<Page> 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: 811-06608 Morgan Stanley Latin American Growth Fund (Exact name of registrant as specified in charter) 1221 Avenue of the Americas, New York, New York 10020 (Address of principal executive offices) (Zip code) Ronald E. Robison 1221 Avenue of the Americas, New York, New York 10020 (Name and address of agent for service) Registrant's telephone number, including area code: 212-762-4000 Date of fiscal year end: January 31, 2005 Date of reporting period: July 31, 2004 Item 1 - Report to Shareholders <Page> WELCOME, SHAREHOLDER: IN THIS REPORT, YOU'LL LEARN ABOUT HOW YOUR INVESTMENT IN MORGAN STANLEY LATIN AMERICAN GROWTH FUND PERFORMED DURING THE SEMIANNUAL PERIOD. WE WILL PROVIDE AN OVERVIEW OF THE MARKET CONDITIONS, AND DISCUSS SOME OF THE FACTORS THAT AFFECTED PERFORMANCE DURING THE REPORTING PERIOD. IN ADDITION, THIS REPORT INCLUDES THE FUND'S FINANCIAL STATEMENTS AND A LIST OF FUND INVESTMENTS. THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS FOR THE FUND BEING OFFERED. MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO PASS. THERE IS NO ASSURANCE THAT THE FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE. THE FUND IS SUBJECT TO MARKET RISK, WHICH IS THE POSSIBILITY THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL DECLINE AND, THEREFORE, THE VALUE OF THE FUND SHARES MAY BE LESS THAN WHAT YOU PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS FUND. <Page> FUND REPORT For the six-month period ended July 31, 2004 TOTAL RETURN FOR THE 6-MONTH PERIOD ENDED JULY 31, 2004 <Table> <Caption> MSCI EMERGING LIPPER MARKETS LATIN LATIN AMERICAN AMERICA FUNDS CLASS A CLASS B CLASS C CLASS D INDEX(1) AVERAGE(2) ------- ------- ------- ------- -------- ---------- 2.14% 1.90% 1.87% 2.13% 1.29% 0.15% </Table> THE PERFORMANCE OF THE FUND'S FOUR SHARE CLASSES VARIES BECAUSE EACH HAS DIFFERENT EXPENSES. THE FUND'S TOTAL RETURN FIGURES ASSUME THE REINVESTMENT OF ALL DISTRIBUTIONS BUT DO NOT REFLECT THE DEDUCTION OF ANY APPLICABLE SALES CHARGES. SUCH COSTS WOULD LOWER PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. SEE PERFORMANCE SUMMARY FOR STANDARDIZED PERFORMANCE INFORMATION. MARKET CONDITIONS Latin American markets produced mixed results for the six-month period ended July 31, 2004 after having rallied for much of 2003. While favorable monetary policy, improved domestic economies and a recovery of global growth had spurred strong performance throughout the previous period, the Latin American markets entered a much more volatile period in the first and second quarters of 2004. After many months of relative tranquility, volatility in the Latin American markets spiked in the second quarter with the asset class coming under selling pressure in April and May before stabilizing in June. Despite this volatility, Latin American markets finished the period up 1.3 percent, after gaining 73.5 percent in 2003 and another 7.1 percent in the first three months of 2004. The recent difficulties in Latin America were primarily due to exogenous factors, namely fears of future US interest rate hikes, instability in Iraq and slower global growth. Concerns about China's economic slowdown also put significant pressure on commodity prices leading to a sell-off in gold and copper producing countries such as Peru and Chile. The Brazilian market was especially weak over the period following its significant rally in 2003, returning -0.96 percent for the six months. Although in the preceding period political uncertainty surrounding the objectives of President Lula's government had subsided and allowed for the market's strong performance, concerns over Brazil's political environment returned in the six-month review period as the prospects for reform weakened and apprehension over monetary policy both there and in the U.S. hurt equities. After having cut interest rates for 11 consecutive months, the Brazilian government stopped making cuts in May, sending an unsettling message to local and foreign investors. The Brazilian market was particularly hurt by a rise in risk aversion and the fall-off in commodity prices during the period, though prices of commodities began to improve in June. Brazil saw a considerable improvement in performance in July, returning 8.4 percent for the last month of the period. 2 <Page> Mexico was one of the best-performing Latin American countries for the period, making a recovery after lagging the previous year. Concerns over the country's potential for economic recovery abated as the economic data that was released was generally stronger than expected. Colombia also saw relatively strong performance as valuations remained attractive and the country saw an improvement in its political and economic environment. Chile and Peru suffered from the drop in commodity prices, but appeared after the final month joining other Latin American countries in a rebound as these prices improved. PERFORMANCE ANALYSIS Morgan Stanley Latin American Growth Fund outperformed the MSCI Emerging Markets Latin America Index and the Lipper Latin American Funds Average during the 6-month period ended July 31, 2004. Strong performance was driven by a number of country allocation decisions and by stock selection within several countries, primarily within Mexico and Brazil. An increasing emphasis on domestic demand plays proved particularly beneficial in Mexico and Brazil. In Mexico a pick-up in the domestic economy drove the positive performance of many securities, while in Brazil a bottom-up process of stock selection based on earning potential and visibility led to a focus on consumer names that greatly helped the Fund's performance. An overweighted position in Mexico relative to the MSCI Emerging Markets Latin America Index also proved beneficial as the country was one of the best performing for the six months. An underweighted position in Argentina relative to the MSCI Emerging Markets Latin America Index also helped the Fund, as the market sold off given concerns over the country's economic and political environment. Stock selection in Argentina was also positive for the Fund, as we moderated our positions in domestic names and increased the Fund's emphasis on export-oriented companies in the country. Stock selection in Chile and Peru served as a drag on performance, with the Fund particularly suffering from the underperformance of Buenaventura, a large mining company in Peru that was hurt by the worsening outlook for commodity prices that occurred in April. 3 <Page> TOP 10 HOLDINGS <Table> America Movil S.A. de C.V. - Series L (ADR) 12.8% Petroleo Brasileiro S.A. 12.2 Companhia Vale do Rio Doce 7.3 Wal Mart de Mexico S.A. de C.V. - Series V 7.2 Grupo Televisa S.A. - CPO (ADR) 6.7 Banco Itau Holding Fin S.A. 4.7 Telesp Celular Part S.A. 4.2 Banco Bradesco S.A. 3.8 Telefonos de Mexico S.A. de C.V. - Series L (ADR) 3.7 Enersis S.A. (ADR) 2.5 </Table> TOP 5 COUNTRIES <Table> Brazil 49.3% Mexico 39.6 Chile 4.2 Venezuela 1.9 Luxembourg 1.3 </Table> DATA AS OF JULY 31, 2004. SUBJECT TO CHANGE DAILY. ALL PERCENTAGES FOR THE TOP 10 HOLDINGS AND THE TOP 5 COUNTRIES ARE AS A PERCENTAGE OF NET ASSETS. PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE DEEMED A RECOMMENDATION TO BUY OR SELL THE SECURITIES MENTIONED. MORGAN STANLEY IS A FULL-SERVICE SECURITIES FIRM ENGAGED IN SECURITIES TRADING AND BROKERAGE ACTIVITIES, INVESTMENT BANKING, RESEARCH AND ANALYSIS, FINANCING AND FINANCIAL ADVISORY SERVICES. INVESTMENT STRATEGY THE FUND WILL NORMALLY INVEST AT LEAST 80% OF ITS ASSETS IN COMMON STOCKS AND OTHER EQUITY SECURITIES (INCLUDING DEPOSITARY RECEIPTS) OF LATIN AMERICAN COMPANIES. IN DETERMINING WHICH SECURITIES TO BUY, HOLD OR SELL FOR THE FUND, THE FUND'S "INVESTMENT MANAGER," MORGAN STANLEY INVESTMENT ADVISORS INC., SELECTS SECURITIES BASED ON ITS VIEW OF THEIR POTENTIAL FOR CAPITAL APPRECIATION; CURRENT DIVIDEND INCOME WILL NOT BE A FACTOR. THE INVESTMENT MANAGER USES A "TOP-DOWN" COUNTRY ALLOCATION APPROACH TOGETHER WITH "BOTTOM-UP" STOCK SELECTION. THE APPROACH BEGINS WITH AN EVALUATION OF THE COUNTRY IN WHICH THE PROPOSED INVESTMENT IS TO BE MADE. FOLLOWING THE COUNTRY LEVEL REVIEW, THE INVESTMENT MANAGER CONDUCTS A FUNDAMENTAL ANALYSIS OF SPECIFIC SECURITIES, INDUSTRIES AND COMPANIES. FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS EACH MORGAN STANLEY FUND PROVIDES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS IN ITS SEMIANNUAL AND ANNUAL REPORTS WITHIN 60 DAYS OF THE END OF THE FUND'S SECOND AND FOURTH FISCAL QUARTERS BY FILING THE SCHEDULE ELECTRONICALLY WITH THE SECURITIES AND EXCHANGE COMMISSION (SEC). THE SEMIANNUAL REPORTS ARE FILED ON FORM N-CSRS AND THE ANNUAL REPORTS ARE FILED ON FORM N-CSR. MORGAN STANLEY ALSO DELIVERS THE SEMIANNUAL AND ANNUAL REPORTS TO FUND SHAREHOLDERS, AND MAKES THESE REPORTS AVAILABLE ON ITS PUBLIC WEB SITE, 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 SHAREHOLDERS, NOR ARE THE REPORTS POSTED TO THE MORGAN STANLEY PUBLIC WEB SITE. YOU MAY, HOWEVER, OBTAIN THE FORM N-Q FILINGS 4 <Page> (AS WELL AS THE FORM N-CSR AND N-CSRS FILINGS) BY ACCESSING THE SEC'S WEB SITE, 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. YOU MAY OBTAIN COPIES OF A FUND'S FISCAL QUARTER FILINGS BY CONTACTING MORGAN STANLEY CLIENT RELATIONS AT (800) 847-2424. PROXY VOTING POLICIES AND PROCEDURES A DESCRIPTION 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 JULY 31 IS AVAILABLE WITHOUT CHARGE, UPON REQUEST, BY CALLING (800) 869-NEWS OR BY VISITING THE MUTUAL FUND CENTER ON OUR WEBSITE AT www.morganstanley.com. THIS INFORMATION IS ALSO AVAILABLE ON THE SECURITIES AND EXCHANGE COMMISSION'S WEBSITE AT http://www.sec.gov. 5 <Page> PERFORMANCE SUMMARY AVERAGE ANNUAL TOTAL RETURNS--PERIOD ENDED JULY 31, 2004 <Table> <Caption> CLASS A SHARES* CLASS B SHARES** CLASS C SHARES+ CLASS D SHARES++ (SINCE 07/28/97) (SINCE 12/30/92) (SINCE 07/28/97) (SINCE 07/28/97) SYMBOL LATAX LATBX LATCX LATDX 1 YEAR 33.32%(3) 32.54%(3) 32.47%(3) 33.51%(3) 26.32(4) 27.54(4) 31.47(4) -- 5 YEARS 6.17(3) 5.37(3) 5.39(3) 6.36(3) 5.03(4) 5.05(4) 5.39(4) -- 10 YEARS -- 0.16(3) -- -- -- 0.16(4) -- -- SINCE INCEPTION (2.20)(3) 2.17(3) (2.91)(3) (2.02)(3) (2.95)(4) 2.17(4) (2.91)(4) -- </Table> PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF FUTURE RESULTS AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT morganstanley.com OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS AND PRINCIPAL VALUE WILL FLUCTUATE AND FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. THE TABLE DOES NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON FUND DISTRIBUTIONS OR THE REDEMPTION OF FUND SHARES. PERFORMANCE FOR CLASS A, CLASS B, CLASS C, AND CLASS D SHARES WILL VARY DUE TO DIFFERENCES IN SALES CHARGES AND EXPENSES. * THE MAXIMUM FRONT-END SALES CHARGE FOR CLASS A IS 5.25%. ** THE MAXIMUM CONTINGENT DEFERRED SALES CHARGE (CDSC) FOR CLASS B IS 5.0%. THE CDSC DECLINES TO 0% AFTER SIX YEARS. + THE MAXIMUM CDSC FOR CLASS C IS 1% FOR SHARES REDEEMED WITHIN ONE YEAR OF PURCHASE. ++ CLASS D HAS NO SALES CHARGE. (1) THE MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS LATIN AMERICA INDEX (MSCI EM LA INDEX) IS A MARKET CAPITALIZATION WEIGHTED INDEX THAT INCLUDES SELECT SECURITIES FROM ARGENTINA, BRAZIL, CHILE, COLOMBIA, MEXICO, PERU, AND VENEZUELA. FOR THE PERIOD FROM THE FUND'S INCEPTION THROUGH DECEMBER 31, 2000, THE INDEX'S RETURNS INCLUDE THOSE OF THE MSCI EM LA'S "GROSS" INDEX WHICH ASSUMES DIVIDENDS GROSS OF WITHHOLDING TAXES BUT NET OF DOMESTIC TAX CREDITS. FOR THE PERIOD FROM JANUARY 1, 2001 AND BEYOND, THE INDEX'S RETURNS REFLECT THOSE OF THE "NET" INDEX WHICH REFLECTS A REDUCTION IN DIVIDENDS AFTER TAKING INTO ACCOUNT WITHHOLDING OF TAXES BY CERTAIN FOREIGN COUNTRIES REPRESENTED IN THE INDEX. THE INDEX DOES NOT INCLUDE ANY EXPENSES, FEES OR CHARGES. SUCH COSTS WOULD LOWER PERFORMANCE. IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX. (2) THE LIPPER LATIN AMERICAN FUNDS AVERAGE TRACKS THE PERFORMANCE OF ALL FUNDS IN THE LIPPER LATIN AMERICAN FUNDS CLASSIFICATION. THE AVERAGE, WHICH IS ADJUSTED FOR CAPITAL GAINS DISTRIBUTIONS AND INCOME DIVIDENDS, IS UNMANAGED AND SHOULD NOT BE CONSIDERED AN INVESTMENT. (3) FIGURE SHOWN ASSUMES REINVESTMENT OF ALL DISTRIBUTIONS AND DOES NOT REFLECT THE DEDUCTION OF ANY SALES CHARGES. (4) 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. 6 <Page> EXPENSE EXAMPLE As a shareholder of the Fund, you incur ongoing costs, including management fees; distribution and service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period 02/01/04 - 07/31/04. ACTUAL EXPENSES The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table below provides information about hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing cost of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second line of the table is useful in comparing ongoing costs, and will not help you determine the relative total cost of owning different funds that have transactional costs, such as sales charges (loads), and redemption fees, or exchange fees. <Table> <Caption> BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD * ------------- ------------- --------------- 02/01/04 - 02/01/04 07/31/04 07/31/04 ------------- ------------- --------------- CLASS A Actual $ 1,000.00 $ 1,021.36 $ 11.96 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,013.03 $ 11.96 CLASS B Actual $ 1,000.00 $ 1,019.00 $ 14.06 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,010.94 $ 14.00 CLASS C Actual $ 1,000.00 $ 1,018.73 $ 14.46 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,010.54 $ 14.40 CLASS D Actual $ 1,000.00 $ 1,021.31 $ 11.31 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,013.67 $ 11.27 </Table> - ---------- * EXPENSES ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSE RATIO OF 2.38%, 2.80%, 2.88% AND 2.25% RESPECTIVELY, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 182/366 (TO REFLECT THE ONE-HALF YEAR PERIOD). 7 <Page> MORGAN STANLEY LATIN AMERICAN GROWTH FUND PORTFOLIO OF INVESTMENTS - JULY 31, 2004 (UNAUDITED) <Table> <Caption> NUMBER OF SHARES VALUE - -------------------------------------------------------------------------------- COMMON AND PREFERRED STOCKS (97.9%) BRAZIL (49.3%) AEROSPACE & DEFENSE 15,000 Empresa Brasileira de Aeronautica S.A. (ADR) (Pref.)* $ 429,000 3,000 Empresa Brasileira de Aeronautica S.A. (Pref.) 21,525 -------------- 450,525 -------------- AIRLINES 8,800 Gol - Linhas Aereas Inteligentes S.A. (Pref.)* 149,600 -------------- ELECTRIC UTILITIES 32,506 Companhia Energetica de Minas Gerais (ADR) (Pref.)* 596,810 36,823,000 Companhia Energetica de Minas Gerais (Pref.) 675,109 21,203,000 Companhia Paranaense de Energia - Copel (Pref.) 76,867 -------------- 1,348,786 -------------- FOOD RETAIL 22,500 Companhia Brasileira de Distribuicao Grupo Pao de Acucar (ADR) (Pref.) 426,150 -------------- HOUSEHOLD/PERSONAL CARE 18,200 Natura Cosmeticos S.A. 311,624 -------------- INTEGRATED OIL 61,611 Petroleo Brasileiro S.A. (ADR) 1,742,359 107,261 Petroleo Brasileiro S.A. (ADR) (Pref.) 2,751,245 5,107 Petroleo Brasileiro S.A. (Pref.) 131,333 -------------- 4,624,937 -------------- MAJOR TELECOMMUNICATIONS 121,403,000 Tele Celular Sul Participacoes S.A. (Pref.) 155,901 -------------- OTHER METALS/MINERALS 1,448 Companhia Vale do Rio Doce (Class A) (Pref.) $ 63,794 61,602 Companhia Vale do Rio Doce S.A. (Class A) (ADR) (Pref.) 2,716,648 -------------- 2,780,442 -------------- PULP & PAPER 4,200 Aracruz Celulose S.A. (Class B) (ADR) (Pref.) 145,320 17,362 Votorantim Celulose e Papel S.A. (ADR) (Pref.) 620,865 2,104,000 Votorantim Celulose e Papel S.A. (Pref.) 150,328 -------------- 916,513 -------------- RAILROADS 17,000 All America Latina Logistica* 288,558 -------------- REGIONAL BANKS 21,963 Banco Bradesco S.A. 1,012,275 9,031 Banco Bradesco S.A. (Pref.) 417,204 26,135 Banco Itau Holding Financeira S.A. (ADR) (Pref.)* 1,208,482 6,392,797 Banco Itau Holding Financeira S.A. (Pref.) 593,581 27,950 Unibanco-Uniao de Bancos Brasileiros S.A. (GDR) (Units)++ 606,795 -------------- 3,838,337 -------------- SPECIALTY TELECOMMUNICATIONS 80,852,300 Embratel Participacoes S.A. (Pref.) 211,116 -------------- STEEL 11,352 Companhia Siderurgica Nacional S.A. 164,430 5,100 Companhia Siderurgica Nacional S.A. (ADR) 73,950 42,382 Gerdau S.A. (ADR) (Pref.) 602,672 4,728 Gerdau S.A. (Pref.) 67,238 </Table> SEE NOTES TO FINANCIAL STATEMENTS 8 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - -------------------------------------------------------------------------------- 50,026 Usinas Siderurgicas de Minas Gerais S.A. (Class A) (Pref.) $ 710,774 -------------- 1,619,064 -------------- WIRELESS TELECOMMUNICATIONS 62,659 Telesp Celular Participacoes S.A. (ADR) (Pref.)* 413,549 434,355,202 Telesp Celular Participacoes S.A. (Pref.)* 1,162,762 -------------- 1,576,311 -------------- TOTAL BRAZIL 18,697,864 -------------- CHILE (4.2%) ELECTRIC UTILITIES 158,800 Enersis S.A. (ADR)* 944,860 -------------- REGIONAL BANKS 24,375 Banco Santander Chile S.A. (ADR) 648,375 -------------- TOTAL CHILE 1,593,235 -------------- COLOMBIA (0.7%) BANKING 43,200 Bancolombia S.A. (ADR) (Pref.) 287,280 -------------- LUXEMBOURG (1.3%) OILFIELD SERVICES/EQUIPMENT 13,385 Tenaris S.A. (ADR) 475,970 -------------- MEXICO (39.6%) BEVERAGES: NON-ALCOHOLIC 30,500 Coca-Cola Femsa S.A. de C.V. (Series L) (ADR) (Mexico)* 625,250 16,000 Fomento Economico Mexicano, S.A. de C.V. (ADR) (Units)++* 703,040 -------------- 1,328,290 -------------- BROADCASTING 54,100 Grupo Televisa S.A. - CPO (ADR) 2,542,700 -------------- CONSTRUCTION MATERIALS 22,914 Cemex S.A. de C.V. - CPO $ 129,474 32,240 Cemex S.A. de C.V. - CPO (ADR) 908,523 -------------- 1,037,997 -------------- DISCOUNT STORES 891,982 Wal-Mart de Mexico S.A. de C.V. (Series V) 2,719,316 -------------- ENGINEERING & CONSTRUCTION 264,300 Empresas ICA Sociedad Controladora S.A. de C.V.* 77,565 -------------- INDUSTRIAL CONGLOMERATES 51,300 Alfa, S.A. (Class A) 169,876 -------------- MAJOR TELECOMMUNICATIONS 71,200 Carso Global Telecom (Series A1)* 101,358 44,891 Telefonos de Mexico S.A. de C.V. (Series L) (ADR) 1,386,234 -------------- 1,487,592 -------------- OTHER METALS/MINERALS 63,800 Grupo Mexico S.A. de C.V. (Series B)* 213,785 -------------- OTHER TRANSPORTATION 14,800 Grupo Aeroportuario del Sureste S.A. de C.V. (Series B) (ADR) 315,240 -------------- REAL ESTATE DEVELOPMENT 150,400 Corporacion GEO, S.A. de C.V. (Series B)* 205,540 -------------- REGIONAL BANKS 22,700 Grupo Financiero Banorte S.A. de C.V. (O shares) 83,502 -------------- WIRELESS TELECOMMUNICATIONS 135,653 America Movil S.A. de C.V. (Series L) (ADR) 4,846,882 -------------- TOTAL MEXICO 15,028,285 -------------- </Table> SEE NOTES TO FINANCIAL STATEMENTS 9 <Page> <Table> <Caption> NUMBER OF SHARES VALUE - -------------------------------------------------------------------------------- PERU (0.9%) PRECIOUS METALS 15,400 Compania de Minas Buenaventura S.A. (ADR) $ 331,562 -------------- VENEZUELA (1.9%) MAJOR TELECOMMUNICATIONS 37,000 Compania Anonima Nacional Telefonos de Venezuela (Class D) (ADR) 738,890 -------------- TOTAL COMMON AND PREFERRED STOCKS (COST $33,667,103) 37,153,086 -------------- <Caption> PRINCIPAL AMOUNT IN THOUSANDS - -------------- SHORT-TERM INVESTMENT (0.1%) REPURCHASE AGREEMENT $ 43 Joint repurchase agreement account 1.35% due 08/02/04 (dated 07/30/04; proceeds $43,005) (a) (COST $43,000) 43,000 -------------- TOTAL INVESTMENTS (COST $33,710,103)(b) 98.0% 37,196,086 OTHER ASSETS IN EXCESS OF LIABILITIES 2.0 762,411 ----- -------------- NET ASSETS 100.0% $ 37,958,497 ===== ============== </Table> - ---------- ADR AMERICAN DEPOSITORY RECEIPT. GDR GLOBAL DEPOSITORY RECEIPT. * NON-INCOME PRODUCING SECURITY. ++ CONSISTS OF ONE OR MORE CLASS OF SECURITIES TRADED TOGETHER AS A UNIT; STOCKS WITH ATTACHED WARRANTS. (a) COLLATERALIZED BY FEDERAL AGENCY AND U.S. TREASURY OBLIGATIONS. (b) THE AGGREGATE COST FOR FEDERAL INCOME TAX PURPOSES APPROXIMATES THE AGGREGATE COST FOR BOOK PURPOSES. THE AGGREGATE GROSS UNREALIZED APPRECIATION IS $4,739,328 AND THE AGGREGATE GROSS UNREALIZED DEPRECIATION IS $1,253,345, RESULTING IN NET UNREALIZED APPRECIATION OF $3,485,983. FORWARD FOREIGN CURRENCY CONTRACTS OPEN AT JULY 31, 2004: <Table> <Caption> UNREALIZED CONTRACTS IN EXCHANGE DELIVERY APPRECIATION/ TO DELIVER FOR DATE (DEPRECIATION) - -------------------------------------------------------- $ 56,922 MXN 650,484 08/03/04 $ 63 $ 13,874 BRL 41,970 08/02/04 (55) BRL 40,416 $ 13,360 08/04/04 52 MXN 760,725 $ 66,681 08/02/04 38 ----- Net unrealized appreciation $ 98 ===== </Table> CURRENCY ABBREVIATIONS: BRL Brazilian Real. MXN Mexican Peso. SEE NOTES TO FINANCIAL STATEMENTS 10 <Page> MORGAN STANLEY LATIN AMERICAN GROWTH FUND SUMMARY OF INVESTMENTS - JULY 31, 2004 (UNAUDITED) <Table> <Caption> PERCENT OF INDUSTRY* VALUE NET ASSETS - -------------------------------------------------------------------------------- Wireless Telecommunications $ 6,423,193 16.9% Integrated Oil 4,624,937 12.2 Regional Banks 4,570,214 12.0 Other Metals/Minerals 2,994,227 7.9 Discount Stores 2,719,316 7.2 Broadcasting 2,542,700 6.7 Major Telecommunications 2,382,383 6.3 Electric Utilities 2,293,646 6.0 Steel 1,619,064 4.3 Beverages: Non-Alcoholic 1,328,290 3.5 Construction Materials 1,037,998 2.7 Pulp & Paper 916,513 2.4 Oilfield Services/Equipment 475,970 1.3 Aerospace & Defense 450,525 1.2 Food Retail 426,150 1.1 Precious Metals 331,562 0.9 Other Transportation 315,240 0.8 Household/Personal Care 311,623 0.8 Railroads 288,558 0.8 Banking 287,280 0.8 Specialty Telecommunications 211,116 0.6 Real Estate Development 205,540 0.5 Industrial Conglomerates 169,876 0.4 Airlines 149,600 0.4 Engineering & Construction 77,565 0.2 Repurchase Agreement 43,000 0.1 ------------- ---- $ 37,196,086 98.0% ============= ==== </Table> - ---------- * DOES NOT INCLUDE OUTSTANDING FORWARD FOREIGN CURRENCY CONTRACTS USED TO HEDGE FOREIGN CURRENCY EXPOSURE ON UNSETTLED PORTFOLIO TRANSACTIONS. <Table> <Caption> PERCENT OF TYPE OF INVESTMENT VALUE NET ASSETS - -------------------------------------------------------------------------------- Common Stocks $ 22,367,933 58.9% Preferred Stocks 14,785,153 39.0 Short-Term Investment 43,000 0.1 ------------- ---- $ 37,196,086 98.0% ============= ==== </Table> SEE NOTES TO FINANCIAL STATEMENTS 11 <Page> MORGAN STANLEY LATIN AMERICAN GROWTH FUND FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES JULY 31, 2004 (UNAUDITED) <Table> ASSETS: Investments in securities, at value (cost $33,710,103) $ 37,196,086 Cash (including $21,351 in foreign currency) 22,252 Receivable for: Investments sold 1,029,788 Dividends 122,277 Prepaid expenses and other assets 49,265 -------------- TOTAL ASSETS 38,419,668 -------------- LIABILITIES: Payable for: Investments purchased 293,386 Shares of beneficial interest redeemed 76,349 Investment management fee 40,815 Accrued expenses and other payables 50,621 -------------- TOTAL LIABILITIES 461,171 -------------- NET ASSETS $ 37,958,497 ============== COMPOSITION OF NET ASSETS: Paid-in-capital $ 58,657,138 Net unrealized appreciation 3,485,913 Accumulated undistributed net investment income 200,709 Accumulated net realized loss (24,385,263) -------------- NET ASSETS $ 37,958,497 ============== CLASS A SHARES: Net Assets $ 525,653 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE) 41,471 NET ASSET VALUE PER SHARE $ 12.68 ============== MAXIMUM OFFERING PRICE PER SHARE, (NET ASSET VALUE PLUS 5.54% OF NET ASSET VALUE) $ 13.38 ============== CLASS B SHARES: Net Assets $ 35,953,415 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE) 2,935,664 Net Asset Value Per Share $ 12.25 ============== CLASS C SHARES: Net Assets $ 459,686 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE) 37,496 Net Asset Value Per Share $ 12.26 ============== CLASS D SHARES: Net Assets $ 1,019,743 Shares Outstanding (UNLIMITED AUTHORIZED, $.01 PAR VALUE) 79,832 Net Asset Value Per Share $ 12.77 ============== </Table> SEE NOTES TO FINANCIAL STATEMENTS 12 <Page> STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JULY 31, 2004 (UNAUDITED) <Table> NET INVESTMENT INCOME: INCOME Dividends (net of $45,904 foreign withholding tax) $ 884,566 Interest 1,975 -------------- TOTAL INCOME 886,541 -------------- EXPENSES Investment management fee 282,148 Distribution fee (Class A shares) 397 Distribution fee (Class B shares) 114,883 Distribution fee (Class C shares) 2,047 Transfer agent fees and expenses 74,873 Registration fees 61,962 Shareholder reports and notices 31,921 Professional fees 27,728 Custodian fees 24,081 Trustees' fees and expenses 187 Other 4,051 -------------- TOTAL EXPENSES 624,278 -------------- NET INVESTMENT INCOME 262,263 -------------- NET REALIZED AND UNREALIZED GAIN (LOSS): NET REALIZED GAIN/LOSS ON: Investments 4,970,304 Foreign exchange transactions (8,093) -------------- NET REALIZED GAIN 4,962,211 -------------- NET CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION ON: Investments (4,827,229) Translation of forward foreign currency contracts, other assets and liabilities denominated in foreign currencies 378 -------------- NET DEPRECIATION (4,826,851) -------------- NET GAIN 135,360 -------------- Net Increase $ 397,623 ============== </Table> SEE NOTES TO FINANCIAL STATEMENTS 13 <Page> STATEMENT OF CHANGES IN NET ASSETS <Table> <Caption> FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED JULY 31, 2004 JANUARY 31, 2004 ------------- ---------------- (UNAUDITED) INCREASE (DECREASE) IN NET ASSETS: OPERATIONS: Net investment income $ 262,263 $ 219,102 Net realized gain 4,962,211 3,347,325 Net change in unrealized appreciation/depreciation (4,826,851) 17,427,430 ------------ ------------ NET INCREASE 397,623 20,993,857 ------------ ------------ DIVIDENDS TO SHAREHOLDERS FROM NET INVESTMENT INCOME: Class A shares (6,436) -- Class B shares (145,586) -- Class C shares (1,757) -- Class D shares (29,515) -- ------------ ------------ TOTAL DIVIDENDS (183,294) -- ------------ ------------ Net decrease from transactions in shares of beneficial interest (13,696,627) (4,085,596) ------------ ------------ NET INCREASE (DECREASE) (13,482,298) 16,908,261 NET ASSETS: Beginning of period 51,440,795 34,532,534 ------------ ------------ END OF PERIOD (INCLUDING ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME OF $200,709 AND $121,740, RESPECTIVELY) $ 37,958,497 $ 51,440,795 ============ ============ </Table> SEE NOTES TO FINANCIAL STATEMENTS 14 <Page> MORGAN STANLEY LATIN AMERICAN GROWTH FUND NOTES TO FINANCIAL STATEMENTS - JULY 31, 2004 (UNAUDITED) 1. ORGANIZATION AND ACCOUNTING POLICIES Morgan Stanley Latin American Growth Fund (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a non-diversified, open-end management investment company. The Fund's investment objective is long-term capital appreciation. The Fund 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 following is a summary of significant accounting policies: A. VALUATION OF INVESTMENTS -- (1) an equity portfolio security listed or traded on the New York Stock Exchange ("NYSE") or American Stock Exchange or other exchange is valued at its latest sale price prior to the time when assets are valued; if there were no sales that day, the security is valued at the mean between the last reported bid and asked price; (2) an equity portfolio security listed or traded on the Nasdaq is valued at the Nasdaq Official Closing Price; if there were no sales that day, the security is valued at the mean between the last reported bid and asked price; (3) all other portfolio securities for which over-the-counter market quotations are readily available are valued at the mean between the last reported bid and asked price. In cases where a security is traded on more than one exchange, the security is valued on the exchange designated as the primary market; (4) for equity securities traded on foreign exchanges, the last reported sale price or the latest bid price may be used if there were no sales on a particular day; (5) when market quotations are not readily available or Morgan Stanley Investment Advisors Inc. (the "Investment Manager") determines that the latest sale price, the bid price or the mean between the last reported bid and asked price do not reflect 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 Fund's Trustees. Occasionally, developments affecting 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 developments occur during such periods that are expected to materially affect the value of such securities, such valuations may be adjusted to reflect the estimated fair value of such securities as of the close of the NYSE, as determined in good faith by the Fund's Trustees or by the Investment Manager using a pricing service and/or procedures approved by the Trustees of the Fund; (6) certain portfolio securities may be valued by an outside pricing service 15 <Page> approved by the Fund's Trustees; and (7) 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 and premiums are amortized over the life of the respective securities. Interest income is accrued daily. C. REPURCHASE AGREEMENTS -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other affiliated entities managed by the Investment Manager, may transfer uninvested cash balances into one or more joint repurchase agreement accounts. These balances are invested in one or more repurchase agreements and are collateralized by cash, U.S. Treasury or federal agency obligations. The Fund may also invest directly with institutions in repurchase agreements. The Fund's custodian receives the collateral, which is marked-to-market daily to determine that the value of the collateral does not decrease below the repurchase price plus accrued interest. D. 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. E. FOREIGN CURRENCY TRANSLATION AND FORWARD FOREIGN CURRENCY CONTRACTS -- 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 ("forward contracts") are translated at the exchange rates prevailing at the end of the period; and (2) purchases, sales, income and expenses are translated at the exchange rates prevailing on the respective dates of such transactions. The resultant exchange gains and losses are recorded 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. Forward contracts are valued daily at the appropriate exchange rates. The resultant unrealized exchange gains and losses are recorded 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. 16 <Page> F. FEDERAL INCOME TAX POLICY -- It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable income to its shareholders. Accordingly, no federal income tax provision is required. G. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends and distributions to shareholders are recorded on the ex-dividend date. H. USE OF ESTIMATES -- 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. 2. INVESTMENT MANAGEMENT AGREEMENT Pursuant to an Investment Management Agreement, 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. 3. PLAN OF DISTRIBUTION Shares of the Fund are distributed by Morgan Stanley 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 -- up to 1.0% of the lesser of: (a) the average daily aggregate 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 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 totaled $22,260,645 at July 31, 2004. 17 <Page> 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 Financial Advisors or other selected broker-dealer representatives may be reimbursed in the subsequent calendar year. For the six months ended July 31, 2004, the distribution fee was accrued for Class A shares and Class C shares at the annual rate of 0.13% and 0.63%, respectively. The Distributor has informed the Fund that for the six months ended July 31, 2004, it received contingent deferred sales charges from certain redemptions of the Fund's Class A shares, Class B shares and Class C shares of $135, $8,634 and $198, respectively and received $2,290 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 TRANSACTIONS WITH AFFILIATES The cost of purchases and proceeds from sales of portfolio securities, excluding short-term investments, for the six months ended July 31, 2004 aggregated $13,439,566 and $27,401,867, respectively. For the six months ended July 31, 2004, the Fund incurred brokerage commissions of $561 with Morgan Stanley & Co., Inc., an affiliate of the Investment Manager and Distributor, for the portfolio transactions executed on behalf of the Fund. At July 31, 2004, Morgan Stanley Fund of Funds -- International Portfolio, an affiliate of the Investment Manager and Distributor, held 56,975 Class D shares of beneficial interest of the Fund. Morgan Stanley Trust, an affiliate of the Investment Manager and Distributor, is the Fund's transfer agent. At July 31, 2004, the Fund had transfer agent fees and expenses payable of approximately $6,900. 18 <Page> 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, 2004 JANUARY 31, 2004 -------------------------- --------------------------- (UNAUDITED) SHARES AMOUNT SHARES AMOUNT ---------- ------------- ---------- ------------ CLASS A SHARES Sold 5,285 $ 69,970 42,684 $ 498,529 Reinvestment of dividends 450 5,487 -- -- Redeemed (15,757) (196,532) (31,240) (332,161) ---------- ------------- ---------- ------------ Net increase (decrease) -- Class A (10,022) (121,075) 11,444 166,368 ---------- ------------- ---------- ------------ CLASS B SHARES Sold 89,736 1,145,753 319,093 3,276,124 Reinvestment of dividends 11,175 131,642 -- -- Redeemed (995,923) (11,764,106) (1,105,881) (10,166,806) ---------- ------------- ---------- ------------ Net decrease -- Class B (895,012) (10,486,711) (786,788) (6,890,682) ---------- ------------- ---------- ------------ CLASS C SHARES Sold 4,560 58,401 55,618 581,610 Reinvestment of dividends 141 1,665 -- -- Redeemed (49,877) (604,633) (14,923) (141,884) ---------- ------------- ---------- ------------ Net increase (decrease) -- Class C (45,176) (544,567) 40,695 439,726 ---------- ------------- ---------- ------------ CLASS D SHARES Sold 16,266 219,804 272,717 2,822,902 Reinvestment of dividends 458 5,627 -- -- Redeemed (219,837) (2,769,705) (63,982) (623,910) ---------- ------------- ---------- ------------ Net increase (decrease) -- Class D (203,113) (2,544,274) 208,735 2,198,992 ---------- ------------- ---------- ------------ Net decrease in Fund (1,153,323) $ (13,696,627) (525,914) $ (4,085,596) ========== ============= ========== ============ </Table> 6. FEDERAL INCOME TAX STATUS 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 tax purposes are reported as distributions of paid-in-capital. As of January 31, 2004, the Fund had a net capital loss carryforward of $29,249,788 of which $19,838,661 will expire on January 31, 2005, $3,057,904 will expire on January 31, 2007, $2,899,656 19 <Page> will expire on January 31, 2008 and $3,453,567 will expire on January 31, 2011 to offset future capital gains to the extent provided by regulations. As of January 31, 2004, the Fund had temporary book/tax differences attributable to post-October losses (foreign currency losses incurred after October 31 within the taxable year which are deemed to arise on the first business day of the Fund's next taxable year), capital loss deferrals on wash sales and foreign tax credit pass-through. 7. PURPOSES OF AND RISKS RELATING TO CERTAIN FINANCIAL INSTRUMENTS The Fund may enter into 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, 2004, the Fund's cash balance consisted principally of interest bearing deposits with J.P. Morgan Chase, the Fund's custodian. At July 31, 2004, investment in securities of issuers in Mexico and Brazil represented 39.6% and 49.3% of net assets, respectively. These investments, as well as other non-U.S. investments which involve risks and considerations not present with respect to U.S. securities, may be affected by economic or political developments in these regions. 8. LEGAL MATTERS The Investment Manager, certain affiliates of the Investment Manager, certain officers of such affiliates and certain investment companies advised by the Investment Manager or its affiliates, including the Fund, are named as defendants in a number of similar class action complaints which were recently consolidated. This consolidated action also names as defendants certain individual Trustees and Directors of the Morgan Stanley funds. The consolidated amended complaint generally alleges that defendants, including the Fund, violated their statutory disclosure obligations and fiduciary duties by failing properly to disclose (i) that the Investment Manager and certain affiliates of the Investment Manager allegedly offered economic incentives to brokers and others to recommend the funds advised by the Investment Manager or its affiliates to investors rather than funds managed by other companies, and (ii) that the funds advised by the Investment Manager or its affiliates, including the Fund, allegedly paid excessive commissions to brokers in return for their efforts to recommend these funds to investors. 20 <Page> The complaint seeks, among other things, unspecified compensatory damages, rescissionary damages, fees and costs. The defendants have moved to dismiss the action and intend to otherwise vigorously defend it. While the Fund believes that it has meritorious defenses, the ultimate outcome of this matter is not presently determinable at this early stage of the litigation, and no provision has been made in the Fund's financial statements for the effect, if any, of this matter. 9. FUND LIQUIDATION On April 22, 2004, the Board of Trustees of the Fund recommended the liquidation of the Fund. The liquidation is subject to the approval of the Fund's shareholders at a meeting scheduled to be held on or about September 28, 2004. If approved, the liquidation will occur as soon as is reasonable and practicable. Effective April 30, 2004, the Fund ceased offering its shares and ceased accruing its distribution fee. 21 <Page> MORGAN STANLEY 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 SIX FOR THE YEAR ENDED JANUARY 31, MONTHS ENDED ------------------------------------------------------- JULY 31, 2004 2004 2003 2002 2001 2000 ------------- -------- -------- -------- -------- -------- (UNAUDITED) CLASS A SHARES SELECTED PER SHARE DATA: Net asset value, beginning of period $ 12.57 $ 7.47 $ 10.02 $ 11.90 $ 12.26 $ 7.33 --------- -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income (loss)++ 0.10 0.11 0.08 0.14 0.00 (0.01) Net realized and unrealized gain (loss) 0.16 4.99 (2.51) (2.02) (0.36) 4.94 --------- -------- -------- -------- -------- -------- Total income (loss) from investment operations 0.26 5.10 (2.43) (1.88) (0.36) 4.93 --------- -------- -------- -------- -------- -------- Less dividends from net investment income (0.15) - (0.12) - - - --------- -------- -------- -------- -------- -------- Net asset value, end of period $ 12.68 $ 12.57 $ 7.47 $ 10.02 $ 11.90 $ 12.26 ========= ======== ======== ======== ======== ======== TOTAL RETURN+ 2.14%(1) 68.27% (24.40)% (15.80)% (2.62)% 66.71% RATIOS TO AVERAGE NET ASSETS(3): Expenses 2.38%(2) 2.43% 2.52% 2.20% 1.96% 2.28% Net investment income 1.55%(2) 1.25% 0.91% 1.15% 0.05% 0.16% SUPPLEMENTAL DATA: Net assets, end of period, in thousands $ 526 $ 647 $ 299 $ 547 $ 936 $ 751 Portfolio turnover rate 30%(1) 78% 57% 73% 44% 59% </Table> - ---------- ++ 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 22 <Page> <Table> <Caption> FOR THE SIX FOR THE YEAR ENDED JANUARY 31, MONTHS ENDED -------------------------------------------------------- JULY 31, 2004 2004 2003 2002 2001 2000 ------------- -------- -------- -------- -------- --------- (UNAUDITED) CLASS B SHARES SELECTED PER SHARE DATA: Net asset value, beginning of period $ 12.06 $ 7.23 $ 9.66 $ 11.55 $ 11.99 $ 7.24 --------- -------- -------- -------- -------- --------- Income (loss) from investment operations: Net investment income (loss)++ 0.07 0.05 0.01 0.04 (0.09) (0.06) Net realized and unrealized gain (loss) 0.17 4.78 (2.41) (1.93) (0.35) 4.81 --------- -------- -------- -------- -------- --------- Total income (loss) from investment operations 0.24 4.83 (2.40) (1.89) (0.44) 4.75 --------- -------- -------- -------- -------- --------- Less dividends from net investment income (0.05) - (0.03) - - - --------- -------- -------- -------- -------- --------- Net asset value, end of period $ 12.25 $ 12.06 $ 7.23 $ 9.66 $ 11.55 $ 11.99 ========= ======== ======== ======== ======== ========= TOTAL RETURN+ 1.90%(1) 66.94% (24.90)% (16.36)% (3.43)% 65.19% RATIOS TO AVERAGE NET ASSETS(3): Expenses 2.80%(2) 3.20% 3.27% 2.96% 2.77% 3.06% Net investment income (loss) 1.13%(2) 0.48% 0.16% 0.39% (0.76)% (0.62)% SUPPLEMENTAL DATA: Net assets, end of period, in thousands $ 35,953 $ 46,209 $ 33,372 $ 60,159 $ 99,431 $ 136,699 Portfolio turnover rate 30%(1) 78% 57% 73% 44% 59% </Table> - ---------- ++ THE PER SHARE AMOUNTS WERE COMPUTED USING AN AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE PERIOD. + DOES NOT REFLECT THE DEDUCTION OF SALES CHARGE. CALCULATED BASED ON THE NET ASSET VALUE AS OF THE LAST BUSINESS DAY OF THE PERIOD. (1) NOT ANNUALIZED. (2) ANNUALIZED. (3) REFLECTS OVERALL FUND RATIOS FOR INVESTMENT INCOME AND NON-CLASS SPECIFIC EXPENSES. SEE NOTES TO FINANCIAL STATEMENTS 23 <Page> <Table> <Caption> FOR THE SIX FOR THE YEAR ENDED JANUARY 31, MONTHS ENDED ------------------------------------------------------- JULY 31, 2004 2004 2003 2002 2001 2000 ------------- -------- -------- -------- -------- -------- (UNAUDITED) CLASS C SHARES SELECTED PER SHARE DATA: Net asset value, beginning of period $ 12.07 $ 7.23 $ 9.69 $ 11.57 $ 12.02 $ 7.24 --------- -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income (loss)++ 0.06 0.04 0.01 0.04 (0.09) (0.06) Net realized and unrealized gain (loss) 0.17 4.80 (2.42) (1.92) (0.36) 4.84 --------- -------- -------- -------- -------- -------- Total income (loss) from investment operations 0.23 4.84 (2.41) (1.88) (0.45) 4.78 --------- -------- -------- -------- -------- -------- Less dividends from net investment income (0.04) - (0.05) - - - --------- -------- -------- -------- -------- -------- Net asset value, end of period $ 12.26 $ 12.07 $ 7.23 $ 9.69 $ 11.57 $ 12.02 ========= ======== ======== ======== ======== ======== TOTAL RETURN+ 1.87%(1) 67.08% (24.88)% (16.34)% (3.42)% 65.47% RATIOS TO AVERAGE NET ASSETS(3): Expenses 2.88%(2) 3.20% 3.24% 2.88% 2.77% 2.95% Net investment income (loss) 1.05%(2) 0.48% 0.19% 0.47% (0.76)% (0.51)% SUPPLEMENTAL DATA: Net assets, end of period, in thousands $ 460 $ 998 $ 304 $ 504 $ 887 $ 776 Portfolio turnover rate 30%(1) 78% 57% 73% 44% 59% </Table> - ---------- ++ 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> <Table> <Caption> FOR THE SIX FOR THE YEAR ENDED JANUARY 31, MONTHS ENDED ------------------------------------------------------- JULY 31, 2004 2004 2003 2002 2001 2000 ------------- -------- -------- -------- -------- -------- (UNAUDITED) CLASS D SHARES SELECTED PER SHARE DATA: Net asset value, beginning of period $ 12.68 $ 7.52 $ 10.11 $ 11.97 $ 12.30 $ 7.35 --------- -------- -------- -------- -------- -------- Income (loss) from investment operations: Net investment income (loss)++ 0.11 0.13 0.15 0.14 0.00 (0.02) Net realized and unrealized gain (loss) 0.15 5.03 (2.59) (2.00) (0.33) 4.97 --------- -------- -------- -------- -------- -------- Total income (loss) from investment operations 0.26 5.16 (2.44) (1.86) (0.33) 4.95 --------- -------- -------- -------- -------- -------- Less dividends from net investment income (0.17) - (0.15) - - - --------- -------- -------- -------- -------- -------- Net asset value, end of period $ 12.77 $ 12.68 $ 7.52 $ 10.11 $ 11.97 $ 12.30 ========= ======== ======== ======== ======== ======== TOTAL RETURN+ 2.13%(1) 68.62% (24.24)% (15.54)% (2.37)% 66.80% RATIOS TO AVERAGE NET ASSETS(3): Expenses 2.25%(2) 2.20% 2.27% 1.96% 1.77% 2.06% Net investment income 1.68%(2) 1.48% 1.16% 1.39% 0.24% 0.38% SUPPLEMENTAL DATA: Net assets, end of period, in thousands $ 1,020 $ 3,587 $ 558 $ 5,455 $ 9,262 $ 588 Portfolio turnover rate 30%(1) 78% 57% 73% 44% 59% </Table> - ---------- ++ 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 25 <Page> (This page has been left blank intentionally.) <Page> (This page has been left blank intentionally.) <Page> TRUSTEES Michael Bozic Charles A. Fiumefreddo Edwin J. Garn Wayne E. Hedien James F. Higgins Dr. Manuel H. Johnson Joseph J. Kearns Michael E. Nugent Fergus Reid OFFICERS Charles A. Fiumefreddo CHAIRMAN OF THE BOARD Mitchell M. Merin PRESIDENT Ronald E. Robison EXECUTIVE VICE PRESIDENT AND PRINCIPAL EXECUTIVE OFFICER Barry Fink VICE PRESIDENT Joseph J. McAlinden VICE PRESIDENT Stefanie V. Chang VICE PRESIDENT Francis J. Smith TREASURER AND CHIEF FINANCIAL OFFICER Thomas F. Caloia VICE PRESIDENT Mary E. Mullin SECRETARY TRANSFER AGENT Morgan Stanley Trust Harborside Financial Center, Plaza Two Jersey City, New Jersey 07311 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Deloitte & Touche LLP Two World Financial Center New York, New York 10281 INVESTMENT MANAGER Morgan Stanley Investment Advisors Inc. 1221 Avenue of the Americas New York, New York 10020 The financial statements included herein have been taken from the records of the Fund without examination by the independent auditors and accordingly they do not express an opinion thereon. This report is submitted for the general information of the shareholders of the Fund. For more detailed information about the Fund, its fees and expenses and other pertinent information, please read its Prospectus. The Fund's Statement of Additional Information contains additional information about the Fund, including its trustees. It is available, without charge, by calling (800) 869-NEWS. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective Prospectus. Read the Prospectus carefully before investing. Investments and services offered through Morgan Stanley DW Inc., member SIPC. Morgan Stanley Distributors Inc., member NASD. (C) 2004 Morgan Stanley [MORGAN STANLEY LOGO] 37939RPT-RA04-00535P-Y07/04 [GRAPHIC] MORGAN STANLEY FUNDS MORGAN STANLEY LATIN AMERICAN GROWTH FUND SEMIANNUAL REPORT JULY 31, 2004 [MORGAN STANLEY LOGO] <Page> 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. [Reserved.] Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable for semiannual reports. Item 8. [Reserved.] Item 9 - 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. There were no significant changes or corrective actions with regard to significant deficiencies or material weaknesses in the Fund's internal controls or in other factors that could significantly affect the Fund's internal controls subsequent to the date of their evaluation. <Page> (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 10 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. <Page> 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. Morgan Stanley Latin American Growth Fund /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer September 20, 2004 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. /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer September 20, 2004 /s/ Francis Smith Francis Smith Principal Financial Officer September 20, 2004