Latin American Discovery Fund (LDF) N-CSRS Certified semi-annual shareholder report (management investment company)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number				811-06574
The Latin American Discovery Fund, Inc.
(Exact name of registrant as specified in charter)
522 Fifth Avenue New York, NY					10036
(Address of principal executive offices)					(Zip code)
Ronald E. Robison 522 Fifth Avenue New York, New York 10036
(Name and address of agent for service)
Registrant’s telephone number, including area code:			1-800-231-2608
Date of fiscal year end:	12/31
Date of reporting period:		6/30/07

Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. Section 3507.

ITEM 1. REPORTS TO STOCKHOLDERS.

The Fund’s semi-annual report transmitted to shareholders pursuant to Rule 30e-1 under the Investment Company Act of 1940 is as follows:

2007 Semi-Annual Report

June 30, 2007

The Latin American Discovery

Fund, Inc.

Morgan Stanley

Investment Management Inc.

Investment Adviser

The Latin American Discovery Fund, Inc.

Overview (unaudited)

Letter to Stockholders

Performance

For the six months ended June 30, 2007, The Latin American Discovery Fund, Inc. (the “Fund”) had total returns, based on net asset value and market price per share of 21.46%, net of fees and 21.14%, respectively, compared to 26.97% for the Morgan Stanley Capital International (MSCI) Emerging Markets Free Latin America Net Index (the “Index”). On June 30, 2007, the closing price of the Fund’s shares on the New York Stock Exchange was $29.79, representing a 4.5% discount to the Fund’s net asset value per share. Past performance is no guarantee of future results.

Factors Affecting Performance

•Latin American equities rebounded sharply from the market correction we saw at the end of February. Moreover, during the period under review, the region easily outperformed the global emerging markets. Performance for Latin American equities was boosted by a rally in commodity prices, reform progress in Mexico, robust economic data in Brazil and overall supportive global backdrop. Among the major markets, Brazil outperformed Mexico, while the smaller markets of Peru and Chile continued to post healthy gains. Argentina underperformed the Index on rising concerns about energy shortages and inflation.

•The Fund’s underperformance was primarily driven by stock selection and to a lesser extent by country allocation decisions.

•During the period in review, stock selection in Mexico was the primary detractor to relative returns, with particular weakness among Mexican retail and media names, as performance in each was hampered by concerns over a slowdown in the U.S. economy and higher interest rates domestically. The Fund’s underweight position in Peru, which was among the strongest performers in the Index, also detracted from relative performance.

•Partially offsetting the negative relative performance were our overweight positions in Panama and Brazil. Both markets were outperformers, and our stock selection within Brazilian banks and commodity-related stocks further bolstered relative performance.

Management Strategies

•Despite the impressive returns of the Latin American equity market since its bottom in September 2002, valuations remain supportive, with earnings growth in the region largely keeping pace with the rally in equity prices. Our outlook for Latin American equities remains positive. We believe the region will continue to record good economic growth rates with inflation mostly under control. For most countries in the region, economic growth remains strong, fixed investment is accelerating and debt levels are declining. Moreover, international reserves have increased with the help of current account surpluses. In addition to macro improvements, the region’s companies have benefited from declining cost of capital, healthier leverage ratios, improving margins and free cash flow generation, all of which should justify a further re-rating of equities. Risks to this healthy environment include a possible U.S. recession and/or a collapse in commodity prices.

•We remain overweight Brazil and Mexico, due to our positive view on each country’s domestic economies and high earnings visibility. The remainder of our allocation is spread across Chile, Peru and Colombia where the Fund continues to emphasize domestic sectors, particularly banks.

•Overall, the Fund remains focused on media, consumer-related and wireless telecoms, and financial sectors, given each sector’s strong secular growth prospects from an emerging local consumer, solid domestic liquidity and regional economic growth. The media sector in general is providing leveraged exposure to gross domestic product (“GDP”) growth. Media companies in the emerging world, unlike the developed world, have strong tailwinds in their favor – which include a long-term trend of rising ad spending relative to GDP, increasing consumer discretionary income and less competitive dynamics. Rising real wages, economic convergence and good domestic liquidity are fueling a consumption boom in the region. As a result, we are focused on many consumer-oriented sectors such as retail, airline and beverage. Our exposure to financials is a response to strong secular growth in consumer credit, quality of management and improving asset trends. Bank balance sheets are now strong with many accelerating their lending – to a consumer that is richer and under-leveraged. We recently increased our exposure to select homebuilders in Mexico and Brazil where we remain bullish due to the favorable macro and industry fundamentals in each country.

2

The Latin American Discovery Fund, Inc.

Overview (unaudited)

Letter to Stockholders (cont’d)

Management Strategies (cont'd)

•We continue to maintain an underweight exposure to certain cyclical investment themes. However, we are evaluating these positions as valuations are now reflecting a bearish outlook and fundamentals are changing positively at the margin. We remain focused on domestic reflation and domestic demand stories across markets while continuing to generate alpha from bottom-up stock picking.

Sincerely,

Ronald E. Robison

President and Principal Executive Officer

July 2007

3

	The Latin American Discovery Fund, Inc.
Investment Advisory	June 30, 2007 (unaudited)
Agreement Approval

Nature, Extent and Quality of Services

The Board reviewed and considered the nature and extent of the investment advisory services provided by the Investment Adviser under the Advisory Agreement, including portfolio management, investment research and equity and fixed income securities trading. The Board reviewed similar information and factors regarding the Sub-Adviser, to the extent applicable. The Board also reviewed and considered the nature and extent of the non-advisory, administrative services provided by the Fund’s Administrator under the Administration Agreement, including accounting, clerical, bookkeeping, compliance, business management and planning, and the provision of supplies, office space and utilities at the Investment Adviser’s expense. (The Investment Adviser, Sub-Adviser and Administrator together are referred to as the “Adviser” and the Advisory, Sub-Advisory and Administration Agreements together are referred to as the “Management Agreement.”) The Board also compared the nature of the services provided by the Adviser with similar services provided by non-affiliated advisers as reported to the Board by Lipper Inc. (“Lipper”).

The Board reviewed and considered the qualifications of the portfolio managers, the senior administrative managers and other key personnel of the Adviser who provide the advisory and administrative services to the Fund. The Board determined that the Adviser’s portfolio managers and key personnel are well qualified by education and/or training and experience to perform the services in an efficient and professional manner. The Board concluded that the nature and extent of the advisory and administrative services provided were necessary and appropriate for the conduct of the business and investment activities of the Fund. The Board also concluded that the overall quality of the advisory and administrative services was satisfactory.

Performance Relative to Comparable Funds Managed by Other Advisers

On a regular basis, the Board reviews the performance of all funds in the Morgan Stanley Fund Complex, including the Fund, compared to their peers, paying specific attention to the underperforming funds. In addition, the Board specifically reviewed the Fund’s performance for the one-, three- and five-year periods ended November 30, 2006, as shown in a report provided by Lipper (the “Lipper Report”), compared to the performance of comparable funds selected by Lipper (the “performance peer group”). The Board also discussed with the Adviser the performance goals and the actual results achieved in managing the Fund. The Board concluded that the Fund’s performance was competitive with that of its performance peer group.

Fees Relative to Other Proprietary Funds Managed by the Adviser with Comparable Investment Strategies

The Board noted that the Adviser did not manage any other proprietary funds with investment strategies comparable to those of the Fund.

Fees and Expenses Relative to Comparable Funds Managed by Other Advisers

The Board reviewed the advisory and administrative fee (together, the “management fee”) rate and total expense ratio of the Fund as compared to the average management fee rate and average total expense ratio for funds, selected by Lipper (the “expense peer group”), managed by other advisers with investment strategies comparable to those of the Fund, as shown in the Lipper Report. The Board concluded that the Fund’s management fee rate was acceptable as the total expense ratio was competitive with its expense peer group.

Breakpoints and Economies of Scale

The Board reviewed the structure of the Fund’s management fee schedule under the Management Agreement and noted that it does not include any breakpoints. The Board considered that the Fund is a closed-end fund and, therefore, that the Fund’s assets are not likely to grow with new sales or grow significantly as a result of capital appreciation. The Board concluded that economies of scale for the Fund were not a factor that needed to be considered at the present time.

Profitability of the Adviser and Affiliates

The Board considered information concerning the costs incurred and profits realized by the Adviser and affiliates during the last year from their relationship with the Fund and during the last two years from their relationship with the Morgan Stanley Fund Complex and reviewed with the Adviser the cost allocation methodology used to determine the profitability of the Adviser and affiliates. Based on its review of the information it received, the Board concluded that the profits earned by the Adviser and affiliates were not excessive in light of the advisory, administrative and other services provided to the Fund.

4

	The Latin American Discovery Fund, Inc.
Investment Advisory	June 30, 2007 (unaudited)
Agreement Approval (cont’d)

Fall-Out Benefits

The Board considered so-called “fall-out benefits” derived by the Adviser and affiliates from their relationship with the Fund and the Morgan Stanley Fund Complex, such as commissions on the purchase and sale of Fund shares and “float” benefits derived from handling of checks for purchases and sales of Fund shares, through a broker-dealer affiliate of the Adviser and “soft dollar” benefits (discussed in the next section). The Board concluded that the sales commissions were competitive with those of other broker-dealers and the float benefits were relatively small.

Soft Dollar Benefits

The Board considered whether the Adviser realizes any benefits as a result of brokerage transactions executed through “soft dollar” arrangements. Under such arrangements, brokerage commissions paid by the Fund and/or other funds managed by the Adviser would be used to pay for research that a securities broker obtains from third parties, or to pay for both research and execution services from securities brokers who effect transactions for the Fund. The Board recognized that the receipt of such research from brokers may reduce the Adviser’s costs but concluded that the receipt of such research strengthens the investment management resources of the Adviser, which may ultimately benefit the Fund and other funds in the Morgan Stanley Fund Complex.

Adviser Financially Sound and Financially Capable of Meeting the Fund’s Needs

The Board considered whether the Adviser is financially sound and has the resources necessary to perform its obligations under the Management Agreement. The Board concluded that the Adviser has the financial resources necessary to fulfill its obligations under the Management Agreement.

Historical Relationship Between the Fund and the Adviser

The Board also reviewed and considered the historical relationship between the Fund and the Adviser, including the organizational structure of the Adviser, the policies and procedures formulated and adopted by the Adviser for managing the Fund’s operations and the Board’s confidence in the competence and integrity of the senior managers and key personnel of the Adviser. The Board concluded that it is beneficial for the Fund to continue its relationship with the Adviser.

Other Factors and Current Trends

The Board considered the controls and procedures adopted and implemented by the Adviser and monitored by the Fund’s Chief Compliance Officer and concluded that the conduct of business by the Adviser indicates a good faith effort on its part to adhere to high ethical standards in the conduct of the Fund’s business.

General Conclusion

On April 25, 2007, after considering and weighing all of the above factors, the Board concluded that it would be in the best interest of the Fund and its stockholders to approve renewal of the Management Agreement for another year until April 30, 2008. On June 20, 2007, the Board again considered and weighed all of the above factors and concluded that it would be in the best interest of the Fund and its stockholders to approve renewal of the Management Agreement to continue until June 30, 2008.

5

	The Latin American Discovery Fund, Inc.
Portfolio of Investments	June 30, 2007 (unaudited)

		Value
	Shares	(000)
COMMON STOCKS (98.0%) (Unless Otherwise Noted)
Argentina (3.5%)
Capital Markets
Pampa Holding SA GDR	(a)37,000	$	829
Commercial Banks
Banco Macro SA ADR	53,992	1,775
Energy Equipment & Services
Tenaris SA ADR	124,759	6,108
		8,712
Brazil (59.4%)
Airlines
Tam SA ADR	188,335	6,234
Automobiles
Localiza Rent A Car SA	224,919	2,537
Commercial Banks
Banco Bradesco SA ADR	172,180	4,151
Banco Bradesco SA (Preference)	92,786	2,238
Banco Itau Holding Financeira SA ADR	213,368	9,482
Banco Itau Holding Financeira SA (Preference)	45,410	2,016
Banco Nacional SA (Preference)	(a)(b)(c)95,420,000	@—
Investimentos Itau SA (Preference)	200,854	1,249
Unibanco SA	153,872	1,744
Unibanco SA GDR	93,110	10,509
		31,389
Diversified Financial Services
Bradespar SA (Preference)	49,860	1,894
Electric Utilities
CEMIG SA ADR	249,200	5,258
EDP - Energias De Portugal	141,550	2,899
		8,157
Food Products
Perdigao SA	153,400	2,908
Health Care Providers & Services
Diagnosticos da America SA	75,600	1,673
Household Durables
Cyrela Brazil Realty SA	294,958	3,660
Independent Power Producers & Energy Traders
Cia Paranaense de Energia ADR, ‘B’ (Preference)	14,800	254
Cia Paranaense de Energia, ‘B’ (Preference)	76,430,161	1,308
		1,562
Machinery
Weg SA	162,732	1,522
Media
NET Servicos de Comunicacao SA (Preference)	(a)172,315	2,845
Metals & Mining
CVRD, ‘A’ (Preference)	33,606	1,257
CVRD ADR	901,003	33,968
Gerdau SA	143,647	3,072
Gerdau SA ADR	113,122	2,909
Gerdau SA (Preference)	66,197	1,700
Usinas Siderurgicas de Minas Gerais SA	31,850	2,099
Usinas Siderurgicas de Minas Gerais SA, ‘A’ (Preference)	58,624	3,340
		48,345
Multiline Retail
Lojas Americanas SA (Preference)	34,204,722	2,713
Oil, Gas & Consumable Fuels
Petroleo Brasileiro SA (Preference)	118,712	3,169
Petroleo Brasileiro SA ADR	16,109	1,954
Petroleo Brasileiro SA ADR (Preference)	219,242	23,389
		28,512
Paper & Forest Products
Votorantim Celulose e Papel SA ADR	83,876	1,910
Road & Rail
All America Latina Logistica SA	215,800	2,938
Software
Bematech Industria e Comercio de Equipamentos Eletronicos SA	(a)103,000	969
		149,768
Chile (1.7%)
Airlines
Lan Airlines SA ADR	29,186	2,456
Commercial Banks
Banco Santander Chile SA ADR	34,800	1,724
		4,180
Mexico (33.0%)
Commercial Banks
Grupo Financiero Banorte SAB de CV, ‘O’	1,333,300	6,107
Construction Materials
Cemex SAB de CV ADR	(a)344,121	12,698

The accompanying notes are an integral part of the financial statements.

6

	The Latin American Discovery Fund, Inc.
Portfolio of Investments (cont’d)	June 30, 2007 (unaudited)

		Value
	Shares	(000)
Mexico (cont’d)
Food & Staples Retailing
Wal-Mart de Mexico SAB de CV ADR	23,709	$	901
Wal-Mart de Mexico SAB de CV, ‘V’	3,532,213	13,405
		14,306
Household Durables
Corp. Geo SA de CV, ‘B’	(a)848,394	4,661
Urbi Desarrollos Urbanos SA de CV	(a)791,716	3,646
		8,307
Media
Grupo Televisa SA ADR	511,708	14,128
Wireless Telecommunication Services
America Movil SA de CV, ‘L’ ADR	447,835	27,734
		83,280
Panama (0.4%)
Airlines
Copa Holdings SA, ‘A’	17,004	1,143
TOTAL COMMON STOCKS (Cost $125,721)		247,083
SHORT-TERM INVESTMENT (2.4%)
United States (2.4%)
Investment Company
Morgan Stanley Institutional Liquidity Money Market Portfolio — Institutional Class (Cost $6,061)	(d)6,060,806	6,061
TOTAL INVESTMENTS (100.4%) (Cost $131,782)		253,144
LIABILITIES IN EXCESS OF OTHER ASSETS (-0.4%)		(1,019		)
NET ASSETS (100%)		$	252,125

(a)	Non-income producing.
(b)	Security was valued at fair value — At June 30, 2007, the Fund held fair-valued securities, each valued at less than $500, representing less than 0.05% of net assets.
(c)	Security has been deemed illiquid at June 30, 2007.
(d)	See Note G to the financial statements regarding investment in Morgan Stanley Institutional Liquidity Money Market Portfolio — Institutional Class.
@	Value is less than $500.
ADR	American Depositary Receipt
GDR	Global Depositary Receipt

Foreign Currency Exchange Contract Information:

The Fund had the following foreign currency exchange contract(s) open at period end:

									Net
Currency					In				Unrealized
to					Exchange				Appreciation
Deliver		Value		Settlement	For		Value		(Depreciation)
(000)		(000)		Date	(000)		(000)		(000)
BRL	9,788	$	5,074	7/3/07	USD	5,067	$	5,067	$	(7	)
MXN	27,182	2,516		7/2/07	USD	2,518	2,518		2
		$	7,590				$	7,585	$	(5	)

BRL	— Brazilian Real
MXN	— Mexican Peso
USD	— United States Dollar

Graphic Presentation of Portfolio Holdings

The following graph depicts the Fund’s holdings by industry and/or security type, as a percentage of total investments.

*Industries which do not appear in the above graph, as well as those which represent less than 5% of total investments, if applicable, are included in the category labeled “Other”.

The accompanying notes are an integral part of the financial statements.

7

The Latin American Discovery Fund, Inc.

Financial Statements

Statement of Assets and Liabilities

	June 30, 2007
	(unaudited)
	(000)
Assets:
Investments in Securities of Unaffiliated Issuers, at Value (Cost $125,721)	$	247,083
Investment in Security of Affiliated Issuer, at Value (Cost $6,061)	6,061
Receivable for Investments Sold	21,202
Dividends Receivable	298
Interest Receivable	25
Foreign Currency, at Value (Cost $8)	9
Unrealized Appreciation on Foreign Currency Exchange Contracts	2
Receivable from Affiliate	1
Other Assets	22
Total Assets	274,703
Liabilities:
Payable For:
Dividends Declared	21,676
Investments Purchased	494
Investment Advisory Fees	257
Custodian Fees	33
Directors’ Fees and Expenses	13
Administration Fees	7
Unrealized Depreciation on Foreign Currency Exchange Contracts	7
Other Liabilities	91
Total Liabilities	22,578
Net Assets
Applicable to 8,080,051, Issued and Outstanding $0.01Par Value Shares (100,000,000 Shares Authorized)	$	252,125
Net Asset Value Per Share	$	31.20
Net Assets Consist of:
Common Stock	$	81
Paid-in Capital	101,986
Undistributed (Distributions in Excess of) Net Investment Income	845
Accumulated Net Realized Gain (Loss)	27,823
Unrealized Appreciation (Depreciation) on Investments and Foreign Currency Translations	121,390
Net Assets	$	252,125

The accompanying notes are an integral part of the financial statements.

8

The Latin American Discovery Fund, Inc.

Financial Statements

Statement of Operations

	Six Months Ended
	June 30, 2007
	(unaudited)
	(000)
Investment Income
Dividends from Securities of Unaffiliated Issuers (Net of $15 of Foreign Taxes Withheld)	$	2,953
Interest from Securities of Unafilliated Issuers	82
Interest from Security of Affiliated Issuer	58
Total Investment Income	3,093
Expenses
Investment Advisory Fees (Note B)	1,383
Administration Fees (Note C)	97
Custodian Fees (Note D)	61
Professional Fees	24
Stockholder Reporting Expenses	15
Stockholder Servicing Agent Fees	8
Directors’ Fees and Expenses	8
Other Expenses	2
Total Expenses	1,598
Waiver of Administration Fees (Note C)	(55		)
Rebate from Morgan Stanley Affiliated Cash Sweep (Note G)	(2		)
Expense Offset (Note D)	(1		)
Net Expenses	1,540
Net Investment Income (Loss)	1,553
Net Realized Gain (Loss) on:
Investments	28,260
Foreign Currency Transactions	(70		)
Net Realized Gain (Loss)	28,190
Change in Unrealized Appreciation (Depreciation) on:
Investments	18,799
Foreign Currency Translations	29
Change in Unrealized Appreciation (Depreciation)	18,828
Net Realized Gain (Loss) and Change in Unrealized Appreciation (Depreciation)	47,018
Net Increase (Decrease) in Net Assets Resulting from Operations	$	48,571

The accompanying notes are an integral part of the financial statements.

9

The Latin American Discovery Fund, Inc.

Financial Statements

Statements of Changes in Net Assets

	Six Months Ended
	June 30, 2007			Year Ended
	(unaudited)			December 31, 2006
	(000)			(000)
Increase (Decrease) in Net Assets
Operations:
Net Investment Income (Loss)	$	1,553		$	2,345
Net Realized Gain (Loss)	28,190			61,897
Change in Unrealized Appreciation (Depreciation)	18,828			23,951
Net Increase (Decrease) in Net Assets Resulting from Operations	48,571			88,193
Distributions from and/or in Excess of:
Net Investment Income	(478		)	(4,881		)
Net Realized Gain	(21,198		)	(67,825		)
Total Distributions	(21,676		)	(72,706		)
Total Increase (Decrease)	26,895			15,487
Net Assets:
Beginning of Period	225,230			209,743
End of Period (Including Undistributed (Distributions in Excess of) NetInvestment Income of $845 and $(230), respectively)	$	252,125		$	225,230

The accompanying notes are an integral part of the financial statements.

10

The Latin American Discovery Fund, Inc.

Financial Statements

Selected Per Share Data and Ratios

	Six Months Ended			Year Ended December 31,
	June 30, 2007
	(unaudited)			2006			2005			2004			2003			2002
Net Asset Value, Beginning of Period	$	27.87		$	25.96		$	21.08		$	14.71		$	9.33		$	11.90
Net Investment Income (Loss)†	0.19			0.29			0.45			0.27			0.27			0.18
Net Realized and Unrealized Gain (Loss) on Investments	5.82			10.61			10.65			6.36			5.39			(2.61		)
Total from Investment Operations	6.01			10.90			11.10			6.63			5.66			(2.43		)
Distributions from and/or in Excess of:
Net Investment Income	(0.06		)	(0.60		)	(0.46		)	(0.27		)	(0.29		)	(0.16		)
Net Realized Gain	(2.62		)	(8.39		)	(5.78		)	—			—			—
Total Distributions	(2.68		)	(8.99		)	(6.24		)	(0.27		)	(0.29		)	(0.16		)
Anti-Dilutive Effect of Share Repurchase Program	—			—			0.02			0.01			0.01			0.02
Net Asset Value, End of Period	$	31.20		$	27.87		$	25.96		$	21.08		$	14.71		$	9.33
Per Share Market Value, End of Period	$	29.79		$	26.70		$	22.71		$	18.27		$	12.79		$	7.60
TOTAL INVESTMENT RETURN:
Market Value	21.14		%**	64.51		%	55.62		%	45.09		%	72.01		%	(20.15		)%
Net Asset Value (1)	21.46		%**	50.27		%	54.23		%	45.55		%	61.12		%	(20.08		)%
RATIOS, SUPPLEMENTAL DATA:
Net Assets, End of Period (Thousands)	$	252,125		$	225,230		$	209,743		$	190,492		$	157,131		$	100,250
Ratio of Expenses to Average Net Assets(2)	1.28		%*	1.35		%	1.37		%	1.45		%	1.47		%	1.58		%
Ratio of Net Investment Income (Loss) to Average Net Assets(2)	1.29		%*	1.01		%	1.83		%	1.65		%	2.40		%	1.66		%
Portfolio Turnover Rate	28		%**	59		%	63		%	60		%	71		%	53		%

(2) Supplemental Information on the Ratios to Average Net Assets:
Ratios Before Expenses Waived by Administrator: Ratio of Expenses to Average Net Assets	1.32	%*	1.40	%	1.41	%	1.46	%	N/A	N/A
Ratio of Net Investment Income (Loss) to Average Net Assets	1.24	%*	0.96	%	1.79	%	1.64	%	N/A	N/A

(1)	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. This percentage is not an indication of the performance of a stockholder’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.
†	Per share amount is based on average shares outstanding.
*	Annualized
**	Not Annualized

The accompanying notes are an integral part of the financial statements.

11

	The Latin American Discovery Fund, Inc.
Notes to Financial Statements	June 30, 2007 (unaudited)

The Latin American Discovery Fund, Inc. (the “Fund”) was incorporated on November 12, 1991 and is registered as a non-diversified, closed-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). The Fund’s investment objective is long-term capital appreciation through investments primarily in equity securities of Latin American issuers and by investing, from time to time, in debt securities issued or guaranteed by a Latin American government or governmental entity.

A.Accounting Policies: The following significant accounting policies are in conformity with U.S. generally accepted accounting principles. Such policies are consistently followed by the Fund in the preparation of its financial statements. U.S. generally accepted accounting principles may require management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results may differ from those estimates.

1.Security Valuation: Securities listed on a foreign exchange are valued at their closing price. Unlisted securities and listed securities not traded on the valuation date for which market quotations are readily available are valued at the mean between the current bid and asked prices obtained from reputable brokers. Equity securities listed on a U.S. exchange are valued at the latest quoted sales price on the valuation date. Equity securities listed or traded on NASDAQ, for which market quotations are available, are valued at the NASDAQ Official Closing Price. Debt securities purchased with remaining maturities of 60 days or less are valued at amortized cost, if it approximates value.

All other securities and investments for which market values are not readily available, including restricted securities, and those securities for which it is inappropriate to determine prices in accordance with the aforementioned procedures, are valued at fair value as determined in good faith under procedures adopted by the Board of Directors (the “Directors”), although the actual calculations may be done by others. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuer’s financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.

Most foreign markets close before the New York Stock Exchange (NYSE). Occasionally, developments that could affect the closing prices of securities and other assets may occur between the times at which valuations of such securities are determined (that is, close of the foreign market on which the securities trade) and the close of business on the NYSE. If these developments are expected to materially affect the value of the securities, the valuations may be adjusted to reflect the estimated fair value as of the close of the NYSE, as determined in good faith under procedures established by the Directors.

2.Repurchase Agreements: The Fund may enter into repurchase agreements under which the Fund lends excess cash and takes possession of securities with an agreement that the counterparty will repurchase such securities. In connection with transactions in repurchase agreements, a bank as custodian for the Fund takes possession of the underlying securities (collateral), with a market value at least equal to the amount of the repurchase transaction, including principal and accrued interest. To the extent that any repurchase transaction exceeds one business day, the value of the collateral is marked-to-market on a daily basis to determine the adequacy of the collateral. In the event of default on the obligation to repurchase, the Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty to the agreement, realization and/or retention of the collateral or proceeds may be subject to legal proceedings.

The Fund, along with other affiliated investment companies, may utilize a joint trading account for the purpose of entering into one or more repurchase agreements.

3.Foreign Currency Translation: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars at the mean of the bid and asked prices of such currencies against U.S. dollars last quoted by a major bank as follows:

•investments, other assets and liabilities at the prevailing rates of exchange on the valuation date;

•investment transactions and investment income at the prevailing rates of exchange on the dates of such transactions.

Although the net assets of the Fund are presented at the foreign exchange rates and market values at the close of the period, 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 fluctuations arising from changes in the market prices of the securities held at period end. Similarly, the Fund does not isolate the effect of changes in foreign exchange rates from the fluctuations arising from changes in the market prices of securities sold during the period. Accordingly, realized and unrealized foreign currency gains (losses) due to securities transactions are included in the reported net realized and

12

	The Latin American Discovery Fund, Inc.
Notes to Financial Statements (cont’d)	June 30, 2007 (unaudited)

unrealized gains (losses) on investment transactions and balances.

Net realized gains (losses) on foreign currency transactions represent net foreign exchange gains (losses) from sales and maturities of foreign currency exchange contracts, disposition of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amount of investment income and foreign withholding taxes recorded on the Fund’s books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains (losses) from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation (depreciation) on investments and foreign currency translations in the Statement of Assets and Liabilities. The change in unrealized currency gains (losses) on foreign currency translations for the period is reflected in the Statement of Operations.

A portion of the Fund’s net assets consist of securities denominated in Latin American currencies. Changes in currency exchange rates will affect the value of and investment income from such securities. Latin American securities are often subject to greater price volatility, limited capitalization and liquidity, and higher rates of inflation than securities of companies based in the United States. In addition, Latin American securities may be subject to substantial governmental involvement in the economy and greater social, economic and political uncertainty.

4.Derivatives: The Fund may use derivatives to achieve its investment objectives. The Fund may engage in transactions in futures contracts on foreign currencies, stock indices, as well as in options, swaps and structured products. Consistent with the Fund’s investment objectives and policies, the Fund may use derivatives for non-hedging as well as hedging purposes.

Following is a description of derivative instruments that the Fund has utilized and their associated risks:

Foreign Currency Exchange Contracts: The Fund may enter into foreign currency exchange contracts generally to attempt to protect securities and related receivables and payables against changes in future foreign exchange rates and, in certain situations, to gain exposure to a foreign currency. A foreign currency exchange contract is an agreement between two parties to buy or sell currency at a set price on a future date. The market value of the contract will fluctuate with changes in currency exchange rates. The contract is marked-to-market daily and the change in market value is recorded by the Fund as unrealized gain or loss. The Fund records realized gains or losses when the contract is closed equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Risk may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and is generally limited to the amount of unrealized gain on the contracts, if any, at the date of default. Risks may also arise from unanticipated movements in the value of a foreign currency relative to the U.S. dollar.

5.New Accounting Pronouncements: In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund’s financial statement disclosures.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – including an amendment of FASB Statement No. 115”(“SFAS 159”), which is effective for fiscal years beginning after November 15, 2007. SFAS 159 permits entities to elect to measure certain financial assets and liabilities at fair value. The fair value option may be applied instrument by instrument, is irrevocable and is applied only to entire instruments and not to portions of instruments. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. Management is currently evaluating the impact the adoption of SFAS 159 will have on the Fund’s financial statement disclosures.

6.Other: Security transactions are accounted for on the date the securities are purchased or sold. Realized gains and losses on the sale of investment securities are determined on the specific identified cost basis. Interest income is recognized on the accrual basis. Dividend income and distributions are recorded on the ex-dividend date (except certain dividends which may be recorded as soon as the Fund is informed of such dividends) net of applicable withholding taxes.

13

	The Latin American Discovery Fund, Inc.
Notes to Financial Statements (cont’d)	June 30, 2007 (unaudited)

B. Investment Advisory Fees: Morgan Stanley Investment Management Inc. (the “Adviser” or “MS Investment Management”) provides investment advisory services to the Fund under the terms of an Investment Advisory Agreement (the “Agreement”). Under the Agreement, the Adviser is paid a fee computed weekly and payable monthly at the annual rate of 1.15% of the Fund’s average weekly net assets.

C. Administration Fees: MS Investment Management also serves as Administrator to the Fund pursuant to an Administration Agreement. Under the Administration Agreement, the administration fee is 0.08% of the Fund’s average daily net assets. MS Investment Management has agreed to limit the administration fee so that it will be no greater than the previous administration fee of 0.02435% of the Fund’s average weekly net assets plus $24,000 per annum. This waiver is voluntary and may be terminated at any time. For the six months ended June 30, 2007, $55,000 of administration fees were waived pursuant to this arrangement. Under a sub-administration agreement between the Administrator and JPMorgan Investor Services Co. (“JPMIS”), a corporate affiliate of JPMorgan Chase Bank, N.A., JPMIS provides certain administrative services to the Fund. For such services, the Administrator pays JPMIS a portion of the fee the Administrator receives from the Fund. An employee of JPMIS is an officer of the Fund. Administration costs (including out-of-pocket expenses) incurred in the ordinary course of providing services under the administration agreement, except pricing services and extraordinary expenses, are covered under the administration fee.

D. Custodian Fees: JPMorgan Chase Bank, N.A., (the “Custodian”) serves as Custodian for the Fund. The Custodian holds cash, securities, and other assets of the Fund as required by the 1940 Act. Custody fees are payable monthly based on assets held in custody, investment purchases and sales activity and account maintenance fees, plus reimbursement for certain out-of-pocket expenses.

The Fund has entered into an arrangement with its Custodian whereby credits realized on uninvested cash balances were used to offset a portion of the Fund’s expenses. These custodian credits are shown as “Expense Offset” on the Statement of Operations.

E. Federal Income Taxes: It is the Fund’s intention to continue to qualify as a regulated investment company and distribute all of its taxable income. Accordingly, no provision for Federal income taxes is required in the financial statements. The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on income and/ or capital gains earned or repatriated. Taxes are accrued and applied to net investment income, net realized gains and net unrealized appreciation as such income and/or gains are earned.

The Fund adopted the provisions of the Financial Accounting Standards Board’s (“FASB”) Interpretation number 48 Accounting for Uncertainty in Income Taxes, on June 30, 2007. As of June 30, 2007, this did not result in an impact to the Fund’s financial statements.

The tax character of distributions paid may differ from the character of distributions shown on the Statements of Changes in Net Assets due to short-term capital gains being treated as ordinary income for tax purposes. The tax character of distributions paid during 2006 and 2005 were as follows:

2006 Distributions Paid From: (000)				2005 Distributions Paid From: (000)
		Long-term				Long-term
Ordinary		Capital		Ordinary		Capital
Income		Gain		Income		Gain
$	16,629	$	56,077	$	11,425	$	38,959

The amount and character of income and capital gain distributions to be paid by the Fund are determined in accordance with Federal income tax regulations, which may differ from U.S. generally accepted accounting principles. These book/tax differences are considered either temporary or permanent in nature.

Temporary differences are attributable to differing book and tax treatments for the timing of the recognition of gains (losses) on certain investment transactions and the timing of the deductibility of certain expenses.

Permanent differences, primarily due to differing treatments of gains (losses) related to foreign currency transactions and certain equity securities designated as issued by passive foreign investment companies, resulted in the following reclassifications among the components of net assets at December 31, 2006:

Increase (Decrease)
Accumulated
Undistributed
(Distributions in
Excess of) Net		Accumulated
Investment		Net Realized			Paid-in
Income (Loss)		Gain (Loss)			Capital
(000)		(000)			(000)
$	1,649	$	(1,649	)	$	—

At December 31, 2006, the components of distributable earnings on a tax basis were as follows:

Undistributed		Undistributed
Ordinary Income		Long-term Capital Gain
(000)		(000)
$	3,618	$	18,057

14

	The Latin American Discovery Fund, Inc.
Notes to Financial Statements (cont’d)	June 30, 2007 (unaudited)

At June 30, 2007, the U.S. Federal income tax cost basis of investments was $131,782,000 and, accordingly, net unrealized appreciation for U.S. Federal income tax purposes was $121,362,000 of which $121,363,000 related to appreciated securities and $1,000 related to depreciated securities.

Net capital, currency and passive foreign investment company (“PFIC”) losses incurred after October 31, and within the taxable year are deemed to arise on the first day of the Fund’s next taxable year. For the year ended December 31, 2006, the Fund deferred to January 3, 2007, for U.S. Federal income tax purposes, post-October currency losses of $33,000.

F. Contractual Obligations: The Fund enters into contracts that contain a variety of indemnifications. The Fund’s maximum exposure under these arrangements is unknown. However, the Fund has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.

G. Security Transactions and Transactions with Affiliates: The Fund invests in the Institutional Class of the Morgan Stanley Institutional Liquidity Money Market Portfolio (the “Liquidity Fund”), an open-end management investment company managed by the Adviser. Investment Advisory fees paid by the Fund are reduced by an amount equal to the advisory and administration fees paid by the Liquidity Fund with respect to assets invested by the Fund in the Liquidity Fund. For the six months ended June 30, 2007, advisory fees paid were reduced by $2,000 relating to the Fund’s investment in the Liquidity Fund. Income distributions earned by the Fund are recorded as interest from affiliates in the Statement of Operations and totaled $58,000. During the six months ended June 30, 2007, cost of purchases and sales in the Liquidity Fund were $20,663,000 and $14,602,000, respectively.

During the six months ended June 30, 2007, the Fund made purchases and sales totaling approximately $64,930,000 and $87,605,000, respectively, of investment securities other than long-term U.S. Government securities and short-term investments. There were no purchases or sales of long-term U.S. Government securities.

During the six months ended June 30, 2007, the Fund incurred $13,658 of brokerage commissions to Morgan Stanley & Co. Incorporated, an affiliated broker\dealer.

H. Other: On September 15, 1998, the Fund commenced a share repurchase program for purposes of enhancing stockholder value and reducing the discount at which the Fund’s shares traded from their net asset value. During the six months ended June 30, 2007, the Fund did not repurchase any of its shares. Since the inception of the program, the Fund has repurchased 2,155,438 of its shares at an average discount of 18.94% 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 Directors.

On June 19, 2007 the Officers of the Fund, pursuant to authority granted by the Directors, declared a distribution of $0.0592 per share, derived from net investment income, and $2.6235 per share, derived from capital gains payable on July 13, 2007 to stockholders of record on June 29, 2007.

I. Supplemental Proxy Information: On June 19, 2007, an annual meeting of the Fund’s stockholders was held for the purpose of voting on the following matter, the results of which were as follows:

Election of Directors by all stockholders:

	For	Withhold
Frank L. Bowman	5,204,959	165,151
James F. Higgins	5,201,530	168,580
Manuel H. Johnson	5,201,836	168,274

J. Subsequent Event: On July 1, 2007, the Stockholder Servicing Agent changed from American Stock Transfer & Trust Company to Computershare Trust Company, N.A. Requests for information or any correspondence concerning the Dividend Reinvestment and Cash Purchase Plan after July 1, 2007 should be directed to Computershare Trust Company, N.A. P.O. Box 43010, Providence, Rhode Island 02940-3010, 1 (800) 231-2608.

15

	The Latin American Discovery Fund, Inc.
Notes to Financial Statements (cont’d)	June 30, 2007 (unaudited)

For More Information About Portfolio Holdings

The Fund provides a complete schedule of portfolio holdings in its semi-annual and annual reports within 60 days of the end of the Fund’s second and fourth fiscal quarters. The semi-annual reports and the annual reports are filed electronically with the Securities and Exchange Commission (SEC) on Form N-CSRS and Form N-CSR, respectively. Morgan Stanley also delivers the semi-annual and annual reports to Fund stockholders and makes these reports available on its public website, www.morganstanley. com. Each Morgan Stanley fund also files a complete schedule of portfolio holdings with the SEC for the Fund’s first and third fiscal quarters on Form N-Q. Morgan Stanley does not deliver the reports for the first and third fiscal quarters to stockholders, nor are the reports posted to the Morgan Stanley public website. You may, however, obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS filings) by accessing the SEC’s website, http://www.sec.gov. You may also review and copy them at the SEC’s public reference room in Washington, DC. Information on the operation of the SEC’s Public Reference Room may be obtained by calling the SEC at 1(800) SEC-0330. You can also request copies of these materials, upon payment of a duplicating fee, by electronic request at the SEC’s e-mail address (publicinfo@sec.gov) or by writing the public reference section of the SEC, Washington, DC 20549-0102.

In addition to filing a complete schedule of portfolio holdings with the SEC each fiscal quarter, the Fund makes portfolio holdings information available by periodically providing the information on its public website, www.morganstanley.com/im.

The Fund provides a complete schedule of portfolio holdings on the public website on a calendar-quarter basis approximately 31 calendar days after the close of the calendar quarter. The Fund also provides Top 10 holdings information on the public website approximately 15 business days following the end of each month. You may obtain copies of the Fund’s monthly or calendar-quarter website postings, by calling 1(800) 231-2608.

Proxy Voting Policy and Procedures and Proxy Voting Record

A copy of (1) the Fund’s policies and procedures with respect to the voting of proxies relating to the Fund’s portfolio securities; and (2) how the Fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30, is available without charge, upon request, by calling 1 (800) 548-7786 or by visiting our website at www.morganstanley. com/im. This information is also available on the Securities and Exchange Commission’s web site at www.sec.gov.

16

The Latin American Discovery Fund, Inc.

Dividend Reinvestment and Cash Purchase Plan

Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the “Plan”), each stockholder will be deemed to have elected, unless American Stock Transfer & Trust Company (the “Plan Agent”) is otherwise instructed by the stockholder in writing, to have all distributions automatically reinvested in Fund shares. Participants in the Plan have the option of making additional voluntary cash payments to the Plan Agent, annually, in any amount from $100 to $3,000, for investment in Fund shares.

Dividend and capital gain distributions will be reinvested on the reinvestment date in full and fractional shares. If the market price per share equals or exceeds net asset value per share on the reinvestment date, the Fund will issue shares to participants at net asset value or, if net asset value is less than 95% of the market price on the reinvestment date, shares will be issued at 95% of the market price. If net asset value exceeds the market price on the reinvestment date, participants will receive shares valued at market price. The Fund may purchase shares of its Common Stock in the open market in connection with dividend reinvestment requirements at the discretion of the Board of Directors. Should the Fund declare a dividend or capital gain distribution payable only in cash, the Plan Agent will purchase Fund shares for participants in the open market as agent for the participants.

The Plan Agent’s fees for the reinvestment of dividends and distributions will be paid by the Fund. However, each participant’s account will be charged a pro rata share of brokerage commissions incurred on any open market purchases effected on such participant’s behalf. A participant will also pay brokerage commissions incurred on purchases made by voluntary cash payments. Although stockholders in the Plan may receive no cash distributions, participation in the Plan will not relieve participants of any income tax which may be payable on such dividends or distributions.

In the case of stockholders, such as banks, brokers or nominees, that hold shares for others who are the beneficial owners, the Plan Agent will administer the Plan on the basis of the number of shares certified from time to time by the stockholder as representing the total amount registered in the stockholder’s name and held for the account of beneficial owners who are participating in the Plan.

Stockholders who do not wish to have distributions automatically reinvested should notify the Plan Agent in writing. There is no penalty for non-participation or withdrawal from the Plan, and stockholders who have previously withdrawn from the Plan may rejoin at any time. Requests for additional information or any correspondence concerning the Plan should be directed to the Plan Agent at:

The Latin American Discovery Fund, Inc.

American Stock Transfer & Trust Company

Dividend Reinvestment and Cash Purchase Plan

59 Maiden Lane

New York, New York 10030

17

The Latin American Discovery Fund, Inc.

Morgan Stanley Institutional Closed End Funds

An Important Notice Concerning Our

U.S. Privacy Policy

We are required by federal law to provide you with a copy of our Privacy Policy annually.

The following Policy applies to current and former individual investors in Morgan Stanley Institutional closed end funds. This Policy is not applicable to partnerships, corporations, trusts or other non-individual clients or account holders. Please note that we may amend this Policy at any time, and will inform you of any changes to this Policy as required by law.

We Respect Your Privacy

We appreciate that you have provided us with your personal financial information. We strive to maintain the privacy of such information while we help you achieve your financial objectives. This Policy describes what non-public personal information we collect about you, why we collect it, and when we may share it with others. We hope this Policy will help you understand how we collect and share non-public personal information that we gather about you. Throughout this Policy, we refer to the non-public information that personally identifies you or your accounts as “personal information.”

1. What Personal Information Do We Collect About You?

To serve you better and manage our business, it is important that we collect and maintain accurate information about you. We may obtain this information from applications and other forms you submit to us, from your dealings with us, from consumer reporting agencies, from our Web sites and from third parties and other sources.

For example:

•We may collect information such as your name, address, e-mail address, telephone/fax numbers, assets, income and investment objectives through applications and other forms you submit to us.

•We may obtain information about account balances, your use of account(s) and the types of products and services you prefer to receive from us through your dealings and transactions with us and other sources.

•We may obtain information about your creditworthiness and credit history from consumer reporting agencies.

•We may collect background information from and through third-party vendors to verify representations you have made and to comply with various regulatory requirements.

•If you interact with us through our public and private Web sites, we may collect information that you provide directly through online communications (such as an e-mail address). We may also collect information about your Internet service provider, your domain name, your computer’s operating system and Web browser, your use of our Web sites and your product and service preferences, through the use of “cookies.” “Cookies” recognize your computer each time you return to one of our sites, and help to improve our sites’ content and personalize your experience on our sites by, for example, suggesting offerings that may interest you. Please consult the Terms of Use of these sites for more details on our use of cookies.

2. When Do We Disclose Personal Information We Collect About You?

To provide you with the products and services you request, to serve you better and to manage our business, we may disclose personal information we collect about you to our affiliated companies and to non-affiliated third parties as required or permitted by law.

A. Information We Disclose to Our Affiliated Companies. We do not disclose personal information that we collect about you to our affiliated companies except to enable them to provide services on our behalf or as otherwise required or permitted by law.

18

The Latin American Discovery Fund, Inc.

Morgan Stanley Institutional Closed End Funds

An Important Notice Concerning Our

U.S. Privacy Policy (cont’d)

B. Information We Disclose to Third Parties. We do not disclose personal information that we collect about you to nonaffiliated third parties except to enable them to provide services on our behalf, to perform joint marketing agreements with other financial institutions, or as otherwise required or permitted by law. For example, some instances where we may disclose information about you to nonaffiliated third parties include: for servicing and processing transactions, to offer our own products and services, to protect against fraud, for institutional risk control, to respond to judicial process or to perform services on our behalf. When we share personal information with these companies, they are required to limit their use of personal information to the particular purpose for which it was shared and they are not allowed to share personal information with others except to fulfill that limited purpose.

3. How Do We Protect the Security and Confidentiality of Personal Information We Collect About You?

We maintain physical, electronic and procedural security measures to help safeguard the personal information we collect about you. We have internal policies governing the proper handling of client information. Third parties that provide support or marketing services on our behalf may also receive personal information, and we require them to adhere to confidentiality standards with respect to such information.

19

The Latin American Discovery Fund, Inc.

Directors
Michael E. Nugent	J. David Germany
	Vice President
Frank L. Bowman
	Dennis F. Shea
Michael Bozic	Vice President
Kathleen A. Dennis	Amy R. Doberman
	Vice President
James F. Higgins
	Stefanie V. Chang Yu
Dr. Manuel H. Johnson	Vice President
Joseph J. Kearns	James W. Garrett
	Treasurer and Chief Financial Officer
Michael F. Klein
	Carsten Otto
	Chief Compliance Officer
W. Allen Reed
Fergus Reid	Thomas A. Perugini
	Assistant Treasurer
Officers
Michael E. Nugent	Mary E. Mullin
Chairman of the Board and Director	Secretary
Ronald E. Robison
President and Principal Executive Officer

Investment Adviser and Administrator

Morgan Stanley Investment Management Inc.

522 Fifth Avenue

New York, New York 10036

Custodian

JPMorgan Chase Bank, N.A.

270 Park Avenue

New York, New York 10017

Stockholder Servicing Agent

American Stock Transfer & Trust Company

59 Maiden Lane

New York, New York 10030

Legal Counsel

Clifford Chance US LLP

31 West 52^nd Street

New York, New York 10019-6131

Independent Registered Public Accounting Firm

Ernst & Young LLP

200 Clarendon Street

Boston, Massachusetts 02116

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) 231-2608 or visit our website at www.morganstanley.com/im.

© 2007 Morgan Stanley

CELDFSAN IU07-02966I-Y06/07

Item 2. Code of Ethics.

Not applicable for semiannual reports.

Item 3. Audit Committee Financial Expert.

Not applicable for semiannual reports.

Item 4. Principal Accountant Fees and Services

Not applicable for semiannual reports.

Item 5. Audit Committee of Listed Registrants.

Not applicable for semiannual reports.

Item 6. Schedule of Investments

Refer to Item 1.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable for semiannual reports.

Item 8. Portfolio Managers of Closed-End Management Investment Companies

Applicable only to annual reports filed by closed-end funds.

Item 9. Closed-End Fund Repurchases

None

Item 10. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 11. Controls and Procedures

(a)  The Fund’s principal executive officer and principal financial officer have concluded  that the Fund’s disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Fund in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, based upon such officers’ evaluation of these controls and procedures as of a date within 90 days of the filing date of the report.

1

(b)  There were no changes in the registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period that has materially affected, or is reasonably  likely to materially affect, the registrant’s internal control over financial reporting.

Item 12. Exhibits

(a) Code of Ethics - Not applicable for semiannual reports.

(b) A separate certification for each principal executive officer and principal financial officer of the registrant are attached hereto as part of EX-99.CERT.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

(Registrant)			The Latin American Discovery Fund, Inc.
By:	/s/ Ronald E. Robison
Name:		Ronald E. Robison
Title:		Principal Executive Officer
Date:		August 9, 2007

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By:	/s/ Ronald E. Robison
Name:		Ronald E. Robison
Title:		Principal Executive Officer
Date:		August 9, 2007
By:	/s/ James W. Garrett
Name:		James W. Garrett
Title:		Principal Financial Officer
Date:		August 9, 2007