votorantim Celulose e Papel S.A. (Pref.)....... 1,153,657 ------------ 1,774,387 ------------ Specialty Steels 10,600,000 Companhia Siderurgica de Tubarao (Pref.)*......... 86,375 97,120,000 Gerdau S.A. (Pref.)....... 1,561,242 ------------ 1,647,617 ------------ Steel/Iron Ore 145,700 Usinas Siderurgicas de Minas Gerais S.A. (Class A) (Pref.)............... 424,016 ------------ Telecommunications 46,110 Telecomunicacoes Brasileiras S.A. - Telebras (ADR) (Pref.).................. 3,521,651 ------------ Tobacco 176,700 Souza Cruz S.A............ 1,101,926 ------------ TOTAL BRAZIL.............. 40,457,740 ------------ CHILE (6.0%) Agricultural Chemicals 14,960 Sociedad Quimica y Minera de Chile S.A. (ADR)...... 459,085 ------------
NUMBER OF SHARES VALUE - ---------------------------------------------------------------- Alcoholic Beverages 29,350 Compania Cervecerias Unidas S.A. (ADR)........ $ 768,603 30,050 Vina Concha y Toro (ADR).................... 1,102,459 ------------ 1,871,062 ------------ Banking 18,060 Banco Santander Chile (ADR).................... 270,900 45,850 Banco Santiago S.A. (ADR).................... 980,044 ------------ 1,250,944 ------------ Electric Utilities 11,258 Enersis S.A. (ADR)........ 262,452 26,320 Gener S.A. (ADR).......... 523,110 ------------ 785,562 ------------ Food Chains 29,160 Distribucion y Servicio D&S S.A. (ADR)........... 488,430 ------------ Other Pharmaceuticals 35,660 Laboratorio Chile S.A. (ADR).................... 664,168 ------------ Telecommunications 62,818 Compania de Telecommunicaciones de Chile S.A. (ADR)......... 1,601,859 ------------ Utilities 14,000 Chilectra S.A. (ADR) - 144A**................... 284,375 ------------ TOTAL CHILE............... 7,405,485 ------------ COLOMBIA (1.5%) Alcoholic Beverages 342,370 Bavaria S.A............... 1,164,396 ------------ Banking 115,127 Banco de Bogota........... 299,975 68,335 Bancolombia S.A. (ADR).... 320,320 ------------ 620,295 ------------ TOTAL COLOMBIA............ 1,784,691 ------------
SEE NOTES TO FINANCIAL STATEMENTS 9 10 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND PORTFOLIO OF INVESTMENTS July 31, 1999 (unaudited) continued
NUMBER OF SHARES VALUE - ---------------------------------------------------------------- MEXICO (44.8%) Alcoholic Beverages 1,553,100 Grupo Modelo S.A. de C.V. (Series C)............... $ 4,286,688 ------------ Beverages - Non-Alcoholic 48,350 Coca-Cola Femsa S.A. (ADR).................... 791,731 124,170 Fomento Economico Mexicano S.A. de C.V. (ADR)....... 4,268,344 ------------ 5,060,075 ------------ Building Materials 216,170 Apasco S.A. de C.V........ 1,204,769 620,860 Cemex S.A. de C.V. (B Shares).................. 2,682,484 ------------ 3,887,253 ------------ Diversified Manufacturing 160,000 ALFA, S.A. de C.V. (Class A)....................... 557,962 ------------ Farming/Seeds/Milling 573,000 Grupo Industrial Maseca S.A. de C.V. (B Shares).................. 389,299 ------------ Media Conglomerates 160,480 Grupo Televisa S.A. de C.V. (GDR)*.............. 6,138,360 ------------ Multi-Sector Companies 790,600 DESC S.A. de C.V. (Series B)....................... 830,885 ------------ Other Metals/Minerals 324,100 Grupo Mexico S.A. (Series B)....................... 1,303,969 ------------ Other Specialty Stores 4,239,218 Cifra S.A. de C.V. (Series C)....................... 6,957,358 763,200 Organizacion Soriana S.A. de C.V. (Series B)....... 3,103,032 ------------ 10,060,390 ------------ Package Goods/Cosmetics 909,400 Kimberly-Clark de Mexico S.A. de C.V. (A Shares).................. 3,219,585 ------------
NUMBER OF SHARES VALUE - ---------------------------------------------------------------- Specialty Foods/Candy 1,847,978 Grupo Industrial Bimbo S.A. de C.V. (Series A)....................... $ 4,129,505 ------------ Telecommunications 190,908 Telefonos de Mexico S.A. de C.V. (Series L) (ADR).................... 14,413,554 ------------ Textiles 205,799 Grupo Carso S.A. de C.V. (Series A1).............. 813,802 ------------ TOTAL MEXICO.............. 55,091,327 ------------ PERU (2.9%) Banking 37,300 Credicorp Ltd............. 398,644 ------------ Building Materials 376,621 Cementos Lima, S.A........ 490,803 ------------ Precious Metals 145,569 Compania de Minas Buenaventura S.A. (B Shares).................. 1,090,241 ------------ Telecommunications 107,975 Telefonica del Peru S.A. (ADR).................... 1,585,883 ------------ TOTAL PERU................ 3,565,571 ------------ VENEZUELA (0.7%) Electric Utilities 23,000 La Electricidad de Caracas (ADR).................... 373,750 ------------ Telecommunications 19,310 Compania Anonima Nacional Telefonos de Venezuela (CANTV) (ADR)............ 467,061 ------------ TOTAL VENEZUELA........... 840,811 ------------
SEE NOTES TO FINANCIAL STATEMENTS 10 11 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND PORTFOLIO OF INVESTMENTS July 31, 1999 (unaudited) continued
VALUE - ---------------------------------------------------------------- TOTAL COMMON AND PREFERRED STOCKS (Identified Cost $104,633,479) (a)........ 97.3% $119,580,109 CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES....................... 2.7 3,263,530 ---- ------------ NET ASSETS................................ 100.0% $122,843,639 ======== ============
- --------------------- ADR American Depository Receipt. GDR Global Depository Receipt. * Non-income producing security. ** Resale is restricted to qualified institutional investors. (a) The aggregate cost for federal income tax purposes approximates identified cost. The aggregate gross unrealized appreciation is $21,967,050 and the aggregate gross unrealized depreciation is $7,020,421, resulting in net unrealized appreciation of $14,946,629.
SEE NOTES TO FINANCIAL STATEMENTS 11 12 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND SUMMARY OF INVESTMENTS July 31, 1999 (unaudited)
PERCENT OF INDUSTRY VALUE NET ASSETS - -------------------------------------------------------- Agricultural Chemicals....... $ 459,085 0.4% Alcoholic Beverages.......... 10,497,838 8.5 Banking...................... 7,121,343 5.8 Beverages - Non-Alcoholic.... 5,060,075 4.1 Building Materials........... 4,717,994 3.8 Cellular Telephone........... 2,879,694 2.3 Diversified Financial Services.................... 704,796 0.6 Diversified Manufacturing.... 557,962 0.5 Electric Utilities........... 5,282,876 4.3 Farming/Seeds/Milling........ 389,299 0.3 Food Chains.................. 488,430 0.4 Integrated Oil Companies..... 3,702,490 3.0 Media Conglomerates.......... 6,138,360 5.0 Multi-Sector Companies....... 2,030,511 1.7 Oil & Gas Production......... 2,616,002 2.1 Oil/Gas Transmission......... 428,490 0.3 Other Metals/Minerals........ 4,640,046 3.8 Other Pharmaceuticals........ 664,168 0.5 Other Specialty Stores....... 10,060,390 8.2 Other Telecommunications..... 11,287,459 9.2 Package Goods/Cosmetics...... 3,219,585 2.6
PERCENT OF INDUSTRY VALUE NET ASSETS - -------------------------------------------------------- Paper........................ $ 1,774,387 1.4% Precious Metals.............. 1,090,241 0.9 Real Estate.................. 441,909 0.4 Specialty Foods/Candy........ 4,129,505 3.4 Specialty Steels............. 1,647,616 1.3 Steel/Iron Ore............... 424,016 0.4 Telecommunications........... 24,925,439 20.3 Textiles..................... 813,802 0.7 Tobacco...................... 1,101,926 0.9 Utilities.................... 284,375 0.2 ----------- ---- $119,580,109 97.3% =========== ==== PERCENT OF TYPE OF INVESTMENT VALUE NET ASSETS - -------------------------------------------------------- Common Stocks................ $84,751,215 68.9% Preferred Stocks............. 34,828,894 28.4 ----------- ---- $119,580,109 97.3% =========== ====
SEE NOTES TO FINANCIAL STATEMENTS 12 13 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES July 31, 1999 (unaudited) ASSETS: Investments in securities, at value (identified cost $104,633,479)............................. $ 119,580,109 Cash........................................................ 3,283,605 Receivable for: Dividends............................................... 391,242 Investments sold........................................ 57,397 Shares of beneficial interest sold...................... 56,426 Interest................................................ 9,753 Prepaid expenses and other assets........................... 62,018 ------------- TOTAL ASSETS............................................ 123,440,550 ------------- LIABILITIES: Payable for: Shares of beneficial interest repurchased............... 171,864 Investment advisory fee................................. 141,705 Plan of distribution fee................................ 113,076 Investments purchased................................... 30,120 Accrued expenses and other payables......................... 140,146 ------------- TOTAL LIABILITIES....................................... 596,911 ------------- NET ASSETS.............................................. $ 122,843,639 ============= COMPOSITION OF NET ASSETS: Paid-in-capital............................................. $ 214,802,596 Net unrealized appreciation................................. 14,801,589 Accumulated net investment loss............................. (946,530) Accumulated net realized loss............................... (105,814,016) ------------- NET ASSETS.............................................. $ 122,843,639 ============= CLASS A SHARES: Net Assets.................................................. $431,016 Shares Outstanding (unlimited authorized, $.01 par value)... 44,647 NET ASSET VALUE PER SHARE............................... $9.65 ============= MAXIMUM OFFERING PRICE PER SHARE, (net asset value plus 5.54% of net asset value)........ $10.18 ============= CLASS B SHARES: Net Assets.................................................. $121,857,106 Shares Outstanding (unlimited authorized, $.01 par value)... 12,829,594 NET ASSET VALUE PER SHARE............................... $9.50 ============= CLASS C SHARES: Net Assets.................................................. $549,137 Shares Outstanding (unlimited authorized, $.01 par value)... 57,709 NET ASSET VALUE PER SHARE............................... $9.52 ============= CLASS D SHARES: Net Assets.................................................. $6,380 Shares Outstanding (unlimited authorized, $.01 par value)... 658 NET ASSET VALUE PER SHARE............................... $9.69 =============
SEE NOTES TO FINANCIAL STATEMENTS 13 14 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FINANCIAL STATEMENTS, continued STATEMENT OF OPERATIONS For the six months ended July 31, 1999 (unaudited) NET INVESTMENT LOSS: INCOME Dividends (net of $187,592 foreign withholding tax)......... $1,748,453 Interest.................................................... 112,476 ---------- TOTAL INCOME............................................ 1,860,929 ---------- EXPENSES Plan of distribution fee (Class A shares)................... 295 Plan of distribution fee (Class B shares)................... 626,444 Plan of distribution fee (Class C shares)................... 1,794 Management fee.............................................. 374,013 Investment advisory fee..................................... 315,093 Transfer agent fees and expenses............................ 227,576 Custodian fees.............................................. 113,742 Investment management fee................................... 98,626 Trustees' fees and expenses................................. 77,843 Professional fees........................................... 40,092 Registration fees........................................... 30,389 Shareholder reports and notices............................. 18,166 Other....................................................... 28,696 ---------- TOTAL EXPENSES.......................................... 1,952,769 ---------- NET INVESTMENT LOSS..................................... (91,840) ---------- NET REALIZED AND UNREALIZED GAIN: Net realized gain on: Investments............................................. 6,520,123 Foreign exchange transactions........................... (268,830) ---------- NET GAIN................................................ 6,251,293 ---------- Net change in unrealized appreciation/depreciation on: Investments............................................. 25,665,250 Translation of forward foreign currency contracts, other assets and liabilities denominated in foreign currencies............................................. 10,929 ---------- NET APPRECIATION........................................ 25,676,179 ---------- NET GAIN................................................ 31,927,472 ---------- NET INCREASE................................................ $31,835,632 ==========
SEE NOTES TO FINANCIAL STATEMENTS 14 15 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FINANCIAL STATEMENTS, continued
STATEMENT OF CHANGES IN NET ASSETS FOR THE SIX MONTHS ENDED FOR THE YEAR JULY 31, ENDED 1999 JANUARY 31, 1999 - --------------------------------------------------------------------------------------- (unaudited) INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income (loss).......................... $ (91,840) $ 964,047 Net realized gain (loss).............................. 6,251,293 (17,392,336) Net change in unrealized appreciation................. 25,676,179 (68,311,686) ------------ ------------- NET INCREASE (DECREASE)........................... 31,835,632 (84,739,975) Net decrease from transactions in shares of beneficial interest............................................. (15,102,013) (82,770,172) ------------ ------------- NET INCREASE (DECREASE)........................... 16,733,619 (167,510,147) NET ASSETS: Beginning of period................................... 106,110,020 273,620,167 ------------ ------------- END OF PERIOD (Including net investment losses of $946,530 and $854,690, respectively)........................... $122,843,639 $ 106,110,020 ============ =============
SEE NOTES TO FINANCIAL STATEMENTS 15 16 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS July 31, 1999 (unaudited) 1. ORGANIZATION AND ACCOUNTING POLICIES Morgan Stanley Dean Witter Latin American Growth Fund (the "Fund"), formerly TCW/DW Latin American Growth 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 security listed or traded on the New York, American or other domestic or foreign stock exchange is valued at its latest sale price on that exchange prior to the time when assets are valued; if there were no sales that day, the security is valued at the latest bid price (in cases where securities are traded on more than one exchange, the securities are valued on the exchange designated as the primary market pursuant to procedures adopted by the Trustees); (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 Morgan Stanley Dean Witter Advisors Inc. (the "Investment Manger"), or TCW Funds Management, Inc. (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, 16 17 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS July 31, 1999 (unaudited) continued 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. 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 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 foreign currency contracts which are valued daily at the appropriate exchange rates. The resultant unrealized exchange gains and losses are included in the Statement of Operations as unrealized 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. 17 18 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS July 31, 1999 (unaudited) 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 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. 2. INVESTMENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS Pursuant to a new Investment Management Agreement that took effect June 28, 1999, 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 the terms of the Agreement, in addition to managing the Fund's Investments, the Investment 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 Investment Manager. The Investment Manager also bears the cost of telephone services, heat, light, power and other utilities provided to the Fund. Under a new Sub-Advisory Agreement that took effect June 28, 1999 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 18 19 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS July 31, 1999 (unaudited) continued Agreement, the Investment Manager pays the Sub-Advisor compensation equal to 40% of its monthly compensation. Prior to June 28, 1999, pursuant to a Management Agreement with Morgan Stanley Dean Witter Services Company Inc. (the "Former Manager"), the Fund paid the Former Manager a management fee, accrued daily and payable monthly, by applying the following annual rates to the net assets of the Fund determined as of the close of each business day: 0.75% 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 maintained certain of the Fund's books and records and furnished, at its own expense, office space, facilities, equipment, clerical, bookkeeping and certain legal services and paid the salaries of all personnel, including officers of the Fund who were employees of the Manager. The Manager also bore the cost of telephone services, heat, light, power and other utilities provided to the Fund. Prior to June 28, 1999, pursuant to an Investment Advisory Agreement with the current Sub-Advisor, the Fund paid 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. Under the terms of the Investment Advisory Agreement, the Fund had retained the current Sub-Advisor to invest the Fund's assets, including placing orders for the purchase and sale of portfolio securities. The current Sub-Advisor obtained and evaluated such information and advice relating to the economy, securities markets, and specific securities as it considered necessary or useful to continuously manage the assets of the Fund in a manner consistent with its investment objective. In addition, the current Sub-Advisor paid the salaries of all personnel, including officers of the Fund who were employees of the current Sub-Advisor. 3. PLAN OF DISTRIBUTION Shares of the Fund are distributed by Morgan Stanley Dean Witter Distributors Inc. (the "Distributor"), an affiliate of the Investment Manager. 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 19 20 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS July 31, 1999 (unaudited) continued gross sales of the Class B shares since the inception of the Fund (not 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 A shares, amounts paid under the Plan are paid to the Distributor for services provided. In the case of Class B and Class C shares, amounts paid under the Plan are paid to the Distributor for (1) services provided and the expenses borne by it and others in the distribution of the shares of these Classes, including the payment of commissions for sales of these Classes and incentive compensation to, and expenses of, Morgan Stanley Dean Witter Financial Advisors, and others who engage in or support distribution of the shares or who service shareholder accounts, including overhead and telephone expenses; (2) printing and distribution of prospectuses and reports used in connection with the offering of these shares to other than current shareholders; and (3) preparation, printing and distribution of sales literature and advertising materials. In addition, the Distributor may utilize fees paid pursuant to the Plan, in the case of Class B shares, to compensate Dean Witter Reynolds Inc. ("DWR"), an affiliate of the Investment Manager and Distributor, and other selected broker-dealers for their opportunity costs in advancing such amounts, which compensation would be in the form of a carrying charge on any unreimbursed expenses. In the case of Class B shares, provided that the Plan continues in effect, any cumulative expenses incurred by the Distributor but not yet recovered may be recovered through the payment of future distribution fees from the Fund pursuant to the Plan and contingent deferred sales charges paid by investors upon redemption of Class B shares. Although there is no legal obligation for the Fund to pay expenses incurred in excess of payments made to the Distributor under the Plan and the proceeds of contingent deferred sales charges paid by investors upon redemption of shares, if for any reason the Plan is terminated, the Trustees will consider at that time the manner in which to treat such expenses. The Distributor has advised the Fund that such excess amounts, including carrying charges, totaled $19,609,592 at July 31, 1999. In the case of Class A shares and Class C shares, expenses incurred pursuant to the Plan in any calendar year in excess of 0.25% or 1.0% of the average daily net assets of Class A or Class C, respectively, will not be reimbursed by the Fund through payments in any subsequent year, except that expenses representing a gross sales credit to Morgan Stanley Dean Witter Financial Advisors or other selected broker-dealer representatives may be reimbursed in the subsequent calendar year. For the six months ended July 31, 1999, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.22% and 0.75%, respectively. 20 21 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS July 31, 1999 (unaudited) continued The Distributor has informed the Fund that for the six months ended July 31, 1999, it received contingent deferred sales charges from certain redemptions of the Fund's Class B shares and Class C shares of $182,332 and $453, respectively and received $2,063 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 TRANSACTION WITH AFFILIATES The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the six months ended July 31, 1999 aggregated $45,226,046 and $47,609,208, respectively. For the six months ended July 31, 1999, the Fund incurred brokerage commissions of $4,646 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 July 31, 1999, the Fund had transfer agent fees and expenses payable of approximately $600. 5. SHARES OF BENEFICIAL INTEREST Transactions in shares of beneficial interest were as follows:
FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED JULY 31, 1999 JANUARY 31, 1999 ------------------------- --------------------------- (unaudited) SHARES AMOUNT SHARES AMOUNT ---------- ------------ ----------- ------------- CLASS A SHARES Sold........................................................ 40,678 $ 396,577 14,534 $ 136,263 Redeemed.................................................... (3,960) (40,657) (15,663) (144,192) ---------- ------------ ----------- ------------- Net increase (decrease) - Class A........................... 36,718 355,920 (1,129) (7,929) ---------- ------------ ----------- ------------- CLASS B SHARES Sold........................................................ 996,150 9,833,617 2,410,988 25,661,963 Redeemed.................................................... (2,765,272) (25,380,625) (10,363,817) (108,304,032) ---------- ------------ ----------- ------------- Net decrease - Class B...................................... (1,769,122) (15,547,008) (7,952,829) (82,642,069) ---------- ------------ ----------- ------------- CLASS C SHARES Sold........................................................ 26,493 271,560 27,783 283,451 Redeemed.................................................... (19,718) (182,485) (42,306) (403,625) ---------- ------------ ----------- ------------- Net increase (decrease) - Class C........................... 6,775 89,075 (14,523) (120,174) ---------- ------------ ----------- ------------- Net decrease in Fund........................................ (1,725,629) $(15,102,013) (7,968,481) $ (82,770,172) ========== ============ =========== =============
21 22 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS July 31, 1999 (unaudited) continued 6. FEDERAL INCOME TAX STATUS At January 31, 1999, the Fund had a net capital loss carryover of approximately $96,436,000, 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 - --------- -------- -------- $75,539 $19,839 $3,058 ======= ======= ======
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 $11,321,000 and $855,000, respectively, during fiscal 1999. As of January 31, 1999, the Fund had temporary book/tax differences primarily attributable to capital loss deferrals on wash sales and post-October losses. 7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS The Fund may enter into forward foreign currency contracts ("forward contracts") to facilitate settlement of foreign currency denominated portfolio transactions or to manage foreign currency exposure associated with foreign currency denominated securities. Forward contracts involve elements of market risk in excess of the amounts reflected in the Statement of Assets and Liabilities. The Fund bears the risk of an unfavorable change in 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 July 31, 1999, the Fund had no outstanding forward contracts. At July 31, 1999, the Fund's cash balance consisted principally of interest bearing deposits with Chase Manhattan Bank N.A., the Fund's custodian. 22 23 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 SIX FOR THE YEAR JULY 28, 1997* MONTHS ENDED ENDED THROUGH JULY 31, 1999 JANUARY 31, 1999 JANUARY 31, 1998 - -------------------------------------------------------------------------------------------------------------------------- (unaudited) CLASS A SHARES++ SELECTED PER SHARE DATA: Net asset value, beginning of period........................ $7.33 $12.14 $15.22 ----- ------ ------ Income (loss) from investment operations: Net investment income (loss)............................... 0.03 0.15 (0.07) Net realized and unrealized gain (loss).................... 2.29 (4.96) (3.01) ----- ------ ------ Total income (loss) from investment operations.............. 2.32 (4.81) (3.08) ----- ------ ------ Net asset value, end of period.............................. $9.65 $ 7.33 $12.14 ===== ====== ====== TOTAL RETURN+............................................... 31.65%(1) (39.62)% (20.24)%(1) RATIOS TO AVERAGE NET ASSETS: Expenses.................................................... 1.88%(2)(3) 2.21%(3) 2.15%(2) Net investment income (loss)................................ 0.45%(2)(3) 1.26%(3) (1.04)%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands..................... $431 $58 $110 Portfolio turnover rate..................................... 39%(1) 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 23 24 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FINANCIAL HIGHLIGHTS, continued
FOR THE SIX FOR THE YEAR ENDED JANUARY 31, MONTHS ENDED ---------------------------------------------------------------- JULY 31, 1999++ 1999++ 1998*++ 1997 1996 1995 - --------------------------------------------------------------------------------------------------------------------------------- (unaudited) CLASS B SHARES SELECTED PER SHARE DATA: Net asset value, beginning of period...... $ 7.24 $12.09 $11.47 $ 9.48 $ 9.35 $16.05 ------ ------ ------ ------ ------ ------ Income (loss) from investment operations: Net investment income (loss)............. (0.01) 0.05 (0.09) (0.04) (0.06) (0.17) Net realized and unrealized gain (loss)................................. 2.27 (4.90) 0.71 2.03 0.19 (6.21) ------ ------ ------ ------ ------ ------ Total income (loss) from investment operations............................... 2.26 (4.85) 0.62 1.99 0.13 (6.38) ------ ------ ------ ------ ------ ------ Less distributions from net realized gain..................................... -- -- -- -- -- (0.32) ------ ------ ------ ------ ------ ------ Net asset value, end of period............ $ 9.50 $ 7.24 $12.09 $11.47 $ 9.48 $ 9.35 ====== ====== ====== ====== ====== ====== TOTAL RETURN+............................. 31.22%(1) (40.12)% 5.41% 20.99% 1.39% (40.12)% RATIOS TO AVERAGE NET ASSETS: Expenses.................................. 2.66%(2)(3) 2.98%(3) 2.81% 2.78% 2.98% 2.87% Net investment income (loss).............. (0.33)%(2)(3) 0.49%(3) (0.64)% (0.29)% (0.61)% (1.46)% SUPPLEMENTAL DATA: Net assets, end of period, in thousands... $121,857 $105,678 $272,710 $270,843 $261,066 $294,774 Portfolio turnover rate................... 39%(1) 27% 30% 29% 64% 145%
- --------------------- * Prior to July 28, 1997, the Fund issued one class of shares. All shares of the Fund held prior to that date have been designated Class B shares. ++ The per share amounts were computed using an average number of shares outstanding during the period. + Does not reflect the deduction of sales charge. Calculated based on the net asset value as of the last business day of the period. (1) Not annualized. (2) Annualized. (3) Reflects overall Fund ratios for investment income and non-class specific expenses. SEE NOTES TO FINANCIAL STATEMENTS 24 25 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FINANCIAL HIGHLIGHTS, continued
FOR THE PERIOD FOR THE SIX FOR THE YEAR JULY 28, 1997* MONTHS ENDED ENDED THROUGH JULY 31, 1999 JANUARY 31, 1999 JANUARY 31, 1998 - --------------------------------------------------------------------------------------------------------------------- (unaudited) CLASS C SHARES++ SELECTED PER SHARE DATA: Net asset value, beginning of period........................ $7.24 $12.10 $15.22 ----- ------ ------ Income (loss) from investment operations: Net investment income (loss)............................... -- 0.06 (0.12) Net realized and unrealized gain (loss).................... 2.28 (4.92) (3.00) ----- ------ ------ Total income (loss) from investment operations.............. 2.28 (4.86) (3.12) ----- ------ ------ Net asset value, end of period.............................. $9.52 $ 7.24 $12.10 ===== ====== ====== TOTAL RETURN+............................................... 31.49%(1) (40.17)% (20.50)%(1) RATIOS TO AVERAGE NET ASSETS: Expenses.................................................... 2.41%(2)(3) 2.98 %(3) 2.91%(2) Net investment income (loss)................................ (0.08)%(2)(3) 0.49 %(3) (1.76)%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands..................... $549 $369 $ 792 Portfolio turnover rate..................................... 39%(1) 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 25 26 MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND FINANCIAL HIGHLIGHTS, continued
FOR THE PERIOD FOR THE SIX FOR THE YEAR JULY 28, 1997* MONTHS ENDED ENDED THROUGH JULY 31, 1999 JANUARY 31, 1999 JANUARY 31, 1998 - --------------------------------------------------------------------------------------------------------------------- (unaudited) CLASS D SHARES++ SELECTED PER SHARE DATA: Net asset value, beginning of period........................ $7.35 $12.16 $15.22 ----- ------ ------ Income (loss) from investment operations: Net investment income (loss)............................... 0.04 0.16 (0.04) Net realized and unrealized gain (loss).................... 2.30 (4.97) (3.02) ----- ------ ------ Total income (loss) from investment operations.............. 2.34 (4.81) (3.06) ----- ------ ------ Net asset value, end of period.............................. $9.69 $ 7.35 $12.16 ===== ====== ====== TOTAL RETURN+............................................... 31.84%(1) (39.56)% (20.11)%(1) RATIOS TO AVERAGE NET ASSETS: Expenses.................................................... 1.66%(2)(3) 1.98 %(3) 1.86 %(2) Net investment income (loss)................................ 0.67%(2)(3) 1.49 %(3) (0.52)%(2) SUPPLEMENTAL DATA: Net assets, end of period, in thousands..................... $6 $5 $8 Portfolio turnover rate..................................... 39%(1) 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 26 27 (This Page Intentionally Left Blank) -----END PRIVACY-ENHANCED MESSAGE-----