<PAGE>
----------------------------------------------------------------
THE
LATIN AMERICAN
DISCOVERY
FUND, INC.
----------------------------------------------------------------
THIRD QUARTER REPORT
SEPTEMBER 30, 1999
MORGAN STANLEY DEAN WITTER
INVESTMENT MANAGEMENT INC.
INVESTMENT ADVISER
THE LATIN AMERICAN DISCOVERY FUND, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
Barton M. Biggs
CHAIRMAN OF THE BOARD
OF DIRECTORS
Michael F. Klein
PRESIDENT AND DIRECTOR
Peter J. Chase
DIRECTOR
John W. Croghan
DIRECTOR
David B. Gill
DIRECTOR
Graham E. Jones
DIRECTOR
John A. Levin
DIRECTOR
William G. Morton, Jr.
DIRECTOR
Stefanie V. Chang
VICE PRESIDENT
Harold J. Schaaff, Jr.
VICE PRESIDENT
Joseph P. Stadler
VICE PRESIDENT
Mary E. Mullin
SECRETARY
Belinda A. Brady
TREASURER
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- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Morgan Stanley Dean Witter Investment Management Inc.
1221 Avenue of the Americas
New York, New York 10020
- --------------------------------------------------------------------------------
U.S. ADMINISTRATOR
The Chase Manhattan Bank
73 Tremont Street
Boston, Massachusetts 02108
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CUSTODIAN
The Chase Manhattan Bank
3 Chase MetroTech Center
Brooklyn, New York 11245
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICING AGENT
Boston Equiserve
Investor Relations Department
P.O. Box 644
Boston, Massachusetts 02102-0644
(800) 730-6001
- --------------------------------------------------------------------------------
LEGAL COUNSEL
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
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INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
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- --------------------------------------------------------------------------------
For additional Fund information, including the Fund's net asset value per share
and information regarding the investments comprising the Fund's portfolio,
please call 1-800-221-6726 or visit our website at www.msdw.com/institutional/
investmentmanagement.
<PAGE>
LETTER TO SHAREHOLDERS
- ---------
For the nine months ended September 30, 1999, The Latin American Discovery Fund,
Inc. (the "Fund") had a total return, based on net asset value per share, of
23.30% compared with 21.79% for the Morgan Stanley Capital International (MSCI)
Emerging Markets Global Latin America Index and 19.22% for the MSCI Emerging
Markets Free Latin America Index (the "Index"). For the period since
commencement of operations on June 23, 1992 through September 30, 1999, the
Fund's total return, based on net asset value per share, was 122.84% compared
with 56.88% for the MSCI Emerging Markets Global Latin America Index and 71.41%
for the MSCI Emerging Markets Free Latin America Index. On September 30, 1999,
the closing price of the Fund's shares on the New York Stock Exchange was
$8 1/16, representing a 19.9% discount to the Fund's net asset value per share.
Underperformance relative to the Index for the quarter was largely attributable
to poor stock selection, particularly in Argentina, Brazil and Chile. Our
underweight position in Argentina (+2.5%) and our overweight stance in Mexico
(-13.7%) detracted from performance. Our overweight allocation in Brazil
(-8.8%) throughout the third quarter contributed favorably to performance.
The equity market declines throughout the region stymied positive themes,
including appreciating commodity prices and better than expected economic
figures. Stronger commodity prices continued to lend support to some markets in
the region, such as Chile and Peru (copper) and Mexico, Colombia and Venezuela
(oil), given their positive effects on the external accounts. Brazil and Mexico
have had better than expected economic figures and assets are attractively
valued. Contributing to the region's malaise, Latin American markets have
witnessed a great deal of political noise surrounding upcoming elections
(Argentina, Mexico), fractious politics and contentious reform debates (Brazil)
and the effective dismantling of congress (Venezuela).
However, politics, economic fundamentals and great valuations have been
secondary influences on market performances in light of Latin American
countries' heavy reliance on foreign investment to fund current account
deficits. Consequently, anxieties surrounding trends in U.S. inflation and
interest rates have proven quite menacing, dampening investor sentiment for
Latin American assets. However, the blow out in high-yield credit spreads
reached levels beyond that of the Russian crisis. In addition to global
tightening concerns, the bond market has been flooded with corporate supply, as
issuers fear a market shutdown entering the Y2K-sensitive period. Also during
the third quarter, Ecuador became the first Brady country to default on its
Brady Bonds. Ecuador's partial default set the precarious precedent that
defaulting on external debt without an IMF bailout may become the way of the
future. Although the market believed this will have significant implications for
future Latin American sovereign borrowing, this is unlikely; the major Latin
countries depend too much on foreign capital for their survival and have
governments which act more responsibly regarding debt obligations.
In Brazil, contained inflation numbers, the easing of interest rates and
progress regarding privatizations were overshadowed by a lack of political
commitment to enact reforms to help reduce the fiscal deficit. A negative
surprise came at the end of the third quarter when the Supreme Court ruled
against the government's bill regarding social security contributions from
retirees; the Brazilian authorities must now resort to compensatory (probably
tax increases) fiscal measures in lieu of increased contributions. Despite the
currency devaluation at the beginning of the year, the Brazilian economy has
shown great resilience and inflation and unemployment figures have been tame.
Although interest rate reductions in Brazil have been slowed by decreased global
risk appetite and fractious domestic politics, the Brazilian monetary council
(COPOM) lowered benchmark interest rates to 19.0% at the end of the third
quarter, from 20.5% at the end of the second quarter. We are concerned that
President Cardoso, at the nadir of his popularity, lacks the political power to
expedite the adoption of the fiscal reforms requisite for further rate
reductions and the stabilization of the growth of public debt. We believe
Brazilian assets are attractively valued and may be poised for a rebound given a
decline in domestic interest rates and a cyclical recovery in earnings growth.
We are overweight Brazil, focusing on the telecommunications and energy sources
industries.
Mexican equities fell 13.7% during the third quarter, as promising economic
fundamentals and corporate earnings were eclipsed by anxieties over the
direction of U.S. inflation and interest rates. Moreover, the equity market
underwent a period of consolidation after a very strong performance during the
first half of 1999. Concerns over decreased global liquidity and increased risk
spreads, coupled with political clamor concerning Mexico's first PRI party
primaries, have exacerbated short-term nervousness regarding Mexican equities.
However, we are impressed by earnings surprises and increased exports and
consumer spending. We maintain overweight positions in the building materials
and components and broadcasting and publishing industries, focusing on companies
such as Cemex and Televisa, which we believe represent strong earnings growth
stories. The Peso's seemingly sustainable strength enhances the U.S. Dollar
earnings of Mexican companies, and we may add to our holdings in Mexico should
assets become even more attractively valued. One longer-term theme we continue
to watch is Mexico's potential to earn investment grade status, which would
allow for access to a large, new pool of foreign capital and a reduction in the
sovereign risk premium. This would have very positive
2
<PAGE>
implications for equity prices as well, but we do not expect an announcement
until after the presidential election in July 2000.
Argentina fared better than most Latin markets during the third quarter and the
first month-over-month improvements emerged towards the end of the quarter, a
sign that the economy has bottomed. Recovering commodity prices, lower costs of
funding and an economic pick-up after the recession should help increase the
earnings growth of Argentine equities in the longer term. We maintain our
underweight position in Argentina, as we are concerned about the country's
ability to service its large debt requirements, and expect limited growth in the
near term, restricting the upside from a contraction in the sovereign risk
premium.
Chile's market declined 6.0%, weighed down by poor economic fundamentals,
including high unemployment figures. Increased global commodity prices,
particularly copper, Chile's main export, should lend support to Chile's
external accounts and its already weak currency. This has not yet been reflected
in increased domestic consumption. During the course of the third quarter, Chile
lifted the trading band on its currency, and we are waiting to see if capital
controls on its foreign exchange will also be lifted. We expect this would help
lower the country's risk premium, and help make next year economically
interesting for Chile. We remain underweight Chile, due to a lack of exciting
investment opportunities in the near term.
Venezuela was the best performing regional market during the third quarter,
gaining 3.5%. The rally in oil prices raised expectations for a swift
improvement in Venezuelan fundamentals. Despite the dismantling of the Congress
by the Constitutional Assembly (i.e. congressional oversight of the country's
financial operations have effectively been removed), President Chavez's rhetoric
and measures toward political tyranny appear less dire than anticipated. Chavez
wields a great deal of popular support and has assured investors that Venezuela
will continue servicing its debt. However, we continue to be wary of Venezuela
due to its doubtful ability to service its debt, should oil prices fall, as well
as management issues and an uncertain tariff environment for both the telecom
(CANTV) and electric utility (Electricidad de Caracas) stocks. Therefore, we
maintain our underweight position in Venezuela.
Turning to other markets, we remain underweight Colombia and Peru. Colombian
equities lost 13.5% during the third quarter. The Colombian economy continued to
suffer from its recession, with GDP dropping 7.6% in the second quarter of 1999,
its worst performance on record. In a widely anticipated move, Colombia decided
to let the Peso float freely at the end of September. Peruvian equities (+0.4%)
were relatively flat during the third quarter, with improved commodity prices
helping terms of trade and exports. Yet growth continues to be skewed, as trends
in consumer manufacturing lack the catalysts for growth as evidenced in areas
such as agriculture, mining investment and fishing production.
While in the near term diminished risk appetites from global investors may
suppress a further rally in the Latin markets, we expect a return to these
attractive markets by early 2000. In part, we believe Y2K related concerns will
abate, fostering more normal capital market operations with supply and demand
equating at higher market levels. Latin America is a great beneficiary from
these conditions as well as from the improved outlook for the global commodity
cycle, allowing for higher rates of growth.
On September 15, 1998, the Fund commenced a share repurchase program for
purposes of enhancing shareholder value and reducing the discount at which the
Fund's shares traded from their net asset value. For the nine months ended
September 30, 1999, the Fund repurchased 437,200 shares of its Common Stock at
an average price per share of $7.94 and an average discount of 15.58% from net
asset value per share. The Fund expects to continue to repurchase its
outstanding shares at such time and in such amounts as it believes will further
the accomplishment of the foregoing objectives, subject to review by the Board.
Sincerely,
/s/ Michael F. Klein
Michael F. Klein
PRESIDENT AND DIRECTOR
October 1999
THE INFORMATION CONTAINED IN THIS OVERVIEW REGARDING SPECIFIC SECURITIES IS FOR
INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION TO
PURCHASE OR SELL THE SECURITIES MENTIONED.
- --------------------------------------------------------------------------------
DAILY NET ASSET AND MARKET VALUES, AS WELL AS MONTHLY PORTFOLIO INFORMATION FOR
THE FUND, ARE AVAILABLE ON OUR WEBSITE AT
WWW.MSDW.COM/INSTITUTIONAL/INVESTMENTMANAGEMENT.
3
<PAGE>
The Latin American Discovery Fund, Inc.
Investment Summary as of September 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HISTORICAL
INFORMATION
TOTAL RETURN (%)
-------------------------------------------------------------------------------------------------
MARKET VALUE (1) NET ASSET VALUE (2) MSCI EMF LA INDEX (3) MSCI EMG LA INDEX (4)
---------------------- ---------------------- ----------------------- -----------------------
AVERAGE AVERAGE AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL CUMULATIVE ANNUAL
---------- ------- ---------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fiscal Year to Date 30.80% -- 23.30% -- 19.22% -- 21.79% --
One Year 39.80 39.80% 36.65 36.65% 27.66 27.66% 30.61 30.61%
Five Year -17.06+ -3.67+ -1.82+ -0.37+ -14.78 - 3.15 -15.34 -3.28
Since Inception* 78.59+ 8.30+ 122.84+ 11.65+ 71.41 7.69 56.88 6.39
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
[GRAPH]
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
NINE MONTHS
ENDED
SEPTEMBER 30,
1992* 1993 1994 1995 1996 1997 1998 1999
------- ------ ------ ------ ------ ------ ------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value Per Share.......... $15.23 $23.31 $17.16 $10.98 $14.77 $20.34 $ 8.19 $10.06
Market Value Per Share............. $13.25 $27.13 $18.25 $ 9.88 $12.50 $17.94 $ 6.19 $ 8.06
Premium/(Discount)................. -13.0% 16.4% 6.4% -10.0% -15.4% -11.8% -24.4% -19.9%
Income Dividends................... -- -- $ 0.00# -- $ 0.16 -- $ 0.08 $ 0.03
Capital Gains Distributions........ -- -- $ 5.74 $ 0.45 $ 1.14 $ 0.70 $ 6.67 --
Fund Total Return (2).............. 8.01% 65.36%+ -0.14% -27.61%+ 47.19% 43.06% -33.53% 23.30%
MSCI EMF LA Index Total Return (3). 2.00% 53.92% 0.64% -12.83% 22.21% 31.64% -35.11% 19.22%
MSCI EMG LA Index Total Return (4). -2.26% 52.29% -3.69% -13.53% 21.96% 31.66% -35.29% 21.79%
</TABLE>
(1) Assumes dividends and distributions, if any, were reinvested.
(2) Total investment return based on net asset value per share reflects the
effects of changes in net asset value on the performance of the Fund during
each period, and assumes dividends and distributions, if any, were
reinvested. These percentages are not an indication of the performance of a
shareholder's investment in the Fund based on market value due to
differences between the market price of the stock and the net asset value
per share of the Fund.
(3) The Morgan Stanley Capital International Emerging Markets Free Latin
America Index is a broad based market cap weighted composite index covering
at least 60% of markets in Argentina, Brazil, Chile, Colombia, Mexico, Peru
and Venezuela. The Index takes into account local market restrictions for
specific securities or classes of shares that may be excluded from or
limited for foreign investor ownership.
(4) The Morgan Stanley Capital International Emerging Markets Global Latin
America Index is the same as the Morgan Stanley Capital International
Emerging Markets Free Latin America Index, but does not take into account
local market restrictions on share ownership by foreigners.
* The Fund commenced operations on June 23, 1992.
# Amount is less than $0.01 per share.
+ This return excludes the effect of the rights issued in connection with the
Rights Offerings.
4
<PAGE>
The Latin American Discovery Fund, Inc.
Portfolio Summary as of September 30, 1999 (Unaudited)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DIVERSIFICATION OF TOTAL INVESTMENTS
[CHART]
<TABLE>
<S> <C>
Equity Securities (94.7%)
Short-Term Investments (5.3%)
</TABLE>
- --------------------------------------------------------------------------------
INDUSTRIES
[CHART]
<TABLE>
<S> <C>
Banking (6.5%)
Beverages and Tobacco (7.7%)
Building Materials &
Components (6.4%)
Energy Sources (4.5%)
Health & Personal Care (3.8%)
Metals - Steel (5.6%)
Multi-Industry (4.3%)
Telecommunications -
Integrated (31.9%)
Telecommunications -
Wireless (3.9%)
Utilities - Electrical &
Gas (8.5%)
Other (16.9%)
</TABLE>
- --------------------------------------------------------------------------------
COUNTRY WEIGHTINGS
[CHART]
<TABLE>
<S> <C>
Mexico (42.1%)
Brazil (34.8%)
Chile (9.3%)
Argentina (6.0%)
Venezuela (2.4%)
Peru (1.2%)
Colombia (0.3%)
Other (3.9%)
</TABLE>
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS*
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
----------
<S> <C>
1. Telmex (Mexico) 10.5%
2. Cemex (Mexico) 6.0
3. Petrobras (Brazil) 4.5
4. FEMSA (Mexico) 4.1
5. Kimberly Clark (Mexico) 3.8
6. CVRD (Brazil) 3.5
7. Televisa (Mexico) 3.5
8. Telecom Argentina (Argentina) 3.0
9. Telebras (Brazil) 2.5
10. CANTV (Venezuela) 2.4
----
43.8%
----
----
</TABLE>
* Excludes short-term investments.
5
<PAGE>
FINANCIAL STATEMENTS
- ---------
STATEMENT OF NET ASSETS (UNAUDITED)
- ---------
SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS (95.4%)
(Unless otherwise noted)
- --------------------------------------------------------------------------------
ARGENTINA (6.0%)
BANKING
Banco del Suquia 1 U.S.$ --@
--------------
Banco Rio De La Plata ADR 50,040 538
--------------
538
--------------
BEVERAGES & TOBACCO
Quilmes Industrial ADR 163,335 1,562
--------------
TELECOMMUNICATIONS--INTEGRATED
Telecom Argentina ADR 131,778 3,517
Telefonica Argentina ADR 57,532 1,517
--------------
5,034
--------------
7,134
--------------
- --------------------------------------------------------------------------------
BRAZIL (34.8%)
BANKING
Banco Bradesco (Preferred) 37,140,000 176
Banco Nacional (Preferred) 95,420,000 3
Itaubanco (Preferred) 22,840,340 1,225
Unibanco (Preferred) GDR 86,848 1,536
--------------
2,940
--------------
ENERGY SOURCES
Petrobras (Preferred) 28,889,579 4,393
Petrobras (Preferred) ADR 32,940 508
(a)Petrobras (Preferred) ADR 30,795 462
--------------
5,363
--------------
FOREST PRODUCTS & PAPER
Aracruz Celulose ADR 27,400 572
--------------
MERCHANDISING
Globex Utilidades (Preferred) 14,200 66
Lojas Arapus (Preferred) 41,337,400 --@
Lojas Arapua (Preferred) ADR 20,775 --@
--------------
66
--------------
METALS--STEEL
CSN 40,691,000 1,028
CVRD 5,000 79
CVRD (Preferred) 'A' 150,191 3,168
CVRD (Preferred) ADR 44,830 947
CVRD Bonus 116,420 --@
Gerdau (Preferred) 64,152,422 1,036
Usiminas (Preferred) 111,200 365
--------------
6,623
--------------
REAL ESTATE
(a)Rossi Residencial GDR 176,972 166
Rossi Residencial GDS 269,535 253
(Registered)
--------------
419
--------------
TELECOMMUNICATIONS--INTEGRATED
CIA Riograndense Telecom 10,741,366 2,411
CRT 1,108,000 121
CRT (Preferred) 'A' 14,043,266 1,536
Tele Centro-Sul (Preferred) 73,125,250 815
Tele Norte-Leste (Preferred) 99,507,000 1,586
Tele Norte-Leste (Preferred) ADR 47,329 734
Telebras (Preferred) ADR 39,850 2,986
Telesp (Preferred) 7,397,373 659
Telesp ADR 54,150 853
--------------
11,701
--------------
TELECOMMUNICATIONS--LONG DISTANCE
Embratel (Preferred) 126,677,000 1,451
Embratel ADR 112,345 1,285
--------------
2,736
--------------
TELECOMMUNICATIONS--WIRELESS
Tele Leste Celular ADR 2,185 69
Tele Leste Celular (Preferred) 787,883,000 501
Tele Nordeste Celular (Preferred) 126,448,900 152
Tele Norte Celular (Preferred) 719,139,000 412
Tele Sudeste Celular ADR 3,180 68
Tele Sudeste Celular (Preferred) 119,308,790 525
Telesp Celular ADR 37,810 988
Telesp Celular (Preferred) 78,094,790 793
--------------
3,508
--------------
TEXTILES & APPAREL
Coteminas 5,426,400 198
(a)Coteminas ADR 9,305 17
--------------
215
--------------
UTILITIES--ELECTRICAL & GAS
Cemig ADR 59,293 904
Cemig (Preferred) 71,159,003 1,093
Centrais Electricas
Brasileiras (Preferred) 'B' 8,940,880 153
CERJ 4,209,300,000 789
Copel (Preferred) ADR 64,820 425
Copel (Preferred) 'B' 359,903,400 2,381
Electrobras 32,524,000 542
Electrobras ADR 14,130 117
Electrobras (Preferred) ADR 71,780 608
--------------
7,012
--------------
41,155
--------------
- --------------------------------------------------------------------------------
CHILE (8.6%)
BANKING
Banco Edwards ADR 54,789 877
Banco Santander Chile ADR 14,900 256
Banco Santiago ADR 28,795 576
--------------
1,709
--------------
BEVERAGES & TOBACCO
CCU ADR 59,200 1,362
--------------
- --------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
VALUE
SHARES (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
CHILE (CONTINUED)
FOOD & HOUSEHOLD PRODUCTS
D&S ADR 37,675 U.S.$ 633
--------------
MERCHANDISING
Santa Isabel ADR 44,705 341
--------------
MULTI-INDUSTRY
Quinenco ADR 56,020 567
--------------
TELECOMMUNICATIONS--INTEGRATED
CTC ADR 137,052 2,475
--------------
UTILITIES--ELECTRICAL & GAS
Chilectra ADR 103,165 1,960
Endesa ADR 31,309 407
Enersis ADR 32,548 680
--------------
3,047
--------------
10,134
--------------
- --------------------------------------------------------------------------------
COLOMBIA (0.3%)
BEVERAGES & TOBACCO
Bavaria 87,449 267
Valores Bavaria 174,925 128
--------------
395
--------------
FINANCIAL SERVICES
Corfivalle 2 --@
--------------
395
--------------
- --------------------------------------------------------------------------------
MEXICO (42.1%)
BANKING
Bancomer 'B' 2,525,232 562
Bancomer 'O' 963,920 216
Banmex 'L' 645,651 967
Banorte 'O' 684,441 710
--------------
2,455
--------------
BEVERAGES & TOBACCO
FEMSA 899,134 2,794
FEMSA ADR 64,643 2,024
Grupo Modelo 'C' 394,300 1,000
--------------
5,818
--------------
BROADCASTING & PUBLISHING
Televisa CPO GDR 102,944 4,111
--------------
BUILDING MATERIALS & COMPONENTS
Cemex ADR 153,202 3,696
Cemex CPO 698,152 3,361
Vitro ADR 111,592 460
--------------
7,517
--------------
CONSTRUCTION & HOUSING
Empresas ICA Sociedad
Controladora 338,901 160
--------------
ENERGY EQUIPMENT & SERVICES
Tamsa ADR 44,212 541
--------------
FOOD & HOUSEHOLD PRODUCTS
Grupo Industrial Bimbo 'A' 163,732 343
--------------
HEALTH & PERSONAL CARE
Kimberly 'A' 1,256,024 4,434
--------------
MACHINERY & ENGINEERING
ICA ADR 71,070 209
--------------
MERCHANDISING
Cifra 'C' 632,027 975
Cifra 'V' 301,906 475
Cifra 'V' ADR 11,250 177
Soriana 'B' 515,985 2,070
--------------
3,697
--------------
MISC. MATERIALS & COMMODITIES
Seminis, Inc. 69,300 598
--------------
MULTI-INDUSTRY
Alfa 'A' 669,284 2,792
Grupo Carso 'A1' 403,785 1,685
--------------
4,477
--------------
RECREATION, OTHER CONSUMER GOODS
Blockbuster de Mexico ADR 40,000 --@
--------------
TELECOMMUNICATIONS--INTEGRATED
Carso Global Telecom 329,266 1,832
Telmex 'L' ADR 174,617 12,441
--------------
14,273
--------------
TELECOMMUNICATIONS--WIRELESS
Nuevo Grupo Iusacell S.A. 93,040 1,070
--------------
49,703
--------------
- --------------------------------------------------------------------------------
PERU (1.2%)
TELECOMMUNICATIONS--INTEGRATED
Tel Peru 'B' ADR 103,917 1,396
--------------
- --------------------------------------------------------------------------------
VENEZUELA (2.4%)
TELECOMMUNICATIONS--INTEGRATED
CANTV ADR 107,295 2,877
--------------
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost U.S.$127,528) 112,794
--------------
- --------------------------------------------------------------------------------
FACE
AMOUNT
(000)
- --------------------------------------------------------------------------------
SHORT--TERM INVESTMENTS (5.3%)
- --------------------------------------------------------------------------------
CHILE (0.7%)
Citi Corp. Cash Fund CLP 23 50
Citibank Time Deposit 4.82%,
12/13/99 27 773
--------------
823
--------------
- --------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
FACE
AMOUNT VALUE
(000) (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES (4.6%)
REPURCHASE AGREEMENT
Chase Securities, Inc. 5.05%,
dated 9/30/99, due
10/01/99, to be
repurchased at U.S.$5,474
collateralized by
U.S.$5,120 United States
Treasury Bonds, 7.125%,
due 2/15/23, valued at
U.S.$5,610 U.S$ 5,473 U.S.$ 5,473
--------------
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS
(Cost U.S.$6,297) 6,296
--------------
- --------------------------------------------------------------------------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (0.0%)
Brazil Real BRL 2 1
Chilean Peso CLP 357 1
Colombian Peso COP 42 --@
Mexican Peso MXP 275 29
--------------
(Cost U.S.$31) 31
--------------
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS (100.7%)
(Cost U.S.$133,856) 119,121
--------------
- --------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (-0.7%)
Other Assets U.S.$ 5,709
Liabilities (6,590) (881)
-------------------- --------------
- --------------------------------------------------------------------------------
NET ASSETS (100%)
Applicable to 11,756,125 issued and
outstanding U.S.$0.01 par value shares
(100,000,000 shares authorized) U.S.$ 118,240
--------------
- --------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE U.S.$ 10.06
--------------
- --------------------------------------------------------------------------------
</TABLE>
@--Value is less than U.S.$500.
(a)--144A Security--certain conditions for public sale may exist.
ADR--American Depositary Receipt
GDR--Global Depositary Receipt
GDS--Global Depositary Shares
- --------------------------------------------------------------------------------
8
