<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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.
<TABLE>
<S> <C>
Very truly yours,
/s/ CHARLES A. FIUMEFREDDO /s/ MITCHELL M. MERIN
CHARLES A. FIUMEFREDDO MITCHELL M. MERIN
Chairman of the Board President
</TABLE>
5
<PAGE> 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.:
<TABLE>
<S> <C>
For..................................................... 6,138,541
Against................................................. 255,989
Abstain................................................. 591,337
</TABLE>
(2) APPROVAL OF A NEW SUB-ADVISORY AGREEMENT BETWEEN MORGAN STANLEY DEAN WITTER
ADVISORS INC. AND TCW FUNDS MANAGEMENT, INC.:
<TABLE>
<S> <C>
For..................................................... 6,104,447
Against................................................. 276,784
Abstain................................................. 604,636
</TABLE>
(3) ELECTION OF TRUSTEES:
<TABLE>
<S> <C>
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
</TABLE>
6
<PAGE> 7
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
FUND PERFORMANCE July 31, 1999
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A*
- -------------------------------------------------
<S> <C> <C>
PERIOD ENDED 7/31/99
- --------------------------
Since Inception (7/28/97) (20.31)(1) (22.42)(2)
1 Year (16.59)(1) (20.97)(2)
</TABLE>
<TABLE>
<CAPTION>
CLASS C++
- -------------------------------------------------
<S> <C> <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)
</TABLE>
<TABLE>
<CAPTION>
CLASS B+
- -------------------------------------------------
<S> <C> <C>
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)
</TABLE>
<TABLE>
<CAPTION>
CLASS D#
- -------------------------------------------------
<S> <C> <C>
PERIOD ENDED 7/31/99
- --------------------------
Since Inception (7/28/97) (20.15)(1)
1 Year (16.47)(1)
</TABLE>
- ---------------------
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE RETURNS.
<TABLE>
<S> <C>
(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.
</TABLE>
7
<PAGE> 8
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1999 (unaudited)
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------
<C> <S> <C>
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
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------
<C> <S> <C>
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
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE> 9
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1999 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------
<C> <S> <C>
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
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------
<C> <S> <C>
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
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE> 10
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1999 (unaudited) continued
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------
<C> <S> <C>
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
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
SHARES VALUE
- ----------------------------------------------------------------
<C> <S> <C>
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
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE> 11
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
PORTFOLIO OF INVESTMENTS July 31, 1999 (unaudited) continued
<TABLE>
<CAPTION>
VALUE
- ----------------------------------------------------------------
<C> <S> <C>
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
======== ============
</TABLE>
- ---------------------
<TABLE>
<C> <S>
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.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE> 12
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
SUMMARY OF INVESTMENTS July 31, 1999 (unaudited)
<TABLE>
<CAPTION>
PERCENT OF
INDUSTRY VALUE NET ASSETS
- --------------------------------------------------------
<S> <C> <C>
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
</TABLE>
<TABLE>
<CAPTION>
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
- --------------------------------------------------------
<S> <C> <C>
Common Stocks................ $84,751,215 68.9%
Preferred Stocks............. 34,828,894 28.4
----------- ----
$119,580,109 97.3%
=========== ====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE> 13
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
FINANCIAL STATEMENTS
<TABLE>
<S> <C>
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
=============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE> 14
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
FINANCIAL STATEMENTS, continued
<TABLE>
<S> <C>
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
==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE> 15
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
FINANCIAL STATEMENTS, continued
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JULY 31, ENDED
1999 JANUARY 31, 1999
- ---------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
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
============ =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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
<PAGE> 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:
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR
MONTHS ENDED ENDED
JULY 31, 1999 JANUARY 31, 1999
------------------------- ---------------------------
(unaudited)
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
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)
========== ============ =========== =============
</TABLE>
21
<PAGE> 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:
<TABLE>
<CAPTION>
AMOUNT IN THOUSANDS
- -----------------------------------
2004 2005 2007
- --------- -------- --------
<S> <C> <C>
$75,539 $19,839 $3,058
======= ======= ======
</TABLE>
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
<PAGE> 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:
<TABLE>
<CAPTION>
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)
<S> <C> <C> <C>
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%
</TABLE>
- ---------------------
<TABLE>
<C> <S>
* 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.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
23
<PAGE> 24
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR ENDED JANUARY 31,
MONTHS ENDED ----------------------------------------------------------------
JULY 31, 1999++ 1999++ 1998*++ 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C> <C> <C> <C> <C>
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%
</TABLE>
- ---------------------
* Prior to July 28, 1997, the Fund issued one class of shares. All shares of
the Fund held prior to that date have been designated Class B shares.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
24
<PAGE> 25
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
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)
<S> <C> <C> <C>
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%
</TABLE>
- ---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Does not reflect the deduction of sales charge. Calculated based on the net
asset value as of the last business day of the period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
25
<PAGE> 26
MORGAN STANLEY DEAN WITTER LATIN AMERICAN GROWTH FUND
FINANCIAL HIGHLIGHTS, continued
<TABLE>
<CAPTION>
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)
<S> <C> <C> <C>
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%
</TABLE>
- ---------------------
* The date shares were first issued.
++ The per share amounts were computed using an average number of shares
outstanding during the period.
+ Calculated based on the net asset value as of the last business day of the
period.
(1) Not annualized.
(2) Annualized.
(3) Reflects overall Fund ratios for investment income and non-class specific
expenses.
SEE NOTES TO FINANCIAL STATEMENTS
26
<PAGE> 27
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