<PAGE>
THE LATIN AMERICA
INVESTMENT FUND, INC.
SEMI-ANNUAL REPORT
JUNE 30, 1996
<PAGE>
CONTENTS
Letter to Shareholders . . . . . . . . . . . . . . . . . . . . . . . 1
Portfolio Summary. . . . . . . . . . . . . . . . . . . . . . . . . . 7
Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . 9
Statement of Assets and Liabilities. . . . . . . . . . . . . . . . . 15
Statement of Operations. . . . . . . . . . . . . . . . . . . . . . . 16
Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . 17
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . 18
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . 19
Results of Annual Meeting of Shareholders. . . . . . . . . . . . . . 24
Description of Dividend Reinvestment and Cash Purchase Plan. . . . . 25
PICTURED ON THE COVER IS THE INTERIOR OF THE MEXICAN STOCK EXCHANGE, BOLSA
MEXICANA DE VALORES, S.A. DE C.V. ("BOLSA"). THE BOLSA, FOUNDED IN 1895, IS
LOCATED IN MEXICO CITY AND IS CURRENTLY THE ONLY STOCK EXCHANGE IN MEXICO.
<PAGE>
LETTER TO SHAREHOLDERS
August 12, 1996
DEAR SHAREHOLDER:
We are pleased to report on the activities of The Latin America Investment Fund,
Inc. (the "Fund") for the six months ended June 30, 1996.
PERFORMANCE
At June 30, 1996, the Fund's net assets were $154.9 million. The Fund's net
asset value ("NAV") was $19.71 per share, as compared to $17.09 on December 31,
1995.
For the period January 1, 1996 through June 30, 1996, the Fund's total return,
based on NAV, was 15.3%. By comparison, the total return of the Morgan Stanley
Capital International Emerging Markets Latin America Free Index (the "Index")
was 17.5%. From the commencement of investment operations on August 1, 1990
through June 30, 1996, the Fund's total return based on NAV and assuming
reinvestment of dividends and distributions increased by 276.4%. The Index rose
241.4% during this period.
INVESTMENT PERSPECTIVE
It is now some 18 months since the so-called "Tequila crisis," which resulted in
the substantial depreciation of the Mexican Peso in December 1994. Many
observers publicly wondered how far-reaching the crisis' impact would be, not
simply on Mexico's economic reform program, but on Latin America as a whole. The
possibility of serious adverse consequences for investors was very real.
Developments since that time have actually proven to be quite positive, with
Mexico's recent $6 billion refinancing perhaps the best example of how much
better things have become. Underlying trends are becoming more favorable, so
much so that we see the process of reform being deepened throughout the region.
In addition, we have noted general improvements in Latin American economic
performance, including:
- - Brazil's successful lowering of inflation, now likely to be less than 15% this
year.
- - Continued foreign exchange stability in Argentina, despite the nervousness
caused by the Tequila crisis.
- - Successful resolution of problems in the Mexican banking system, which at one
point appeared close to collapse.
We believe that the ongoing development and growth of Latin American economies
will continue to offer the Fund many new opportunities in the future. Our theme
is simple: for developing economies to grow, basic as well as increasingly
sophisticated goods and services must be provided. Delivery of the latter on a
level sufficient for growth means that companies providing these and other goods
and services are likely to generate high internal rates of return.
- --------------------------------------------------------------------------------
1
<PAGE>
LETTER TO SHAREHOLDERS
To best illustrate how we have put our investment philosophy to work, we'd like
to discuss a few of our specific holdings.
ENERSIS S.A.
Enersis S.A. ("Enersis"), a Chilean electricity holding company, has been held
in the Fund for some time. It is among the top players within its universe and
fits well with our preference for companies that provide basic goods and
services.
Enersis is the largest and most powerful electricity company in Latin America.
By acquiring and combining providers of generation, transmission and
distribution services, it has assembled a vertically integrated electricity
network extending throughout Chile and into Argentina and Peru. This enables it
to realize operating synergies and economies of scale and enhances its ability
to expand further.
To achieve most of its growth, Enersis acquires less efficient companies (mostly
via foreign privatization) and raises their efficiency and profitability to
levels it has achieved in its own domestic operations. While this is a strategy
that may not be familiar to United States investors, it is not one that they
would typically associate with an electricity company.
Here is a brief summary of why we like Enersis and are inclined to maintain it
as a long-term holding:
- - SHREWD RISK-CONTROL VIA DIVERSIFICATION. By acquiring other regional
utilities, it reduces its reliance for revenues on any one country or
territory, widens its utility specialization into different segments (i.e.,
generation, transmission and distribution), builds a fairly predictable
revenue stream and remains focused on a relatively low-risk business.
- - ATTRACTIVE SERVICE TERRITORY. Electricity demand is increasing in Enersis'
markets. Furthermore, regulation is relatively favorable; unlike in the United
States, utilities are not limited to fixed rates of return, meaning that the
potential for profitability is much higher.
- - HIGH-QUALITY, EXPERIENCED MANAGEMENT TEAM.
- - MULTI-DIMENSIONAL EQUITY PLAY. Enersis shares are a very effective way of
investing in the growing Latin American utility privatization trend; the
strong projected regional demand for electricity and the "safe haven" of the
Chilean economy also make the shares attractive to investors.
- - PRIVATIZATION. Enersis' deep acquisition and operational experience make it a
likely and highly desirable participant in the numerous upcoming privatization
opportunities among Latin American utilities (particularly in Brazil). It is
also the only regional utility company with access to the level of capital
required in the privatization process.
- - DOMESTIC DOMINANCE. Through its controlling equity interests in Chilectra S.A.
and Compania Electrica del Rio Maipo S.A. (Chile's largest and fourth-largest
electricity distribution companies, respectively), as well as Empresa Nacional
de Electricidad S.A. (Chile's largest electricity generation company), Enersis
is Chile's dominant electricity company.
- --------------------------------------------------------------------------------
2
<PAGE>
LETTER TO SHAREHOLDERS
- - STABLE DOMESTIC OWNERSHIP BASE. Chilean pension funds and employee-owned funds
own approximately 64% of Enersis' shares and are likely to hold them for the
very long-term.
TELECOMUNICACOES DO RIO DE JANEIRO S.A.
Since our last report, we have increased our holdings in one of the largest
regional telephone operators in Brazil, Telecomunicacoes do Rio de Janeiro S.A.
("Telerj"), to the Fund's holdings.
We find Telerj appealing for several reasons. It is on the cusp of a transition,
in terms of profitability, service and physical plant, from laggard status to
rising star. Of all the Brazilian phone companies, its sales mix makes it the
potentially greatest beneficiary of the ongoing reconfiguration of the country's
tariff structure. More generally, we see considerable longer-term opportunity
among Brazil's regional operators.
Telerj is the oldest phone company in Brazil (est. 1923) and one of 27 regional
operators, all of which are government controlled. It services the
geographically small state of Rio de Janeiro ("RdJ").
RdJ's small size belies its large status as a telephone market. As a proportion
of Brazil, it accounts for 12.5% of 1995 GDP, 9.0% of the population and about
33.0% of tourism, and its per capita income is 1.5 times the national figure. In
addition, RdJ is a major center both of financial services and industrial
production (e.g., oil, crude steel, cement, beer and soft drinks). About 95% of
its population resides in urban areas. All of these characteristics are strong
positives in terms of telephone service demand.
A variety of company specific factors make Telerj stock a highly attractive
growth vehicle:
- - SUBSTANTIAL GOVERNMENT SUPPORT. After years of politically motivated
under-funding of capital expenditures by the federal government, Telerj has
received a huge funding commitment. So huge, in fact, that Telerj's capital
expenditures program is the most ambitious of any Brazilian phone company. The
1996 spending is estimated at about $1.3 billion, up from an annual average of
$289 million over the previous five years.
- - DRAMATIC IMPROVEMENT OF INFRASTRUCTURE. High capital spending levels over the
next few years will be dedicated both to the expansion and improvement of
service and the upgrading of Telerj's antiquated network. This should
dramatically boost efficiency, which should consequently help to generate
higher revenues and profits.
- - FAVORABLE SALES MIX. Beginning in November 1995, Brazil significantly changed
tariffs for most telephone usage categories. The resulting tariff structure
raised rates for local service and lowered them for domestic long-distance
service. As Telerj's local percentage of revenues is the highest in Brazil and
its domestic long-distance percentage the lowest, it should benefit from the
new tariffs more than any other operator.
- - CELLULAR EXPOSURE. In 1991, Telerj became the first of Brazil's regional
operators to offer cellular phone service. With very low cellular penetration
of its service area, a waiting list roughly twice the size of its existing
cellular network and the highest cellular percentage of revenues in the
country, Telerj is positioned to experience tremendous growth in its cellular
business.
- --------------------------------------------------------------------------------
3
<PAGE>
LETTER TO SHAREHOLDERS
- - PRIVATIZATION. Following successful privatization of many federally controlled
companies, state-level companies (especially utilities and banks) are expected
to follow suit. For Telerj, privatization will bring a greatly increased
access to financing.
- - TURNING NEGATIVES INTO POSITIVES. With recent financial and operating results
relatively poor, upcoming year-over-year comparisons should be extremely
positive. The visibility and perception of Telerj among investors should
improve and the stock price should benefit accordingly.
Clearly, Telerj has outstanding appreciation potential, which we suspect will
ripen over the next few years.
CEMENTOS MEXICANOS, S.A. DE C.V.
Another recent addition to the Fund is Cementos Mexicanos, S.A. de C.V.
("Cemex"). We feel that Cemex has significant positive attributes that make it a
compelling investment:
- - It is the fourth-largest cement producer in the world, one of a handful of
cement companies with international capabilities and the only one of the
latter domiciled in an emerging market. In addition, it dominates cement
production in Mexico.
- - Due to its swelling exports (notably to Asia and Latin America) and overseas
operations, Cemex represents a strong investment play on the growth of
emerging markets' infrastructures.
- - Its overseas acquisition strategy (i.e., "buy, don't build") enables it to
obtain immediate local market share and the pricing power that goes along with
it. Moreover, it has been able to substantially increase the profitability of
acquired operations via cost cutting and improvements in facilities and
processes.
- - It should benefit from the remarkable economic recovery of Mexico, whose
outlook we consider among the emerging world's most promising.
- - Because sales in Mexico have long accounted for most, if not all, of total
sales, we feel that many investors misperceive Cemex as a strictly Mexican
company rather than a budding international giant.
As the dominant player in its home market, Cemex benefits disproportionately
from the Mexican cement industry's high barriers to entry. Barriers include the
substantial investment of capital and time needed to buy or build a plant; a
highly fragmented, mostly retail customer base; control of local distribution
channels by Cemex and number-two producer Cementos Apasco, S.A. de C.V.; cash
costs among the lowest in the world; a lack of suitable substitutes; the
presence of three of the world's five major global players; and the lack of
adequate port facilities for imports.
- --------------------------------------------------------------------------------
4
<PAGE>
LETTER TO SHAREHOLDERS
Beginning in 1992, overseas expansion has been a priority for Cemex, which would
likely reduce its dependence on the Mexican market. It has already made
tremendous progress. The Mexican proportion of total sales dropped to 38% in
1995 from 67% in 1994. Furthermore, long-term, Cemex's goal is to become a truly
global cement company by increasing international sales to two-thirds of total
sales. Why? The answer, simply, is that it is too costly not to do so:
- - Since the other global players (Holderbank [Switzerland], Lafarge [France],
Italcementi [Italy] and Blue Circle [United Kingdom]) have entrenched
positions in many world markets, Cemex must expand in order to be competitive.
- - As the global players continue to consolidate market share and power, overseas
acquisition candidates for Cemex decline in number and rise in price.
- - Expansion brings with it the potential for diversification of cash flows,
margin improvement, greater pricing flexibility and access to capital markets
in other countries.
- - Higher margins and pricing flexibility are two especially attractive features
of emerging markets.
Cement demand in Mexico has been weak for most of the period since late 1994.
This is changing, however, as pricing is firming, government sponsored
construction programs are being legislated and, generally, the strengthening
Mexican economy puts the agonizing Tequila crisis in the past. Cement company
stock performance has reflected the downturn, and we sense that prices will rise
as the improving environment becomes clearer to investors.
OUTLOOK
In the near-term, we have fairly favorable views on the Fund's core markets:
- - ARGENTINA'S prospects are far less clear following the July dismissal of
Economic Minister Cavallo, who was the primary force behind his country's
remarkable economic turnaround. Uncertainty may well pervade the local
economic environment for some time.
- - BRAZIL continues to progress along its course of economic liberalization, much
to the Fund's benefit. Strong fundamentals do not justify the recent sell off
in Brazilian equities, whose valuation levels are now more attractive than
previously. Our outlook remains auspicious.
- - We see no reason to suggest that CHILE'S reputation as the safe haven among
Latin American markets has changed. Therefore, we have confidence in the
positive prospects for Chilean equities.
- - Economic developments in MEXICO, we suspect, will be meaningfully affected by
political considerations as the 1997 congressional elections draw nearer. The
likelihood of an associated upturn in government spending bodes especially
well for our consumer and infrastructure-related holdings.
Looking further ahead, we feel optimistic about equities in Latin America. The
global monetary environment appears to be less of a concern, while overall
worldwide growth should pick up. There is less worry about current account
deficits within the region and the corporate sector has responded well to tough
business conditions. The operational leverage of many companies, furthermore, is
quite high due to rising volumes and reduced costs.
- --------------------------------------------------------------------------------
5
<PAGE>
LETTER TO SHAREHOLDERS
Finally, we think that, in the aggregate, political developments have been very
positive. Indeed, Latin governments have chosen to adopt even more austere
economic policies despite the problems caused by the Tequila crisis. We view
this as a rather favorable trend and, all in all, we sense good potential for
long-term appreciation.
We wish to remind shareholders whose shares are registered in their own name
that they automatically participate in the Fund's dividend reinvestment program.
The automatic Dividend Reinvestment Plan (the "Plan") can be of value to
shareholders in maintaining their proportional ownership interest in the Fund in
an easy and convenient way. A shareholder whose shares are held in the name of a
broker/dealer or nominee should contact that party for details about
participating in the Plan. The Fund also offers shareholders a voluntary Cash
Purchase Plan. The Plan and the Cash Purchase Plan are described on pages 25 and
26 of this report.
We appreciate your continued confidence in the Fund and would be pleased to
respond to your questions and comments.
Sincerely yours,
[SIG]
Emilio Bassini*
President and Chief Investment Officer
- --------------------------------------------------------------------------------
* Emilio Bassini, who is a member of the Executive Committee and Executive
Director of BEA Associates, is primarily responsible for management of the
Fund's assets. He has served in such capacity since the commencement of the
Fund's operations. Mr. Bassini joined BEA Associates (formerly Basic Appraisals,
Inc. and BEA Associates, Inc.) in 1984. Mr. Bassini is a Director, Chairman of
the Board, President and Chief Investment Officer of the Fund and is also a
Director, Chairman of the Board, President and Chief Investment Officer of The
Chile Fund, Inc., The Emerging Markets Infrastructure Fund, Inc., The Emerging
Markets Telecommunications Fund, Inc., The First Israel Fund, Inc., The Latin
America Equity Fund, Inc. and The Portugal Fund, Inc. He is also the President
and Secretary of The Indonesia Fund, Inc., and Director, Chairman of the Board,
President and Investment Officer of The Brazilian Equity Fund, Inc. He is also
the managing principal of Bassini, Playfair + Associates LLC.
Peter Wilby, of Salomon Brothers Asset Management Inc. ("SBAM") is responsible
for managing the Fund's sovereign debt portfolio. Mr. Wilby, who joined SBAM in
1989, is a Senior Portfolio Manager responsible for SBAM's portfolios which
invest in high yield sovereign debt and high yield corporate securities. Prior
to that time, Mr. Wilby managed high yield bonds and leveraged equities in
mutual funds and institutional portfolios for Prudential Capital Management
Group ("Prudential"). He had previously served as director of Prudential's
credit research unit and as a corporate and sovereign credit analyst with
Prudential. Mr. Wilby is a Chartered Financial Analyst and a Certified Public
Accountant.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
PORTFOLIO SUMMARY - AS OF JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
GEOGRAPHIC ASSET BREAKDOWN
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
6/30/96 12/31/95
Argentina 6.84% 13.44%
Bolivia 0.64% 0.63%
Brazil 28.88% 25.05%
Chile 26.11% 28.62%
Colombia 3.23% 2.37%
Ecuador 1.43% 1.43%
Latin America 1.19% 2.53%
Mexico 15.49% 14.61%
Panama 0.72% 0.00%
Peru 6.68% 4.90%
Puerto Rico 0.97% 0.95%
Venezuela 1.22% 2.71%
Cash & Cash Equivalents 6.60% 2.76%
100.0% 100.0%
</TABLE>
SECTOR ALLOCATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
6/30/96 12/31/95
Banking 6.52% 10.43%
Cement 5.90% 3.60%
Electric Distribution 5.27% 5.46%
Electric Generation 2.25% 2.71%
Engineering & Construction 1.80% 2.06%
Food & Beverages 8.53% 11.85%
Forestry 2.55% 3.15%
Holding Companies 4.05% 4.40%
Mining 4.29% 3.57%
Natural Gas 4.66% 5.03%
Retail 2.41% 3.19%
Steel 5.08% 5.15%
Telecommunications 13.11% 12.21%
Utilities 9.86% 9.91%
Fixed or Floating Rate
Investments 3.71% 2.99%
Other 13.42% 11.53%
Cash & Cash Equivalents 6.60% 2.76%
100.0% 100.0%
</TABLE>
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
PORTFOLIO SUMMARY - AS OF JUNE 30, 1996 (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
TOP 10 HOLDINGS, BY ISSUER
<TABLE>
<CAPTION>
Percent of Net
Holding Sector Country Assets
<C> <S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
1. Centrais Eletricas Brasileiras S.A. Utilities Brazil 2.6
- --------------------------------------------------------------------------------------------------------------
2. Companhia Energetica de Minas Gerais Utilities Brazil 2.5
- --------------------------------------------------------------------------------------------------------------
3. Cementos Mexicanos, S.A. de C.V. Cement Mexico 2.3
- --------------------------------------------------------------------------------------------------------------
4. Telefonica del Peru S.A. Telecommunications Peru 2.3
- --------------------------------------------------------------------------------------------------------------
5. Enersis S.A. Electric
Distribution Chile 2.2
- --------------------------------------------------------------------------------------------------------------
6. Corporacion Industrial SanLuis, S.A. de
C.V. Holding Companies Mexico 2.1
- --------------------------------------------------------------------------------------------------------------
7. Companhia Paulista de Forca e Luz Utilities Brazil 2.1
- --------------------------------------------------------------------------------------------------------------
8. Banco de Credito e Inversiones Banking Chile 2.1
- --------------------------------------------------------------------------------------------------------------
9. Telecomunicacoes do Rio de Janeiro S.A. Telecommunications Brazil 2.1
- --------------------------------------------------------------------------------------------------------------
10. Companhia Vale do Rio Doce Mining Brazil 2.0
- --------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS - JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
<S> <C> <C>
- ----------------------------------------------------------
EQUITY OR EQUITY-LINKED SECURITIES-89.69%
ARGENTINA-6.16%
FOOD & BEVERAGES-0.26%
Quilmes Industrial
S.A..................... 26,200 $ 268,550
Quilmes Industrial S.A.
ADR+.................... 13,100 134,275
--------------
402,825
--------------
NATURAL GAS-4.66%
Camuzzi Argentina
S.A.*................... 1,536,387 2,922,899
Capex S.A., Ord.......... 186,844 1,514,004
Compania Naviera Perez
Companc S.A., Class B... 169,500 1,110,641
Sodigas del Sur S.A.*.... 421,485 782,592
Sodigas Pampeana S.A.*... 583,264 886,935
--------------
7,217,071
--------------
RETAIL-0.00%
Domec S.A., Class B+..... 574 1,895
--------------
TELECOMMUNICATIONS-0.84%
Argentine Cellular
Communications Holdings
Ltd.@*+................. 247,262 1,298,126
--------------
UTILITIES-0.40%
Central Puerto S.A.
ADR++................... 33,500 615,395
--------------
TOTAL ARGENTINA (Cost $9,324,989)........ 9,535,312
--------------
BOLIVIA-0.64%
UTILITIES-0.64%
Compania Boliviana de
Energia Electrica S.A.
(Cost $609,600)......... 25,400 996,950
--------------
BRAZIL-28.22%
BANKING-1.83%
Banco Bradesco S.A. PN... 288,817,809 2,358,518
Banco do Brasil S.A.
PN+(a).................. 59,385,000 470,161
--------------
2,828,679
--------------
BUSINESS SERVICES-0.88%
Multibras da Amazonia
S.A. PN................. 1,018,000 1,368,620
--------------
<CAPTION>
No. of Value
Description Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
CHEMICALS & PETROLEUM PRODUCTS-1.45%
Petroleo Brasileiro S.A.
PN...................... 18,221,800 $ 2,241,092
--------------
CONSUMER GOODS-0.08%
Tec Toy Industria e
Comercio PN+............ 373,587,000 130,217
--------------
FOOD & BEVERAGES-2.70%
Companhia Cervejaria
Brahma PN............... 3,489,073 2,081,317
Santista Alimentos S.A.
ON+..................... 1,334,000 2,099,009
--------------
4,180,326
--------------
HOLDING COMPANIES-1.16%
Brasmotor S.A. PN........ 715,000 223,582
Investimentos Itau S.A.
PN...................... 2,050,800 1,572,590
--------------
1,796,172
--------------
MANUFACTURING-1.06%
Continental 2001 S.A.
PN...................... 31,976,978 708,547
Refrigeracao Parana S.A.
PN...................... 375,496,000 934,860
--------------
1,643,407
--------------
MINING-1.97%
Companhia Vale do Rio
Doce ADR................ 112,000 2,254,000
Companhia Vale do Rio
Doce PN................. 41,201 798,048
--------------
3,052,048
--------------
RETAIL-0.43%
Lojas Americanas S.A.
PN...................... 34,114,721 672,680
--------------
STEEL-1.52%
Bardella Industrias S.A.
PN...................... 4,229 473,796
Companhia Siderurgica
Nacional ON............. 42,617,060 1,086,488
Usinas Siderurgicas de
Minas Gerais S.A. PN.... 745,808,000 787,289
--------------
2,347,573
--------------
</TABLE>
- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-4.75%
Telecomunicacoes de Minas
Gerais S.A. ON.......... 2,100,000 $ 171,488
Telecomunicacoes de Minas
Gerais S.A. ON,
Receipts+............... 247,547 20,215
Telecomunicacoes de Minas
Gerais S.A. PNB......... 16,230,000 1,673,024
Telecomunicacoes de Sao
Paulo S.A. PN........... 5,171,877 1,107,358
Telecomunicacoes do
Parana S.A. ON+......... 2,126,000 914,615
Telecomunicacoes do
Parana S.A. PN.......... 596,000 289,052
Telecomunicacoes do Rio
de Janeiro S.A. PN+..... 28,261,000 3,180,295
--------------
7,356,047
--------------
TEXTILES-1.70%
Companhia Tecidos Norte
de Minas S.A. PN........ 6,676,800 2,636,410
--------------
TRANSPORTATION-0.45%
Marcopolo S.A. PN........ 3,016,810 690,698
--------------
UTILITIES-8.24%
Centrais Eletricas
Brasileiras S.A. ON..... 15,200,431 4,087,155
Centrais Eletricas de
Santa Catarin PN+....... 1,598,300 1,496,193
Companhia Energetica de
Minas Gerais PN......... 146,504,750 3,895,510
Companhia Paulista de
Forca e Luz ON+......... 35,930,910 3,291,982
--------------
12,770,840
--------------
TOTAL BRAZIL (Cost $39,649,317).......... 43,714,809
--------------
CHILE-26.11%
BANKING-2.51%
Banco de Credito e
Inversiones............. 373,694 3,219,853
Banco Osorno y La Union,
Class A................. 5,783,975 342,097
<CAPTION>
No. of Value
Description Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
BANKING (CONTINUED)
BiceCorp S.A............. 80,229 $ 331,969
--------------
3,893,919
--------------
CONSUMER DURABLES-0.01%
Companias Cic S.A........ 65,581 13,887
--------------
CONSUMER GOODS-0.57%
Compania Tecno Industrial
S.A..................... 21,643,485 882,386
--------------
ELECTRIC DISTRIBUTION-3.93%
Chilectra S.A............ 599 3,310
Compania General de
Electricidad S.A........ 142,000 584,106
Empresas Emel S.A........ 34,190 740,638
Enersis S.A.............. 5,699,129 3,405,467
Sociedad Austral de
Electricidad S.A........ 57,500 1,350,554
--------------
6,084,075
--------------
ELECTRIC GENERATION-2.25%
Chilgener S.A............ 256,056 1,533,158
Empresa Electrica
Pilmaiquen S.A.......... 112,686 105,596
Empresa Nacional de
Electricidad S.A........ 2,670,387 1,845,905
--------------
3,484,659
--------------
ENGINEERING & CONSTRUCTION-0.75%
Besalco S.A.............. 60,426 386,073
Maderas y Sinteticos
Sociedad Anonima........ 698,968 392,994
Maderas y Sinteticos
Sociedad Anonima ADR.... 21,600 383,400
--------------
1,162,467
--------------
FERTILIZER-1.27%
Sociedad Quimica y Minera
de Chile S.A., Class
A....................... 244,421 1,285,017
Sociedad Quimica y Minera
de Chile S.A., Class
B....................... 127,949 675,792
--------------
1,960,809
--------------
</TABLE>
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
FINANCIAL SERVICES-0.52%
Administradora de Fondos
de Pensiones Provida
S.A. ADS................ 7,000 $ 174,125
Antarchile S.A., Class
A....................... 42,465 175,720
Invercap S.A............. 425,000 460,326
--------------
810,171
--------------
FISHERY-0.24%
Pesquera Itata S.A....... 1,204,818 378,293
--------------
FOOD & BEVERAGES-3.54%
Compania Cervecerias
Unidas S.A.............. 517 2,391
Embotelladora Andina
S.A..................... 347,533 2,080,884
Embotelladora Polar
S.A..................... 3,637,415 2,965,885
Empresas Iansa S.A....... 830,627 190,042
Empresas Santa Carolina
S.A., Series A.......... 182,729 175,680
Empresas Santa Carolina
S.A., Series B.......... 18,273 18,458
Jugos Concentrados
S.A..................... 912,650 53,313
--------------
5,486,653
--------------
FORESTRY-2.55%
Compania Chilena de
Fosforos S.A............ 218,449 664,625
Compania de Petreoleos de
Chile S.A............... 246,029 1,059,928
Compania Manufacturera de
Papeles y Cartones
S.A..................... 114,504 1,379,566
Forestal Terranova....... 647,903 851,570
--------------
3,955,689
--------------
HEALTH CARE-0.26%
Banmedica S.A............ 1,122,599 407,125
--------------
INSURANCE-0.14%
Compania de Seguros La
Prevision Vida S.A...... 188,348 210,880
--------------
MACHINERY & ELECTRIC-0.50%
Madeco S.A. NPV ADR...... 27,500 773,438
--------------
<CAPTION>
No. of Value
Description Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
MINING-1.05%
Antofagasta Holdings
P.L.C................... 213,500 $ 1,061,351
Empresa Minera de Mantos
Blancos S.A............. 199,302 482,671
Sociedad Punta del Cobre
S.A., Class A........... 761 85,204
--------------
1,629,226
--------------
PACKAGING-0.13%
Envases del Pacifico
S.A..................... 297,747 194,222
--------------
PHARMACEUTICALS-0.88%
Laboratorio Chile S.A.... 2,049,137 1,361,603
--------------
RETAIL-0.24%
Santa Isabel S.A......... 208,642 375,794
--------------
SHIPPING-0.02%
Puerto Ventanas S.A...... 23,635 36,242
--------------
STEEL-1.06%
Compania de Aceros del
Pacifico S.A............ 425,000 1,634,416
--------------
TELECOMMUNICATIONS-2.58%
Compania de
Telecomunicaciones de
Chile S.A., Class A..... 290,317 1,604,039
Compania de
Telecomunicaciones de
Chile S.A., Class B..... 200,000 1,032,007
Empresa Nacional de
Telecomunicaciones
S.A..................... 141,547 1,360,863
--------------
3,996,909
--------------
TOBACCO-0.15%
Empresas CCT S.A......... 33,887 239,193
--------------
UTILITIES-0.58%
Compania de Consumidores
de Gas de Santiago
S.A..................... 131,593 550,907
Empresa Metropolitana de
Obras Santinas.......... 1,239,254 346,877
--------------
897,784
--------------
</TABLE>
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
WHOLESALE-0.38%
Zona Franca de Iquique
S.A..................... 1,153,465 $ 583,962
--------------
TOTAL CHILE (Cost $20,246,057)........... 40,453,802
--------------
COLOMBIA-3.23%
BANKING-1.88%
Banco de Bogota.......... 9 48
Banco Ganadero, Preferred
C ADR................... 34,300 668,850
Banco Industrial
Colombiano ADR.......... 64,900 1,095,188
<CAPTION>
Par (000)
--------------
<S> <C> <C>
Banco de Colombia, Senior
Subordinated Convertible
Note, 5.20%,
02/01/99++.............. USD 1,270 1,146,175
--------------
2,910,261
--------------
CEMENT-0.91%
<CAPTION>
No. of
Shares
--------------
<S> <C> <C>
Cementos
Diamante S.A. ADS++..... 74,300 1,170,225
Cementos Paz del Rio S.A.
ADR+,++................. 17,900 232,700
--------------
1,402,925
--------------
FINANCIAL SERVICES-0.17%
Corporacion Financiera
del Valle, S.A. GDR++... 33,375 267,000
--------------
RETAIL-0.27%
Carulla y Compania S.A.
ADR++................... 30,800 265,650
La Gran Cadena de
Almacenes Colombianos
S.A. ADS++.............. 11,500 152,375
--------------
418,025
--------------
TOTAL COLOMBIA (Cost $5,155,615)......... 4,998,211
--------------
ECUADOR-0.76%
CEMENT-0.76%
La Cemento Nacional GDR++
(Cost $1,371,182)....... 6,528 1,181,568
--------------
<CAPTION>
No. of Value
Description Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
LATIN AMERICA-1.19%
TELECOMMUNICATIONS-1.19%
International Wireless
Communications, Inc.,
Series D*+.............. 4,660 $ 1,747,500
International Wireless
Communications, Inc.,
Series F*+.............. 271 101,625
International Wireless
Communications, Inc.,
Warrants (expiring
12/31/98)*+............. 16 290
--------------
TOTAL LATIN AMERICA (Cost $1,328,894).... 1,849,415
--------------
MEXICO-15.19%
CEMENT-3.36%
Cementos Apasco, S.A. de
C.V..................... 295,569 1,636,638
Cementos Mexicanos, S.A.
de C.V., Class B........ 417,000 1,646,559
Cementos Mexicanos, S.A.
de C.V. CPO............. 538,000 1,929,282
--------------
5,212,479
--------------
ENGINEERING & CONSTRUCTION-1.08%
Corporacion GEO,
S.A. de C.V. ADR+,++.... 76,900 1,336,138
Corporacion GEO,
S.A. de C.V., Series
B+...................... 75,640 336,067
--------------
1,672,205
--------------
FOOD & BEVERAGES-1.39%
Grupo Modelo, S.A. de
C.V., Series C.......... 460,000 2,152,933
--------------
HOLDING COMPANIES-2.89%
Corporacion Industrial
SanLuis, S.A. de C.V.
CPO..................... 537,354 3,301,344
Grupo Carso, S.A. de
C.V., Class A1+......... 166,500 1,183,171
--------------
4,484,515
--------------
MANUFACTURING-0.51%
Elamex, S.A. de C.V.+.... 79,000 790,000
--------------
</TABLE>
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
MINING-0.73%
Grupo Mexico, S.A. de
C.V., Class B+.......... 379,000 $ 1,126,757
--------------
PAPER PRODUCTS-1.26%
Kimberly Clark de Mexico,
S.A. de C.V., Class A... 106,800 1,950,138
--------------
RETAIL-1.47%
Grupo Elektra,
S.A. de C.V. CPO........ 313,000 2,273,738
--------------
STEEL-2.50%
Altos Hornos de Mexico,
S.A.+................... 199,000 1,637,126
Grupo Simec,
S.A. de C.V. ADS+....... 38,950 194,750
Grupo Simec, S.A. de
C.V., Series B+......... 545,300 150,973
Hylsamex, S.A. de C.V.,
Class B................. 436,000 1,896,902
--------------
3,879,751
--------------
TOTAL MEXICO (Cost $21,634,639).......... 23,542,516
--------------
PERU-6.68%
BANKING-0.30%
Banco Wiese ADR.......... 64,400 458,850
--------------
CEMENT-0.83%
Cementos Lima S.A.++..... 91,574 1,285,709
--------------
ELECTRIC DISTRIBUTION-1.34%
Ontario-Quinta A.V.V.*... 1,434,000 2,079,300
--------------
FINANCIAL SERVICES-0.47%
Credicorp Limited........ 36,800 731,400
--------------
FOOD & BEVERAGES-0.64%
Backus y Johnston........ 786,326 994,575
--------------
MINING-0.54%
Southern Peru Copper
Corporation............. 3,000 46,500
Southern Peru Copper
Corporation ADR......... 50,600 796,950
--------------
843,450
--------------
TELECOMMUNICATIONS-2.56%
Telefonica del Peru S.A.,
Class B................. 1,760,655 $ 3,574,641
<CAPTION>
No. of Value
Description Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS (CONTINUED)
<CAPTION>
Par (000)
--------------
<S> <C> <C>
Tele 2000 S.A.,
Convertible Note, 9.75%,
04/14/97++.............. USD 400 388,000
--------------
3,962,641
--------------
TOTAL PERU (Cost $7,662,829)............. 10,355,925
--------------
PUERTO RICO-0.97%
TELECOMMUNICATIONS-0.97%
<CAPTION>
No. of
Shares
--------------
<S> <C> <C>
Cellular Communications
of Puerto Rico, Inc.+
(Cost $800,940)......... 46,100 1,498,250
--------------
VENEZUELA-0.54%
FINANCIAL SERVICES-0.32%
<CAPTION>
Par (000)
--------------
<S> <C> <C>
Global Investment
Financial Corp.,
Convertible Note,
11.00%, 03/19/01........ USD 500 500,000
--------------
FOOD & BEVERAGES-0.00%
<CAPTION>
No. of
Shares
--------------
<S> <C> <C>
Mavesa S.A. ADR++........ 17 67
--------------
TELECOMMUNICATIONS-0.22%
Venworld
Telecommunications*+=/=... 40,140 334,374
--------------
TOTAL VENEZUELA (Cost $1,317,034)........ 834,441
--------------
TOTAL EQUITY OR EQUITY-LINKED SECURITIES
(Cost $109,101,096)..................... 138,961,199
--------------
FIXED OR FLOATING RATE INVESTMENTS-3.71%
ARGENTINA-0.68%
<CAPTION>
Par (000)
--------------
<S> <C> <C>
Republic of Argentina,
Bocon, Pre 1, Series 1
FRN, 3.50%, 04/01/01(1)
(Cost $1,039,703)....... ARS 1,342 1,059,756
--------------
</TABLE>
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
Description (000) (Note A)
- ----------------------------------------------------------
<S> <C> <C>
BRAZIL-0.66%
Federal Republic of
Brazil, Debt Conversion
Bond FRB, 6.5625%,
04/15/12+++(3) (Cost
$984,465)............... USD 1,500 $ 1,020,938
--------------
ECUADOR-0.67%
Republic of Ecuador, Past
Due Interest Bond FRB,
PIK, 6.0625%,
02/27/15(1)(2) (Cost
$870,170)............... 2,269 1,029,526
--------------
MEXICO-0.30%
United Mexican States,
11.50%, 05/15/26 (Cost
$447,146)............... 500 457,813
--------------
PANAMA-0.72%
Republic of Panama, When
Issue Contract FLIRB,
3.50%, 01/01/14+(4)
(Cost $1,115,625)....... 2,000 1,112,500
--------------
VENEZUELA-0.68%
Republic of Venezuela,
Debt Conversion Bond,
Series DL FRB, 6.625%,
12/18/07+++(3) (Cost
$1,000,486)............. 1,500 1,060,313
--------------
TOTAL FIXED OR FLOATING RATE INVESTMENTS
(Cost $5,457,595)....................... 5,740,846
--------------
SHORT-TERM INVESTMENTS-0.58%
CHILEAN INFLATION-ADJUSTED
TIME DEPOSITS-0.44%
<CAPTION>
Units (000)
--------------
<S> <C> <C>
Banco de O'Higgins,
7.25%, 09/02/96**....... CLP 4 131,435
Banco de O'Higgins,
7.25%, 09/09/96**....... 6 184,982
Banco de O'Higgins,
7.20%, 09/16/96**....... 12 365,097
--------------
TOTAL CHILEAN INFLATION-ADJUSTED TIME
DEPOSITS (Cost $683,288)................ 681,514
--------------
<CAPTION>
No. of Value
Description Shares (Note A)
- ----------------------------------------------------------
<S> <C> <C>
CHILEAN MUTUAL FUNDS-0.14%
Fondo Mutuo Operacional
BanChile (Cost
$214,917)............... 20,007 $ 215,616
--------------
TOTAL SHORT-TERM INVESTMENTS (Cost
$898,205)............................... 897,130
--------------
TOTAL INVESTMENTS-93.98%
(Cost $115,456,896) (Notes A,D)......... 145,599,175
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES-6.02%....................... 9,330,074
--------------
NET ASSETS-100.00%....................... $ 154,929,249
--------------
--------------
- ---------------------------------------------------------
@ Subsequent to June 30, 1996, certain events took
place that indicated an impairment to the
carrying value of this security. Effective July
25, 1996, the estimated fair value of this
investment is $275,396.
* Not readily marketable security.
** Effective yield on the date of purchase.
+ Security is non-income producing.
++ SEC Rule 144A security. Such securities are
traded only among "qualified institutional
buyers."
+++ Brady Bonds.
=/= Restricted security (See Note F).
(1) Payment-in-kind; of which 3.00% is being
capitalized.
(2) Adjustable rate; rate resets based on 6-month
London Interbank Offered Rate ("LIBOR") plus
0.8125%.
(3) Adjustable rate; rate resets based on 6-month
LIBOR plus 0.875%.
(4) The Fund has segregated $1,134,750 in a separate
account at Brown Brothers Harriman & Co. as
collateral for the when issue security.
(a) With an additional 59,385,000 warrants attached,
expiring 06/30/11, with no market value.
ADR American Depositary Receipts.
ADS American Depositary Shares.
ARS Argentine Pesos.
CLP Chilean Pesos.
FLIRB Front-Loaded Interest Reduction Bonds.
FRB Floating Rate Bonds.
FRN Floating Rate Notes.
GDR Global Depositary Receipts.
ON Ordinary Shares.
PIK Payment-in-kind.
PN Preferred Shares.
PNB Preferred Shares, Class B.
USD United States Dollars.
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
14
<PAGE>
- --------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost
$115,456,896) (Note A)................. $ 145,599,175
Cash (including $8,007 of foreign
currencies with a cost of $8,083) (Note
A)..................................... 12,679,003
Receivables:
Investments sold...................... 1,506,742
Dividends............................. 328,063
Interest.............................. 128,983
Prepaid expenses and other assets....... 27,607
--------------
Total Assets............................ 160,269,573
--------------
LIABILITIES
Payables:
Investments purchased................. 4,558,294
Advisory fees (Note B)................ 424,980
Administration fees (Note B).......... 69,075
Other accrued expenses................ 287,975
--------------
Total Liabilities....................... 5,340,324
--------------
NET ASSETS (applicable to 7,859,999
shares of common stock outstanding)
(Note C)............................... $ 154,929,249
--------------
--------------
NET ASSET VALUE PER SHARE ($154,929,249
DIVIDED BY 7,859,999)................. $19.71
--------------
--------------
NET ASSETS CONSIST OF
Capital stock, $0.001 par value;
7,859,999 shares issued and outstanding
(100,000,000 shares authorized)........ $ 7,860
Paid-in capital......................... 130,572,131
Undistributed net investment income..... 3,067,453
Accumulated net realized loss on
investments and foreign currency
related transactions................... (8,831,282)
Net unrealized appreciation in value of
investments and translation of other
assets and liabilities denominated in
foreign currencies..................... 30,113,087
--------------
Net assets applicable to shares
outstanding............................ $ 154,929,249
--------------
--------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
15
<PAGE>
- --------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Income (Note A):
Dividends............................. $ 2,396,243
Interest.............................. 511,203
Less: Foreign taxes withheld.......... (156,727)
--------------
Total Investment Income............... 2,750,719
--------------
Expenses:
Investment advisory fees (Note B)..... 884,082
Custodian fees........................ 117,006
Administration fees (Note B).......... 116,195
Printing.............................. 37,831
Audit and legal fees.................. 32,907
Accounting fees....................... 32,083
Insurance............................. 17,533
Directors' fees....................... 14,918
Transfer agent fees................... 10,650
NYSE listing fees..................... 8,041
Other................................. 9,434
--------------
Total Expenses........................ 1,280,680
Less: Fee waivers (Note B)............ (87,114)
--------------
Net Expenses........................ 1,193,566
--------------
Net Investment Income................. 1,557,153
--------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY
RELATED TRANSACTIONS
Net realized loss from:
Investments........................... (1,273,129)
Foreign currency related
transactions......................... (160,458)
Net change in unrealized appreciation in
value of investments and translation of
other assets and liabilities
denominated in foreign currencies...... 20,515,939
--------------
Net realized and unrealized gain on
investments and foreign currency
related transactions................... 19,082,352
--------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS........................ $ 20,639,505
--------------
--------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
16
<PAGE>
- --------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six
Months For the Year
Ended June 30, Ended
1996 December 31,
(unaudited) 1995
<S> <C> <C>
----------------------------------
INCREASE/(DECREASE) IN NET ASSETS
Operations:
Net investment income................. $ 1,557,153 $ 1,510,300
Net realized loss on investments and
foreign currency
related transactions................. (1,433,587) (7,342,062)
Net change in unrealized appreciation
in value of investments and
translation of other assets and
liabilities denominated in foreign
currencies........................... 20,515,939 (16,932,189)
-------------- --------------
Net increase/(decrease) in net
assets resulting from operations... 20,639,505 (22,763,951)
-------------- --------------
Dividends and distributions to
shareholders:
Net realized gain on investments...... -- (1,492,105)
-------------- --------------
Capital share transactions (Note C):
Proceeds from 98,012 shares issued in
reinvestment of dividends............ -- 1,820,380
Reversal of offering costs charged to
capital.............................. -- 52,713
-------------- --------------
Net increase in net assets resulting
from capital share transactions.... -- 1,873,093
-------------- --------------
Total increase/(decrease) in net
assets............................. 20,639,505 (22,382,963)
-------------- --------------
NET ASSETS
Beginning of period..................... 134,289,744 156,672,707
-------------- --------------
End of period (including undistributed
net investment income of $3,067,453 and
$1,510,300, respectively).............. $ 154,929,249 $ 134,289,744
-------------- --------------
-------------- --------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
17
<PAGE>
- --------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share of common
stock outstanding, total investment return, ratios to average net assets and
other supplemental data for each period indicated. This information has been
derived from information provided in the financial statements and market price
data for the Fund's shares.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the
For the Period
Six Months August 1,
Ended 1990*
June 30, For the Years Ended December 31, through
1996 ---------------------------------------------------------- December
(unaudited) 1995 1994+ 1993 1992 1991 31, 1990
<S> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning of
period....................... $17.09 $20.18 $25.73 $25.36 $26.05 $14.24 $13.64**
----------- -------- -------- -------- -------- -------- -----------
Net investment income......... 0.20 0.19 0.09 0.08 0.24 0.61 0.29
Net realized and unrealized
gain/(loss) on investments
and foreign currency
related transactions......... 2.42 (3.09) 1.29 10.18 1.51 14.66 0.58
----------- -------- -------- -------- -------- -------- -----------
Net increase/(decrease) in
net assets resulting from
operations................. 2.62 (2.90) 1.38 10.26 1.75 15.27 0.87
----------- -------- -------- -------- -------- -------- -----------
Dividends and distributions to
shareholders:
Net investment income....... -- -- (0.07) (0.22) -- (0.63) (0.27)
Net realized gain on
investments and foreign
currency related
transactions............... -- (0.19) (4.33) (8.61) (2.44) (2.83) --
In excess of net realized
gains...................... -- -- -- (0.04) -- -- --
----------- -------- -------- -------- -------- -------- -----------
Total dividends and
distributions to
shareholders............... -- (0.19) (4.40) (8.87) (2.44) (3.46) (0.27)
----------- -------- -------- -------- -------- -------- -----------
Dilution due to capital share
rights offering.............. -- -- (2.53) (1.02) -- -- --
----------- -------- -------- -------- -------- -------- -----------
Net asset value, end of
period....................... $19.71 $17.09 $20.18 $25.73 $25.36 $26.05 $14.24
----------- -------- -------- -------- -------- -------- -----------
----------- -------- -------- -------- -------- -------- -----------
Market value, end of period... $16.750 $14.750 $18.750 $31.500 $24.375 $26.500 $11.125
----------- -------- -------- -------- -------- -------- -----------
----------- -------- -------- -------- -------- -------- -----------
Total investment return(a).... 13.56% (20.34)% (26.63)% 89.45% 2.35% 167.96% (18.35)%
----------- -------- -------- -------- -------- -------- -----------
----------- -------- -------- -------- -------- -------- -----------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000
omitted)..................... $154,929 $134,290 $156,673 $140,458 $102,259 $104,435 $57,081
Ratio of expenses to average
net assets(d)................ 1.64%(b) 2.00% 2.02% 2.06% 2.61% 2.30% 3.27%(b)
Ratio of expenses to average
net assets, excluding fee
waivers and including taxes
(if any)..................... 1.76%(b) 2.12% -- -- -- -- --
Ratio of net investment income
to average net assets........ 2.15%(b) 1.20% 0.63% 1.45% 1.15% 2.85% 5.10%(b)
Portfolio turnover rate....... 26.31%(c) 38.71% 77.81% 70.17% 55.40% 82.39% 125.97%(c)
Average commission rate per
share(e)..................... $0.0011 -- -- -- -- -- --
</TABLE>
- ---------------------------------------------------------------------------
* Commencement of operations.
** Initial public offering price of $15.00 per share less underwriting
discount of $1.05 per share and offering expenses of $0.31 per share.
+ Based on average shares outstanding.
(a) Total investment return at market value is based on the changes in
market price of a share during the period and assumes reinvestment of
dividends and distributions, if any, at actual prices pursuant to the
Fund's Dividend Reinvestment Plan. Total investment return does not
reflect brokerage commissions or initial underwriting discounts and
has not been annualized. In addition, such returns have been restated
to reflect the reinvestment of dividends and distributions, if any, on
the ex-dividend date.
(b) Annualized.
(c) Not annualized.
(d) Ratios reflect actual expenses incurred by the Fund. Amounts are net
of fee waivers and inclusive of taxes.
(e) Disclosure is required for fiscal years beginning on or after
September 1, 1995.
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
18
<PAGE>
- --------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
NOTE A. SIGNIFICANT ACCOUNTING POLICIES
The Latin America Investment Fund, Inc. (the "Fund") was incorporated in
Maryland on April 17, 1990 and commenced investment operations on August 1,
1990. The Fund is registered under the Investment Company Act of 1940, as
amended, as a closed-end, non-diversified management investment company.
Significant accounting policies are as follows:
PORTFOLIO VALUATION: Investments are stated at value in the accompanying
financial statements. All securities for which market quotations are readily
available are valued at the last sales price or lacking any sales, at the
closing price last quoted for the securities (but if bid and asked quotations
are available, at the mean between the current bid and asked prices). Securities
that are traded over-the-counter are valued at the mean between the current bid
and the asked prices, if available. All other securities and assets are valued
at fair value as determined in good faith by the Board of Directors. Short-term
investments having a maturity of 60 days or less are valued on the basis of
amortized cost. The preparation of financial statements requires the use of
estimates by management, principally the valuation of non-publicly traded
securities. Accordingly, the Board of Directors has established general
guidelines for calculating fair value of non-publicly traded securities. At June
30, 1996, the Fund held 6.55% of its net assets in securities valued in good
faith by the Board of Directors with an aggregate cost of $9,391,107 and fair
value of $10,153,641. The net asset value per share of the Fund is calculated
weekly, at the end of each month and at any other times determined by the Board
of Directors.
CASH: Deposits held at Brown Brothers Harriman & Co., the Fund's custodian, in a
variable rate account are classified as cash. At June 30, 1996, the interest
rate was 4.6875%, which resets on a daily basis. Amounts on deposit are
generally available on the same business day.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
income tax purposes. Interest income is recorded on an accrual basis; dividend
income is recorded on the ex-dividend date.
TAXES: No provision is made for U.S. federal income or excise taxes as it is the
Fund's intention to continue to qualify as a regulated investment company and to
make the requisite distributions to its shareholders which will be sufficient to
relieve it from all or substantially all U.S. federal income and excise taxes.
At December 31, 1995, the Fund had a capital loss carryover of $5,842,282 which
expires in 2003.
For U.S. federal income tax purposes, realized capital losses and foreign
exchange losses incurred after October 31, 1995, within the fiscal year, are
deemed to arise on the first day of the following fiscal year. The Fund incurred
and elected to defer realized capital losses of $1,520,543.
Income received by the Fund from sources within Latin America may be subject to
withholding and other taxes imposed by Latin American countries. Also, certain
Latin American countries impose taxes on funds remitted or repatriated from such
countries.
The Fund is subject to a 10% Chilean repatriation tax with respect to all
remittances from Chile in excess of original invested capital. For the six
months ended June 30, 1996, the Fund incurred no such tax.
FOREIGN CURRENCY TRANSLATIONS: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
- --------------------------------------------------------------------------------
19
<PAGE>
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THE LATIN AMERICA INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
(I) market value of investment securities, assets and liabilities at the
current rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at
the relevant rates of exchange prevailing on the respective dates of
such transactions.
The Fund does not isolate that portion of gains and losses in investments in
equity securities which is due to changes in the foreign exchange rates from
that which is due to changes in market prices of equity securities. Accordingly,
realized and unrealized foreign currency gains and losses with respect to such
securities are included in the reported net realized and unrealized gains and
losses on investment transactions balances. However, the Fund does isolate the
effect of fluctuations in foreign exchange rates when determining the gain or
loss upon the sale or maturity of foreign currency denominated debt obligations
pursuant to U.S. federal income tax regulations, with such amount categorized as
foreign exchange gain or loss for both financial reporting and U.S. federal
income tax reporting purposes.
The Fund reports certain foreign currency related transactions as components of
realized gains for financial reporting purposes, whereas such components are
treated as ordinary income for U.S. federal income tax purposes.
Net currency gains from valuing foreign currency denominated assets and
liabilities at period end exchange rates are reflected as a component of net
unrealized appreciation /depreciation on investments, foreign currency holdings,
and other assets and liabilities denominated in foreign currencies.
Net realized foreign exchange losses represent foreign exchange gains and losses
from sales and maturities of debt securities, transactions in foreign currencies
and forward foreign currency contracts, exchange gains or losses realized
between the trade date and settlement dates on security transactions, and the
difference between the amounts of interest and dividends recorded on the Fund's
books and the U.S. dollar equivalent of the amounts actually received.
DISTRIBUTIONS OF INCOME AND GAINS: The Fund distributes at least annually to
shareholders, substantially all of its net investment income and net realized
short-term capital gains, if any. The Fund determines annually whether to
distribute any net realized long-term capital gains in excess of net realized
short-term capital losses, including capital loss carryovers, if any. An
additional distribution may be made to the extent necessary to avoid the payment
of a 4% U.S. federal excise tax. Dividends and distributions to shareholders are
recorded by the Fund on the ex-dividend date.
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for U.S.
federal income tax purposes due to U.S. generally accepted accounting
principles/tax differences in the character of income and expense recognition.
OTHER: Securities denominated in currencies other than U.S. dollars are subject
to changes in value due to fluctuations in exchange rates.
Some countries require governmental approval for the repatriation of investment
income, capital or the proceeds of sales of securities by foreign investors. In
addition, if there is a deterioration in a country's balance of payments or for
other reasons, a country may impose temporary restrictions on foreign capital
remittances abroad. Amounts repatriated prior to the end of specified periods
may be subject to taxes as specified in the Fund's prospectus.
- --------------------------------------------------------------------------------
20
<PAGE>
- --------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
The Latin American securities markets are substantially smaller, less liquid and
more volatile than the major securities markets in the United States.
Consequently, acquisition and disposition of securities by the Fund may be
inhibited. A significant proportion of the aggregate market value of equity
securities listed on the major securities exchange are held by a small number of
investors. This may limit the number of shares for acquisition or disposition by
the Fund.
The Fund, subject to local investment limitations, may invest up to 25% of its
assets in non-publicly traded equity securities which may involve a high degree
of business and financial risk and may result in substantial losses. Because of
the current absence of any liquid trading market for these investments, the Fund
may take longer to liquidate these positions than would be the case for publicly
traded securities. Although these securities may be resold in privately
negotiated transactions, the prices realized on such sales could be less than
those originally paid by the Fund. Further, companies whose securities are not
publicly traded may not be subject to the disclosure and other investor
protection requirements applicable to companies whose securities are publicly
traded.
The Fund is permitted to engage in the trading of sovereign debt of Latin
American countries which involves a high degree of risk. The issuer of the debt
or the governmental authorities that control the repayment of the debt may be
unable or unwilling to repay principal and/or interest when due in accordance
with the terms of such debt. Sovereign debt in which the Fund will invest is
widely considered to have a credit quality below investment grade as determined
by U.S. rating agencies. As a result, sovereign debt may be regarded as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligations and involves
major risk exposure to adverse conditions.
NOTE B. AGREEMENTS
BEA Associates ("BEA") serves as the Fund's investment adviser, with respect to
all investments other than sovereign debt. As compensation for its advisory
services, BEA receives from the Fund an annual fee, calculated weekly and paid
quarterly, equal to 1.0625% of the first $100 million of the Fund's average
weekly net assets, 0.9775% of the next $50 million of the Fund's average weekly
net assets and 0.8925% of amounts over $150 million. BEA has agreed to waive its
portion of the advisory fee previously payable to Merchant Bankers Asociados
S.A., Patrimonio Planejamento Financeiro Ltda. and Acci Worldwide, S.A. de C.V.
(collectively the "Sub-Advisers") who had been employed by the Fund as
sub-advisers through March 1, 1994, August 15, 1994 and November 16, 1994,
respectively. For the six months ended June 30, 1996, BEA earned $751,439 for
advisory services, of which BEA waived $74,017 in advisory fees previously
payable to its Sub-Advisers. BEA also provides certain administrative services
to the Fund and is reimbursed by the Fund for costs incurred on behalf of the
Fund. For the six months ended June 30, 1996, BEA was reimbursed $6,662 for
administrative services rendered to the Fund.
Salomon Brothers Asset Management Inc. ("SBAM") serves as the Fund's investment
adviser with respect to sovereign debt. In return for its services, SBAM is paid
an annual fee, calculated weekly and paid quarterly, equal to 0.1875% of the
first $100 million of the Fund's average weekly net assets, 0.1725% of the next
$50 million of the Fund's average weekly net assets and 0.1575% of amounts over
$150 million. SBAM has agreed to waive its portion of the advisory fee
previously payable to its Sub-Advisers. For the six months ended June 30, 1996,
advisory fees amounted to $132,643, of which $13,097 was waived by SBAM.
Celfin Servicios Financieros Limitada (formerly Celfin Agente de Valores
Limitada) ("Celfin") serves as the
- --------------------------------------------------------------------------------
21
<PAGE>
- --------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
Fund's sub-adviser with respect to Chilean investments. In return for its
services, Celfin is paid a fee out of the advisory fees payable to BEA and SBAM,
computed weekly and paid quarterly at an annual rate of 0.05% of the Fund's
average weekly net assets. For the six months ended June 30, 1996, these
sub-advisory fees amounted to $36,283.
Bear Stearns Funds Management Inc. ("BSFM") serves as the Fund's U.S.
administrator. The Fund pays BSFM a monthly fee that is computed weekly at an
annual rate of 0.10% of the first $100 million of the Fund's average weekly net
assets and 0.08% of amounts in excess of $100 million. For the six months ended
June 30, 1996, BSFM earned $67,998 for administrative services.
BEA Administration, Administradora de Fondos de Inversion de Capital Extranjero
S.A. ("AFICE") serves as the Fund's Chilean administrator. For its services,
AFICE is paid an annual fee by the Fund equal to the greater of 2,000 U.F.'s
(approximately $63,300 at June 30, 1996) or 0.10% of the Fund's average weekly
net assets invested in Chile and an annual reimbursement of out-of-pocket
expenses not to exceed 500 U.F.'s. Such fees are paid by AFICE to Celfin for
certain administrative services. An accounting fee is also paid to Celfin which
is calculated and paid quarterly at an annual rate of 205.32 U.F.'s
(approximately $6,500 at June 30, 1996). For the six months ended June 30, 1996,
Celfin earned $41,535 and $3,155 for administrative and accounting services,
respectively.
NOTE C. CAPITAL STOCK
The authorized capital stock of the Fund is 100,000,000 shares of common stock,
$0.001, par value. Of the 7,859,999 shares outstanding at June 30, 1996, BEA
owned 7,169 shares.
NOTE D. INVESTMENT TRANSACTIONS
For U.S. federal income tax purposes, the cost of securities owned at June 30,
1996 was $115,494,807. Accordingly, the net unrealized appreciation of
investments (including investments denominated in foreign currencies) of
$30,104,368, was composed of gross appreciation of $39,368,806 for those
investments having an excess of value over cost and gross depreciation of
$9,264,438 for those investments having an excess of cost over value.
For the six months ended June 30, 1996, purchases and sales of securities, other
than short-term obligations, were $36,802,779 and $41,920,294, respectively.
NOTE E. CREDIT AGREEMENT
The Fund, along with 17 other U.S. registered investment companies for which BEA
serves as investment adviser, has a credit agreement with The First National
Bank of Boston. The agreement provides that each fund is permitted to borrow an
amount equal to the lesser of $50,000,000 or 25% of the net assets of the fund.
However, at no time shall the aggregate outstanding principal amount of all
loans to any of the 18 funds exceed $50,000,000. The line of credit will bear
interest at (i) the greater of the bank's prime rate or the Federal Funds
Effective Rate plus 0.50% or (ii) the Adjusted Eurodollar Rate plus 1.50%. The
Fund had no amounts outstanding under the credit agreement for the six months
ended June 30, 1996.
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22
<PAGE>
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THE LATIN AMERICA INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
NOTE F. RESTRICTED SECURITIES
Certain of the Fund's investments are restricted as to resale and are valued at
the direction of the Fund's Board of Directors in good faith, at fair value,
after taking into consideration appropriate indications of value. The table
below shows the number of shares held, the acquisition dates, aggregate cost,
fair value as of June 30, 1996, share value of the security and percentage of
net assets which the security comprises.
<TABLE>
<CAPTION>
NUMBER FAIR VALUE VALUE PERCENT OF
SECURITY OF SHARES ACQUISITION DATES COST AT 06/30/96 PER SHARE NET ASSETS
- ----------------------------------- ----------- ---------------------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Venworld Telecommunications 40,140 7/30/92 & 8/07/92 $ 816,959 $ 334,374 $ 8.33 0.22
</TABLE>
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23
<PAGE>
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
On April 23, 1996, the annual meeting of shareholders of The Latin America
Investment Fund, Inc. (the "Fund") was held and the following matters were voted
upon:
(1) To re-elect three directors to the Board of Directors of the Fund.
<TABLE>
<CAPTION>
NAME OF DIRECTOR FOR WITHHELD NON-VOTES
- ----------------------------------------------------------------------------------- ---------- --------- ----------
<S> <C> <C> <C>
Enrique R. Arzac* 6,360,253 147,320 1,352,426
James J. Cattano 6,346,163 161,410 1,352,426
Michael Hyland 6,341,804 165,769 1,352,426
</TABLE>
- --------------
* On February 13, 1996, the Board of Directors increased the size of the Fund's
Board of Directors to 8 and Dr. Enrique R. Arzac was elected to fill the newly
created vacancy. The election of Dr. Arzac was submitted to the Fund's
shareholders for their ratification at the annual meeting of shareholders.
In addition to the directors re-elected at the meeting, Emilio Bassini, Peter A.
Gordon, George W. Landau, Daniel Sigg and Martin M. Torino continue to serve as
directors of the Fund.
(2) To ratify the selection of Coopers & Lybrand L.L.P. as independent public
accountants for the year ending December 31, 1996.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN NON-VOTES
---------- ------------ ------------- ----------
<S> <C> <C> <C> <C>
6,331,009 117,750 58,814 1,352,426
</TABLE>
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24
<PAGE>
DESCRIPTION OF DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Pursuant to The Latin America Investment Fund, Inc.'s (the "Fund") Dividend
Reinvestment and Cash Purchase Plan (the "Plan"), each shareholder will be
deemed to have elected, unless the Fund's transfer agent as the Plan Agent (the
"Plan Agent"), is otherwise instructed by the shareholder in writing, to have
all dividends and distributions, net of any applicable U.S. withholding tax,
automatically reinvested in additional shares of the Fund. Shareholders who do
not participate in the Plan will receive all dividends and distributions in
cash, net of any applicable U.S. withholding tax, paid in dollars by check
mailed directly to the shareholder by the Plan Agent, as dividend-paying agent.
Shareholders who do not wish to have dividends and distributions automatically
reinvested should notify the Plan Agent for the Fund, at the address set forth
below. Dividends and distributions with respect to shares registered in the name
of a broker-dealer or other nominee (i.e., in "street name") will be reinvested
under the Plan unless such service is not provided by the broker or nominee or
the shareholder elects to receive dividends and distributions in cash. A
shareholder whose shares are held by a broker or nominee that does not provide a
dividend reinvestment program may be required to have his shares registered in
his own name to participate in the Plan. Investors who own shares of the Fund's
common stock registered in street name should contact the broker or nominee for
details concerning participation in the Plan.
Certain distributions of cash attributable to (a) some of the dividends and
interest amounts paid to the Fund and (b) certain capital gains earned by the
Fund that are derived from securities of certain foreign issuers are subject to
taxes payable by the Fund at the time amounts are remitted. Such taxes, if any,
will be borne by the Fund and allocated to all shareholders in proportion to
their interests in the Fund.
The Plan Agent serves as agent for the shareholders in administering the Plan.
If the Board of Directors of the Fund declares an income dividend or a capital
gains distribution payable either in the Fund's common stock or in cash, as
shareholders may have elected, nonparticipants in the Plan will receive cash and
participants in the Plan will receive common stock to be issued by the Fund. If
the market price per share on the valuation date equals or exceeds net asset
value per share on that date, the Fund will issue new shares to participants
valued at net asset value or, if the net asset value is less than 95% of the
market price on the valuation date, then valued at 95% of the market price. If
net asset value per share on the valuation date exceeds the market price per
share on that date, participants in the Plan will receive shares of stock from
the Fund valued at the market price.
The valuation date is the dividend or distribution payment date or, if that date
is not a New York Stock Exchange trading day, the next preceding trading day. If
the Fund should declare an income dividend or capital gains distribution payable
only in cash, the Plan Agent will, as agent for the participants, buy Fund
shares in the open market, on the New York Stock Exchange or elsewhere, for the
participants' accounts on, or shortly after, the payment date.
Participants in the Plan have the option of making additional cash payments to
the Plan Agent, semiannually, in any amount from $100 to $3,000, for investment
in the Fund's common stock. The Plan Agent will use all funds received from
participants to purchase Fund shares in the open market on or about February 15
and August 15 of each year. Any voluntary cash payments received more than 30
days prior to these dates will be returned by the Plan Agent and interest will
not be paid on any uninvested cash payments. To avoid unnecessary cash
accumulations, and also to allow ample time for receipt and processing by the
Plan Agent, it is suggested that participants send in voluntary cash payments to
be received by the Plan Agent approximately 10 days before February 15 or August
15, as the case may be. A participant may withdraw a voluntary cash payment by
written notice, if the notice is received by the Plan Agent
- --------------------------------------------------------------------------------
25
<PAGE>
DESCRIPTION OF DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN (CONTINUED)
not less than 48 hours before the payment is to be invested. A participant's tax
basis in his shares acquired through his optional investment right will equal
his cash payments to the Plan, including any cash payments used to pay brokerage
commissions allocable to his acquired shares.
The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in the account, including information
needed by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in the name of the
participant and each shareholder's proxy will include those shares purchased
pursuant to the Plan.
In the case of a shareholder, such as a bank, broker or nominee, that holds
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
shareholder as representing the total amount registered in the shareholder's
name and held for the account of beneficial owners who are to participate in the
Plan.
There is no charge to participants for reinvesting dividends or capital gains
distributions payable in either stock or cash. The Plan Agent's fees for the
handling of reinvestment of such dividends and capital gains distributions will
be paid by the Fund. There will be no brokerage charges with respect to shares
issued directly by the Fund as a result of dividends and capital gains
distributions payable either in stock or in cash. However, each participant will
be charged by the Plan Agent a pro rata share of brokerage commissions incurred
with respect to the Plan Agent's open market purchases in connection with
voluntary cash payments made by the participant or the reinvestment of dividends
and capital gains distributions payable only in cash. Brokerage charges for
purchasing small amounts of stock for individual accounts through the Plan are
expected to be less than the usual brokerage charges for such transactions
because the Plan Agent will be purchasing stock for all participants in blocks
and prorating the lower commission thus obtainable. Brokerage commissions will
vary based on, among other things, the broker selected to effect a particular
purchase and the number of participants on whose behalf such purchase is being
made. The Fund cannot predict, therefore, whether the cost to a participant who
makes a voluntary cash payment will be less than if a participant were to make
an open market purchase on the Fund's common stock on his own behalf.
The receipt of dividends and distributions in stock under the Plan will not
relieve participants of any income tax (including withholding tax) that may be
payable on such dividends and distributions.
Experience under the Plan may indicate that changes in the Plan are desirable.
Accordingly the Fund and the Plan Agent reserve the right to terminate the Plan
as applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to notice of the termination sent to the members of the Plan at
least 30 days before the semiannual contribution date, in the case of voluntary
cash payments, or the record date for dividends or distributions. The Plan also
may be amended by the Fund or the Plan Agent, but (except when necessary or
appropriate to comply with applicable law, rules or policies of a regulatory
authority) only by at least 30 days' written notice to members of the Plan. All
correspondence concerning the Plan should be directed to the Plan Agent, The
First National Bank of Boston, Investor Relations Department, P.O. Box 644, Mail
Stop 45-02-09, Boston, Massachusetts 02102-0644 or by telephone at
1-800-730-6001.
- --------------------------------------------------------------------------------
26
<PAGE>
SUMMARY OF GENERAL INFORMATION
The Fund--The Latin America Investment Fund, Inc.--is a closed-end,
non-diversified management investment company whose shares trade on the
New York Stock Exchange. Its investment objective is long-term capital
appreciation through investments primarily in Latin American equity and
debt securities. The Fund is managed and advised by BEA Associates ("BEA").
BEA is a diversified asset manager, handling equity, balanced, fixed income,
international and derivative based securities accounts. Portfolios include
international and emerging market investments, common stocks, taxable and
non-taxable bonds, options, futures and venture capital. BEAmanages money for
corporate pension and profit-sharing funds, public pension funds, union
funds, endowment and other charitable institutions and private individuals.
As of June 30, 1996, BEA managed approximately $28.7 billion in assets. BEA
also manages and advises eight other international closed-end funds: The
Brazilian Equity Fund, Inc., The First Israel Fund, Inc., The Chile Fund,
Inc., The Emerging Markets Infrastructure Fund, Inc., The Emerging Markets
Telecommunications Fund, Inc., The Indonesia Fund, Inc., The Latin America
Equity Fund, Inc. and The Portugal Fund, Inc.
SHAREHOLDER INFORMATION
The market price is published in: THE NEW YORK TIMES (daily) under the
designation "LatAInv" and THE WALL STREET JOURNAL (daily), and BARRON'S (each
Monday) under the designation "LatinAmFd". The Fund's New York Stock Exchange
trading symbol is LAM. Weekly comparative net asset value (NAV) and market
price information about The Latin America Investment Fund, Inc.'s shares are
published each Sunday in THE NEW YORK TIMES and each Monday in THE WALL
STREET JOURNAL and BARRON'S, as well as other newspapers, in a table called
"Closed End Funds."
To request an annual report, or to be placed on the Fund's mailing list,
shareholders should call 1-800-293-1232.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN--SUMMARY
An automatic Dividend Reinvestment and Cash Purchase Plan (the "Plan") is
available to provide shareholders with automatic reinvestment of their
dividend income and capital gain distributions in additional shares of the
Fund's common stock.
As per the Plan, each shareholder will be automatically reinvested in
additional shares of the Fund by The First National Bank of Boston, unless
otherwise instructed by the shareholder in writing. Shareholders who do not
participate in the Plan will receive all dividends and distributions in cash
paid by check in U.S. dollars. Shares registered in street name will be
reinvested under the Plan, unless the broker-dealer or other nominee does not
provide a dividend reinvestment plan or the shareholder elects to receive
their dividends in cash.
<PAGE>
DIRECTORS AND CORPORATE OFFICERS
Emilio Bassini Chairman of the Board of Directors,
President and Chief Investment Officer
Enrique R. Arzac Director
James J. Cattano Director
Peter A. Gordon Director
Michael Hyland Director
George W. Landau Director
Daniel Sigg Director and Senior Vice President
Martin M. Torino Director
Richard Watt Senior Vice President and Investment Officer
Paul P. Stamler Senior Vice President
Michael A. Pignataro Chief Financial Officer and Secretary
Rachel D. Manney Vice President and Treasurer
INVESTMENT ADVISER
BEA Associates
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Salomon Brothers Asset Management Inc.
7 World Trade Center
New York, NY 10048
ADMINISTRATOR
Bear Stearns Funds Management Inc.
245 Park Avenue
New York, NY 10167
CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
SHAREHOLDER SERVICING AGENT
The First National Bank of Boston
P.O. Box 1865
Mail Stop 45-02-62
Boston, MA 02105-1865
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103
LEGAL COUNSEL
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
This report, including the financial statements herein, is sent to LAM
the shareholders of the Fund for their information. The financial Listed
information included herein is taken from the records of the Fund NYSE
without examination by independent accountants who do not express THE
an opinion thereon. It is not a prospectus, circular or NEW YORK
representation intended for use in the purchase or sale of shares STOCK
of the Fund or of any securities mentioned in this report. EXCHANGE
