<PAGE>
THE LATIN AMERICA
INVESTMENT FUND, INC.
-----------------------------
SEMI-ANNUAL REPORT
JUNE 30, 2000
[PHOTO]
<PAGE>
<TABLE>
<S> <C>
CONTENTS
Letter to Shareholders .................................................... 1
Portfolio Summary ......................................................... 6
Schedule of Investments ................................................... 8
Statement of Assets and Liabilities ....................................... 13
Statement of Operations ................................................... 14
Statement of Changes in Net Assets ........................................ 15
Financial Highlights ...................................................... 16
Notes to Financial Statements ............................................. 18
Results of Annual Meeting of Shareholders ................................. 25
Description of InvestLink-SM- Program ..................................... 26
</TABLE>
PICTURED ON THE COVER ARE THE RUINS OF THE TULUM PYRAMID ON THE EAST COAST OF
MEXICO IN THE YUCATAN PENNISULA.
================================================================================
<PAGE>
LETTER TO SHAREHOLDERS
July 31, 2000
DEAR SHAREHOLDER:
I am writing to report on the activities of The Latin America Investment Fund,
Inc. (the "Fund") for the six months ended June 30, 2000.
At June 30, 2000, the Fund's net assets were $113.0 million. The Fund's net
asset value ("NAV") was $18.07 per share, as compared to $17.55 at December 31,
1999.
PERFORMANCE: EFFECTIVE SELECTION OF STOCKS AND BONDS
For the six months ended June 30, 2000, the Fund's total return, based on NAV
was 3.0%. By comparison, the Morgan Stanley Capital International Emerging
Markets Free Latin America Index ("EMFLA")* returned -3.8% over the same period.
The Fund meaningfully outperformed its EMFLA benchmark due to effective security
selection within the equity and debt portions of the portfolio.
In equities, the portfolio outperformed in virtually all markets and fared
especially well in Mexico, Brazil and Jamaica.
- MEXICO. Our Mexican sector weightings relative to EMFLA and general preference
for well-known, large-capitalization names proved quite favorable. More
specifically, we held a sizable position in Wal-Mart de Mexico S.A. de C.V.
(the Fund's eighth-largest equity holding at June 30), which was strong;
overweighted banks like Grupo Financiero Banamex Accival, S.A. de C.V. (the
Fund's ninth-largest equity holding at June 30), which rose on the basis of a
variety of factors; underweighted Telefonos de Mexico, S.A. (the Fund's
largest holding of any kind at June 30), which underperformed; and
underweighted poor-performing sectors like beverages, cement and industrial
conglomerates.
- BRAZIL. In late May, we opportunistically took positions in several of
Brazil's regional cellular telecommunications carriers, which we felt had been
unjustly beaten down in the wake of a sell-off in the U.S.'s NASDAQ exchange.
Brazilian cellular companies ended up rallying in June, so much so that they
were among the best-performing sectors in the entire Latin American equity
universe for the month.
- JAMAICA. As for Jamaica, we note that the Fund does not usually invest in
Caribbean markets due to their thin capitalization and other logistical
difficulties. In this case, we were able to take advantage of an attractive
opportunity in the form of a private partnership vehicle that, itself, owns
shares in some of the most prominent Jamaican stocks and offered a
sufficiently compelling risk/reward profile. The partnership enjoyed robust
returns due to the Jamaican market's vigorous rally during the period.
The Fund's fixed income holdings, which amounted to roughly 21% of the portfolio
at June 30, outperformed those of broad Latin fixed income indices. Salomon
Brothers Asset Management Inc., the Fund's adviser for fixed income, was most
successful in this regard by overweighting Venezuela and Panama--two of the
period's three strongest Latin debt
================================================================================
1
<PAGE>
LETTER TO SHAREHOLDERS
markets--and underweighting Argentina, which underperformed. Relative weightings
in Mexico and Colombia contributed most negatively to overall fixed income
performance.
THE MARKETS: A TALE OF TWO QUARTERS
Activity in Latin American equity markets in the first half of 2000 followed a
pattern similar to that of most equity markets elsewhere. In other words,
substantial swings in investor sentiment drove Latin stocks up in the first
quarter, down considerably in April and May, and back up a bit in June.
The good news during the first quarter was a combination of strong regional
economic growth, higher commodity prices, notable progress on the inflation and
interest-rate fronts, and a healthy global appetite for equities in
information-based "New Economy" industries like technology, media and
telecommunications (known collectively as "TMT"). An additional plus was the
upgrading of Mexico's sovereign debt rating to investment-grade in March, which
took place sooner than anticipated and generated investor goodwill that helped
Latin markets as a group.
The second quarter, by contrast, was much tougher, with NASDAQ's collapse in
April-May the defining event. In keeping with their recent strong correlation
with NASDAQ returns, Latin markets moved in virtual lockstep with NASDAQ during
the period. Previously buoyant TMT stocks--which are especially influential in
many Latin and emerging equity markets--were hit hard.
This was followed by a sharp rally in early June on the back of benign U.S.
inflationary data and signs that the U.S. economy was slowing. The rally was
short-lived, however, as global investors showed little interest in Latin
equities in the face of expected further hikes in U.S. interest rates later in
the year.
The following goes into greater detail about second-quarter developments in
Brazil and Mexico which, combined, currently account for the lion's share of the
Fund's assets:
- The macroeconomic scene in Brazil remained quite positive. For example:
inflation was well-behaved and should meet targets set by the International
Monetary Fund ("IMF"); fiscal prudence was such that the government is
expected to exceed or easily meet the IMF's fiscal targets as well; the
current-account deficit was no longer a matter of immediate concern; and the
foreign-exchange rate was stable. In addition, foreigners poured capital into
the country. This had the effect of strengthening both the real and investor
confidence which, in turn, smoothed the way for an unexpectedly large
interest-rate cut (I.E., a full percentage point) on June 20.
- Sentiment in Mexico was much less favorable, although macroeconomic conditions
were fairly strong. Uncertainty about the July 2 presidential election--for
which polls showed a virtual tie between the two leading candidates--helped to
push down the value of the peso versus the dollar in June, prompting fears of
higher inflation and tighter monetary policy. Investors were also concerned
about a slowdown in the U.S. economy (which absorbs around 80% of Mexican
exports) and leery of a possible decline in oil prices, whose strength had
been very supportive of the domestic economy for over a year. Many market
participants thought Mexico's market was vulnerable to downside risk, and thus
elected to shift assets to Brazil, whose potential they felt was greater.
================================================================================
2
<PAGE>
LETTER TO SHAREHOLDERS
PORTFOLIO STRATEGY: CONTINUED FOCUS ON MEXICO AND BRAZIL
TOP 10 EQUITY HOLDINGS, BY ISSUER*
<TABLE>
<CAPTION>
% OF
HOLDING COUNTRY NET ASSETS
------- ------- ----------
<S> <C> <C>
1. Telmex Mexico 9.8
2. Televisa Mexico 4.7
3. Tele Norte Leste Brazil 4.5
4. Carso Global Telecom Mexico 3.9
5. CVRD Brazil 3.8
6. Embratel Brazil 3.7
7. Petrobras Brazil 3.6
8. Wal-Mart de Mexico Mexico 3.6
9. Banamex Accival Mexico 3.6
10. Cemex Mexico 2.7
----
Total 43.9
====
</TABLE>
---------------------
* Company names are abbreviations of those found in the
Schedule of Investments.
FIXED INCOME EXPOSURES, BY COUNTRY
<TABLE>
<CAPTION>
SECURITY % OF
COUNTRY TYPE NET ASSETS
------- ---- ----------
<S> <C> <C>
1. Brazil Sovereign 5.6
2. Argentina Sovereign 4.8
3. Venezuela Sovereign 4.1
4. Mexico Sovereign 3.5
5. Panama Sovereign 1.3
6. Ecuador Sovereign 1.0
7. Colombia Sovereign 0.5
8. Peru Sovereign 0.4
----
Total 21.2
====
</TABLE>
ASSET ALLOCATION
(% of net assets)
[CHART]
<TABLE>
<S> <C>
Cash & Cash Equivalents 0.92
Equities 74.37
Fixed Income 21.21
Private Equities 3.50
</TABLE>
HISTORICAL EQUITIES/FIXED INCOME MIX
% of net assets
[GRAPH]
<TABLE>
<CAPTION>
Equities Fixed Income
<S> <C> <C>
12/31/96 87.16 2.70
6/30/97 90.22 9.51
12/31/97 90.25 15.23
6/30/98 70.97 23.61
12/31/98 63.43 34.72
6/30/99 63.76 33.50
12/31/99 68.71 28.73
6/30/00 77.87 21.21
</TABLE>
EQUITIES. In the Fund's equity portion, our country selection continues to focus
on Mexico and Brazil. Mexican stocks rallied immediately following the outcome
of the presidential election, reflecting investor optimism going forward into a
new political era. More recently, however, they have sold off in recognition of
the challenges involved as the new administration begins to assume power. In
Brazil, we see a realistic possibility of further interest-rate cuts, bolstered
by improving fundamentals and vibrant foreign direct investment. These and other
factors are quite bullish for Brazilian equities later in the year.
The corollary to our emphasis on Mexico and Brazil is that we are maintaining
only minimal exposure to Argentina, given its lack of real progress on pressing
economic issues, as well as smaller markets such as Venezuela and Peru, where
lack of liquidity is a limiting factor.
================================================================================
3
<PAGE>
LETTER TO SHAREHOLDERS
Our preference among individual names remains for large, liquid, blue-chip
companies with strong managements and clean balance sheets. By contrast, we are
avoiding more speculative turnaround stories, takeover targets or
less-liquid names generally.
Relative to the EMFLA benchmark, we are overweighting the telecommunications
sector, if less aggressively than previously; underweighting electric utilities,
if not so much as before; and keeping a neutral-to-overweight exposure to
financial services, particularly banks. Latin American banks in general are
extremely liquid and very healthy, which sharply contrasts with banks in the
U.S. and Asia.
FIXED INCOME. In line with the Fund's plan to merge with The Latin America
Equity Fund, Inc. and become an equity-only portfolio (see next section for
details), Salomon Brothers Asset Management Inc. currently expects to liquidate
the Fund's fixed income portion during the next few months.
OUTLOOK: CAUTIOUS IN THE NEAR TERM, MORE OPTIMISTIC FURTHER AHEAD
Our overall view on Latin equities is cautious in the near term and more
optimistic over the next six-12 months. We continue to believe that the region's
markets will lack a firm trend until the U.S. macroeconomic picture becomes
clearer and global risk aversion wanes. With regard to the former, we expect the
Federal Reserve to maneuver the robust U.S. economy into a desirable "soft
landing" that should prove notably beneficial to Latin markets like Brazil and
Mexico.
Looking further ahead, we believe that Latin markets offer investors a
compelling blend of strong fundamentals and valuations that are increasingly
attractive, both on an absolute basis and relative to those in developed
markets. Corporate earnings remain robust (I.E., in the double digits),
suggesting that many companies are transitioning well into a newly competitive
global marketplace. For these and other reasons, we are inclined to keep the
Fund fully invested.
There are risks, to be sure. One is that the Fed goes too far in raising
interest rates, thereby initiating an abrupt "hard landing" for the U.S. economy
and, by extension, those of its Latin neighbors. Another is that U.S.
corporations fail to deliver expected earnings growth, thereby setting off
another round of stock-market volatility throughout the world.
All in all, we like what we see and look forward to the prospect of further
appreciation.
On an administrative note, we are pleased to announce that, subject to
shareholder approval, the Fund intends to merge its assets with those of its
sister fund, The Latin America Equity Fund, Inc. ("LAQ"). For tax purposes, LAQ
will merge into the Fund, which will subsequently change its name to LAQ and
formally adopt LAQ's investment objective and policies. We are hopeful that the
shareholders both of the Fund and LAQ will approve the transaction at their
respective meetings to be held in early October.
================================================================================
4
<PAGE>
LETTER TO SHAREHOLDERS
We additionally note in this context that the Fund's investment adviser, Credit
Suisse Asset Management, LLC ("CSAM"), has agreed effective July 1, 2000, to
calculate its management fee based on the market value of the Fund's shares
instead of its total net asset value. This is intended as a measure to help
reduce the discount to NAV at which the Fund's shares currently trade, and
indicates CSAM's commitment to better align its own interests with those of the
Fund's shareholders.
Respectfully,
/s/ Emily Alejos
Emily Alejos
Chief Investment Officer **
FROM CREDIT SUISSE ASSET MANAGEMENT, LLC:
We wish to remind shareholders whose shares are registered in their own name
that they automatically participate in the Fund's dividend reinvestment program
known as the InvestLink-SM- Program (the "Program"). The Program 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 the Fund's Transfer Agent for
details about participating in the Program. The Program also provides for
additional share repurchases. The Program is described on pages 26 through 28 of
this report.
--------------------------------------------------------------------------------
* The Morgan Stanley Capital International Emerging Markets Free Latin America
Index is an unmanaged index (with no defined investment objective) of Latin
American equities that includes reinvestment of dividends, and is the exclusive
property of Morgan Stanley Capital International Inc.
** Emily Alejos, who is a Director of Credit Suisse Asset Management, LLC
("CSAM"), is primarily responsible for management of the Fund's assets. She has
served the Fund in such capacity since November 9, 1999. Ms. Alejos joined CSAM
in 1997 from Bankers Trust, where she was an emerging markets portfolio manager.
Previously, she focused on Latin American equities at G.T. Capital Management in
San Francisco. Ms. Alejos is Chief Investment Officer of the Fund. She is also
Chief Investment Officer of The Brazilian Equity Fund, Inc. and The Latin
America Equity Fund, Inc. and Investment Officer of The Chile Fund, Inc., The
Emerging Markets Telecommunications Fund, Inc. and The Emerging Markets
Infrastructure Fund, Inc.
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.
================================================================================
5
<PAGE>
-------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
PORTFOLIO SUMMARY - AS OF JUNE 30, 2000 (UNAUDITED)
-------------------------------------------------------------------------------
GEOGRAPHIC ASSET BREAKDOWN
[CHART]
AS A PERCENT OF NET ASSETS
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
<S> <C> <C>
Argentina 5.45 6.61
Brazil 34.68 33.97
Chile 8.82 7.22
Ecuador 1.03 1.01
Jamaica 1.79 0.89
Mexico 39.41 36.10
Panama 1.26 1.34
Venezuela 4.45 4.40
Global 1.02 0.68
Other 1.23 5.30
Cash & Cash Equivalents 0.86 2.48
</TABLE>
SECTOR ALLOCATION
[GRAPH]
AS A PERCENT OF NET ASSETS
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
<S> <C> <C>
Banking 3.30 2.09
Broadcast, Radio & Television 4.66 3.79
Cellular Telecommunications 3.67 0.91
Cement 2.66 2.63
Financial Services 4.55 2.87
Fixed or Floating Rate Investments 21.21 28.73
Food & Beverages 8.37 8.37
Investment & Holding Companies 6.67 2.60
Local and/or Long Distance
Telephone Service 9.81 14.17
Mining 4.23 3.30
Oil & Natural Gas 3.64 3.19
Retail 4.00 2.81
Steel 3.28 1.52
Telecommunications 13.04 11.11
Other 5.99 9.35
Cash & Cash Equivalents 0.92 2.56
</TABLE>
================================================================================
6
<PAGE>
-------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
PORTFOLIO SUMMARY - AS OF JUNE 30, 2000 (UNAUDITED) (CONTINUED)
-------------------------------------------------------------------------------
TOP 10 HOLDINGS, BY ISSUER
<TABLE>
<CAPTION>
Percent of
Holding Sector Country Net Assets
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Telefonos de Mexico, S.A. Telecommunications Mexico 9.8
-----------------------------------------------------------------------------------------------------------------------
2. Federal Republic of Brazil Fixed or Floating Rate Investments Brazil 5.6
-----------------------------------------------------------------------------------------------------------------------
3. Republic of Argentina Fixed or Floating Rate Investments Argentina 4.8
-----------------------------------------------------------------------------------------------------------------------
4. Grupo Televisa S.A. Broadcast, Radio & Television Mexico 4.7
-----------------------------------------------------------------------------------------------------------------------
5. Tele Norte Leste Participacoes S.A. Local and/or Long Distance Telephone Service Brazil 4.5
-----------------------------------------------------------------------------------------------------------------------
6. Republic of Venezuela Fixed or Floating Rate Investments Venezuela 4.1
-----------------------------------------------------------------------------------------------------------------------
7. Carso Global Telecom Investment & Holding Companies Mexico 3.9
-----------------------------------------------------------------------------------------------------------------------
8. Companhia Vale do Rio Doce Mining Brazil 3.8
-----------------------------------------------------------------------------------------------------------------------
9. Embratel Participacoes S.A. Local and/or Long Distance Telephone Service Brazil 3.7
-----------------------------------------------------------------------------------------------------------------------
10. Petroleo Brasileiro S.A. Oil & Natural Gas Brazil 3.6
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
7
<PAGE>
--------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS - JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares/Units (Note A)
--------------------------------------------------------------------------------
<S> <C> <C>
EQUITY OR EQUITY-LINKED SECURITIES-77.87%
ARGENTINA-0.66%
TELECOMMUNICATIONS-0.66%
IMPSAT Fiber Networks Inc.
(Cost $488,695) 44,700 $ 748,725
------------
BRAZIL-29.04%
BANKING-2.88%
Banco Bradesco S.A. PN 393,131 3,422
Banco do Brasil S.A., Series A,
Warrants (expiring 06/30/01)+ 11,877,000 4,083
Banco do Brasil S.A., Series B,
Warrants (expiring 06/30/06)+ 17,815,500 11,854
Banco do Brasil S.A., Series C,
Warrants (expiring 06/30/11)+ 29,692,500 22,391
Banco Itau S.A. PN 20,585,957 1,809,190
Uniao de Bancos Brasileiros
S.A. GDR 48,700 1,400,125
------------
3,251,065
------------
CELLULAR TELECOMMUNICATIONS-3.67%
Telemig Celular Participacoes
S.A. ADR 21,100 1,508,650
Telemig Celular S.A. PNC+ 132,070 3,369
Telesp Celular Participacoes
S.A. ADR 58,700 2,634,162
------------
4,146,181
------------
ELECTRIC DISTRIBUTION-0.47%
Eletropaulo Metropolitana
S.A. PN 7,520,000 529,548
------------
FERTILIZER-0.02%
Serrana S.A. ON 14,249 8,138
Serrana S.A. ON Rights
(expiring 12/25/50)+ 10,856 0
Serrana S.A. PN 16,991 8,950
Serrana S.A. PN Rights
(expiring 12/25/50)+ 12,945 0
------------
17,088
------------
</TABLE>
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
--------------------------------------------------------------------------------
<S> <C> <C>
FOOD & BEVERAGES-1.72%
Companhia Brasileira de
Distribuicao Grupo Pao de
Acucar ADR 48,900 $ 1,570,912
Companhia Cervejaria
Brahma ADR+ 22,100 375,700
------------
1,946,612
------------
LOCAL AND/OR LONG DISTANCE
TELEPHONE SERVICE-9.81%
Brasil Telecom Participacoes
S.A. ADR 24,900 1,819,256
Embratel Participacoes
S.A. ADR 177,565 4,194,973
Tele Norte Leste Participacoes
S.A. ADR 214,043 5,056,766
Telecomunicacoes de Minas
Gerais S.A. PNB 132,070 4,833
------------
11,075,828
------------
MINING-3.81%
Companhia Vale do Rio
Doce ADR 150,100 4,226,876
Companhia Vale do Rio
Doce PNA+ 2,887 81,480
------------
4,308,356
------------
OIL & NATURAL GAS-3.64%
Petroleo Brasileiro S.A. PN 136,088 4,112,446
------------
PAPER PRODUCTS-1.25%
Votorantim Celulose e Papel
S.A. ADR 76,900 1,413,037
------------
STEEL-1.77%
Gerdau S.A. PN 163,814,050 1,998,286
------------
TOTAL BRAZIL (Cost $27,432,107) 32,798,447
------------
CHILE-8.76%
BANKING-0.42%
Banco de Credito e Inversiones 72,752 472,412
------------
</TABLE>
================================================================================
8
<PAGE>
--------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
--------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER DURABLES-0.19%
Empresas Almacenes Paris S.A. 192,229 $ 219,395
------------
ELECTRIC GENERATION-0.67%
Empresa Nacional de
Electricidad S.A.+ 309,074 113,856
Enersis S.A.+ 1,222,321 491,106
Gener S.A. 708,000 151,100
------------
756,062
------------
ENGINEERING & CONSTRUCTION-0.22%
Besalco S.A. 66,354 145,305
Maderas y Sinteticos S.A. 256,850 100,099
------------
245,404
------------
FERTILIZER-0.24%
Sociedad Quimica y Minera de
Chile S.A., Class A 41,406 99,510
Sociedad Quimica y Minera de
Chile S.A., Class B 75,000 167,022
------------
266,532
------------
FOOD & BEVERAGES-2.30%
Compania Cervecerias Unidas
S.A. 64,574 290,005
Compania Cervecerias Unidas
S.A. ADR 12,300 279,056
Distribucion y Servicio D&S
S.A. 91,904 106,597
Distribucion y Servicio D&S
S.A. ADR 37,500 651,562
Embotelladora Andina S.A.
ADR 27,700 264,881
Embotelladora Andina S.A.
PNA 121,203 251,921
Embotelladora Andina S.A.
PNB 49,172 82,585
Embotelladora Arica S.A.
ADR+,++ 75,000 675,000
------------
2,601,607
------------
</TABLE>
<TABLE>
<CAPTION>
No. of Value
Description Shares/Units (Note A)
--------------------------------------------------------------------------------
<S> <C> <C>
FORESTRY-1.50%
Compania de Petroleos de Chile
S.A. 254,729 $ 1,077,818
Empresas CMPC S.A. 54,704 619,271
------------
1,697,089
------------
INSURANCE-0.10%
Compania de Seguros La
Prevision Vida S.A. 188,348 115,347
------------
PHARMACEUTICALS-0.10%
Laboratorio Chile S.A. 122,019 117,207
------------
RETAIL-0.37%
Sociedad Anonima Comercial e
Industrial Falabella 435,161 415,900
------------
STEEL-0.48%
Compania Acero del Pacifico
S.A. 270,555 537,244
------------
TELECOMMUNICATIONS-2.17%
Compania de
Telecomunicaciones de
Chile S.A. ADR 60,300 1,092,938
Compania de
Telecomunicaciones de
Chile S.A., Class A 40,717 185,884
Compania de
Telecomunicaciones de
Chile S.A., Class B 113,213 472,728
Empresa Nacional de
Telecomunicaciones S.A. 78,568 699,873
------------
2,451,423
------------
TOTAL CHILE (Cost $9,141,523) 9,895,622
------------
JAMAICA-1.79%
INVESTMENT & HOLDING COMPANIES-1.79%
Jamaican Assets I L.P. @+
(Cost $859,192) 794,973 2,021,338
------------
</TABLE>
================================================================================
9
<PAGE>
--------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares/Units (Note A)
--------------------------------------------------------------------------------
<S> <C> <C>
LATIN AMERICA-0.31%
DIVERSIFIED OPERATIONS-0.31%
J.P. Morgan Latin America
Capital Partners, L.P.*+# 350,557 $ 350,557
------------
TELECOMMUNICATIONS-0.00%
International Wireless
Communications Holdings,
Corp.*+ 6,318 0
------------
TOTAL LATIN AMERICA (Cost $350,215) 350,557
------------
MEXICO-35.90%
BROADCAST, RADIO & TELEVISION-4.66%
Grupo Televisa S.A. GDR+ 76,400 5,266,825
------------
CEMENT-2.66%
Cemex, S.A. de C.V. ADR 128,306 2,999,153
Cemex, S.A. de C.V. CPO 2 9
------------
2,999,162
------------
DIVERSIFIED OPERATIONS-0.91%
Alfa, S.A., Series A 452,158 1,033,583
------------
FINANCIAL SERVICES-4.55%
Grupo Financiero Banamex
Accival, S.A. de C.V., Series O+ 965,618 4,061,423
Grupo Financiero Bancomer,
S.A. de C.V., Series O+ 2,120,000 1,076,907
------------
5,138,330
------------
FOOD & BEVERAGES-4.35%
Fomento Economico Mexicano,
S.A. de C.V. ADR 54,800 2,359,825
Grupo Modelo, S.A. de C.V.,
Series C 1,101,999 2,558,232
------------
4,918,057
------------
INVESTMENT & HOLDING COMPANIES-3.86%
Carso Global Telecom,
Class A-1+ 1,527,217 4,359,931
------------
</TABLE>
<TABLE>
<CAPTION>
No. of Value
Description Shares/Units (Note A)
--------------------------------------------------------------------------------
<S> <C> <C>
MINING-0.42%
Grupo Mexico S.A., Series B 168,773 $ 474,958
------------
RETAIL-3.63%
Wal-Mart de Mexico S.A. de C.V.
ADR+ 174,689 4,099,601
------------
STEEL-1.03%
Tubos de Acero de Mexico, S.A.
ADR 84,200 1,168,275
------------
TELECOMMUNICATIONS-9.83%
Telefonos de Mexico, S.A.,
Class L ADR 194,300 11,099,388
------------
TOTAL MEXICO (Cost $34,520,095) 40,558,110
------------
PERU-0.01%
Engineering & Construction-0.01%
Tecsur S.A.+ (Cost $16,661) 82,212 5,422
------------
VENEZUELA-0.38%
CEMENT-0.00%
Cemex Venezuela
S.A.C.A., Shares 2 317 109
------------
TELECOMMUNICATIONS-0.38%
Venworld
Telecommunications@ + 40,140 436,012
------------
TOTAL VENEZUELA (Cost $816,963) 436,121
------------
GLOBAL-1.02%
INVESTMENT & HOLDING COMPANIES-1.02%
Emerging Markets Ventures I
L.P.@+# (Cost $833,631) 803,343 1,149,126
------------
TOTAL EQUITY OR EQUITY-LINKED
SECURITIES (Cost $74,459,082) 87,963,468
------------
</TABLE>
================================================================================
10
<PAGE>
--------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
Description (000) (Note A)
--------------------------------------------------------------------------------
<S> <C> <C>
FIXED OR FLOATING RATE
INVESTMENTS-21.21%
ARGENTINA-4.79%
Republic of Argentina,
Debentures, 7.375%,
03/31/05(2)(5)(6) USD 1,600 $ 1,460,800
Republic of Argentina,
Global Senior Note, 11.595%,
04/10/05(4) 650 611,000
Republic of Argentina, Par Bond,
Series L-GP, 6.00%, 03/31/23(5) 625 412,500
Republic of Argentina, Unsubordinated
Note, Series 54, Tranche 1
8.75%, 07/10/02++ 1,250 1,125,937
Republic of Argentina, Series
REGS, Euro MTN, 11.75%,
02/12/07++ ARS 2,150 1,804,287
------------
TOTAL ARGENTINA (Cost $5,222,240) 5,414,524
------------
BRAZIL-5.64%
Federal Republic of Brazil,
Bearer Bond, 7.375%,
04/15/09(4)(5)(6) USD 148 114,700
Federal Republic of Brazil,
Capitalization Bond, 8.00%,
04/15/14(1)(5)(6) 308 223,386
Federal Republic of Brazil,
Capitalization Debenture, Series
L, 8.00%, 04/15/14(1)(5)(6) 443 321,675
Federal Republic of Brazil, Debt
Conversion Bond, Series L,
7.4375%, 04/15/12(3)(5)(6) 2,076 1,530,401
Federal Republic of Brazil,
Debt Conversion Bond, Series
L-18yr, 7.4375%, 04/15/12(3)(5)(6) 1,926 1,419,823
Federal Republic of Brazil,
Global Bond, 12.75%,
01/15/20 100 95,500
</TABLE>
<TABLE>
<CAPTION>
Par Value
Description (000) (Note A)
--------------------------------------------------------------------------------
<S> <C> <C>
BRAZIL (CONTINUED)
Federal Republic of Brazil, Global
Bond, 12.25%, 03/06/30 USD 320 $ 292,800
Federal Republic of Brazil,
Unsubordinated Bond, 14.50%,
10/15/09 2,241 2,373,779
------------
TOTAL BRAZIL (Cost $6,091,826) 6,372,064
------------
COLOMBIA-0.51%
Republic of Colombia, Global
Bond, 11.75%, 02/25/20 464 389,180
Republic of Colombia, Global
Unsubordinated Note, 8.625%,
04/01/08 250 187,500
------------
TOTAL COLOMBIA (Cost $626,679) 576,680
------------
ECUADOR-1.03%
The Republic of Ecuador, Par
Bond, 4.00%, 02/28/25(5)(7)
(Cost $1,544,907) 3,400 1,156,000
------------
MEXICO-3.51%
United Mexican States, Global
Bond, 11.375%, 09/15/16 2,815 3,225,990
United Mexican States, Par Bond,
Series W-B, 6.25%,
12/31/19(5) 187 155,677
United Mexican States, Secured
Bond, Series W-A, 6.25%,
12/31/19(5) 700 579,250
------------
TOTAL MEXICO (Cost $3,676,913) 3,960,917
------------
PANAMA-1.26%
The Republic of Panama, Global
Bond, 8.875%, 09/30/27 405 341,212
The Republic of Panama, Interest
Reduction Debenture, 4.25%,
07/17/14(4)(5)(6) 1,350 1,081,688
------------
TOTAL PANAMA (Cost $1,413,765) 1,422,900
------------
</TABLE>
================================================================================
11
<PAGE>
--------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Par Value
Description (000) (Note A)
--------------------------------------------------------------------------------
<S> <C> <C>
PERU-0.40%
The Republic of Peru, Front
Loaded Interest Reduction
Bond, 3.75%, 03/07/17(4)(5)(6)
(Cost $452,642) USD 750 $ 455,625
------------
VENEZUELA-4.07%
Republic of Venezuela, Discount
Bond, Series W-A, 7.375%,
03/31/20(2)(5)(8) 500 383,243
Republic of Venezuela,
Front Loaded Interest
Reduction Debenture, Series A,
7.4375%, 03/31/07(3)(5)(6) 2,000 1,639,994
Republic of Venezuela, Global
Bond, 13.625%, 08/15/18 2,375 2,208,750
Republic of Venezuela, Global
Bond, 9.25%, 09/15/27 550 362,175
------------
TOTAL VENEZUELA (Cost $3,827,828) 4,594,162
------------
TOTAL FIXED OR FLOATING RATE
INVESTMENTS (Cost $22,856,800) 23,952,872
------------
</TABLE>
<TABLE>
<CAPTION>
No. of Value
Description Shares/Units (Note A)
--------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENTS-0.06%
CHILEAN MUTUAL FUNDS-0.06%
Bice Manager Investment Fund 4,639 $ 12,625
Fondo Mutuo Santander Money
Market 5,657 26,336
Fondo Mutuo Security Check 5,248 24,597
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $64,496) 63,558
------------
TOTAL INVESTMENTS-99.14%
(Cost $97,380,378) (Notes A,D) 111,979,898
CASH AND OTHER ASSETS IN EXCESS
OF LIABILITIES-0.86% 975,718
------------
NET ASSETS-100.00% $ 112,955,616
============
</TABLE>
--------------------------------------------------------------------------------
* Not readily marketable security.
@ Restricted security, not readily marketable (See Note F).
+ Security is non-income producing.
++ SEC Rule 144A security. Such securities are traded only among "qualified
institutional buyers."
# As of June 30, 2000, the Fund committed to investing an additional
$412,822 and $3,008,348 of capital in Emerging Markets Ventures I L.P.
and J.P. Morgan Latin America Capital Partners, L.P., respectively.
(1) Payment-in-kind bond; of which all or a portion of the coupon is being
capitalized at periodic intervals.
(2) Floating rate bond; rate resets based on 6-month London Interbank Offered
Rate ("LIBOR") plus 0.8125%.
(3) Floating rate bond; rate resets based on 6-month LIBOR plus 0.875%.
(4) Variable rate bond; coupon varies at periodic intervals.
(5) Brady Bond.
(6) Pro-rata sinking fund has been established.
(7) Step-up bond; coupon increases at periodic intervals.
(8) Issued with 3,570 oil-linked certificates with no current market value.
ADR American Depositary Receipts.
ARS Argentine Pesos.
CPO Ordinary Participation Certificates.
GDR Global Depositary Receipts.
MTN Medium Term Note.
ON Ordinary Shares.
PN Preferred Shares.
PNA Preferred Shares, Class A.
PNB Preferred Shares, Class B.
PNC Preferred Shares, Class C.
USD United States Dollars.
================================================================================
12 See accompanying notes to financial statements.
<PAGE>
--------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost $97,380,378)(Note A) $111,979,898
Cash (including $368,490 of foreign currencies with a cost of
$368,747) (Note A) 1,113,132
Receivables:
Investments sold 829,761
Interest 792,783
Dividends 288,794
Prepaid expenses and other assets 8,130
------------
Total Assets 115,012,498
------------
LIABILITIES
Payables:
Investments purchased 1,371,054
Investment advisory fees (Note B) 295,346
Administration fees (Note B) 35,957
Other accrued expenses 303,388
Chilean repatriation taxes (Note A) 51,137
------------
Total Liabilities 2,056,882
------------
NET ASSETS (applicable to 6,250,239 shares of common stock
outstanding) (Note C) $112,955,616
============
NET ASSET VALUE PER SHARE ($112,955,616 / 6,250,239) $18.07
============
NET ASSETS CONSIST OF
Capital stock, $0.001 par value; 6,250,239 shares issued and
outstanding (100,000,000 shares authorized) $ 6,250
Paid-in capital 112,893,466
Undistributed net investment income 1,672,490
Accumulated net realized loss on investments and foreign
currency related transactions (16,205,853)
Net unrealized appreciation in value of investments and
translation of other assets and liabilities denominated in
foreign currencies 14,589,263
------------
Net assets applicable to shares outstanding $112,955,616
============
</TABLE>
================================================================================
See accompanying notes to financial statements. 13
<PAGE>
--------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
STATEMENT OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Income (Note A):
Dividends $ 745,270
Interest 2,205,098
Less: Foreign taxes withheld (49,034)
-----------
Total Investment Income 2,901,334
-----------
Expenses:
Investment advisory fees (Note B) 688,978
Consulting Fees (Note H) 131,024
Audit and legal fees 113,399
Administration fees (Note B) 95,695
Custodian fees 63,127
Printing 44,838
Accounting fees 40,289
Transfer agent fees 20,260
Directors' fees 19,945
NYSE listing fees 8,063
Insurance 4,616
Other 19,874
Brazilian taxes (Note A) 45,451
-----------
Total Expenses 1,295,559
Less: Fee waivers (Note B) (66,715)
-----------
Net Expenses 1,228,844
-----------
Net Investment Income 1,672,490
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN
CURRENCY RELATED TRANSACTIONS
Net realized gain from:
Investments 8,992,341
Foreign currency related transactions 16,477
Net change in unrealized appreciation in value of investments
and translation of other assets and liabilities denominated in
foreign currencies (8,749,765)
-----------
Net realized and unrealized gain on investments and foreign
currency related transactions 259,053
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,931,543
===========
</TABLE>
================================================================================
14 See accompanying notes to financial statements.
<PAGE>
--------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six For the
Months Ended Year Ended
June 30, 2000 December 31,
(unaudited) 1999
---------------------------
<S> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS
Operations:
Net investment income $ 1,672,490 $ 4,134,035
Net realized gain on investments and foreign
currency related transactions 9,008,818 1,891,707
Net change in unrealized appreciation/
(depreciation) in value of investments and
translation of other assets and liabilities
denominated in foreign currencies (8,749,765) 34,738,713
------------ ------------
Net increase in net assets resulting from
operations 1,931,543 40,764,455
------------ ------------
Dividends to shareholders:
Net investment income -- (3,293,569)
------------ ------------
Capital share transactions:
Cost of 336,900 shares and 1,338,000 shares
repurchased, respectively (Note G) (4,560,172) (12,985,948)
------------ ------------
Total increase/(decrease) in net assets (2,628,629) 24,484,938
------------ ------------
NET ASSETS
Beginning of period 115,584,245 91,099,307
------------ ------------
End of period $112,955,616* $115,584,245
============ ============
</TABLE>
-----------------------------------
* Includes undistributed net investment income of $1,672,490.
================================================================================
See accompanying notes to financial statements. 15
<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 Six Months
Ended
June 30, 2000 -----------------------
(unaudited) 1999 1998
------------------- -------- -------
PER SHARE OPERATING PERFORMANCE
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period................................. $17.55 $11.49 $18.21
-------- -------- -------
Net investment income................................................ 0.26+ 0.59 0.43
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions...................................... 0.02 5.44 (6.71)++
-------- -------- -------
Net increase/(decrease) in net assets resulting from operations...... 0.28 6.03 (6.28)
-------- -------- -------
Dividends and distributions to shareholders:
Net investment income............................................ -- (0.50) (0.45)
Net realized gain on investments and foreign currency related
transactions.................................................... -- -- --
In excess of net realized gains.................................. -- -- --
-------- -------- -------
Total dividends and distributions to shareholders.................... -- (0.50) (0.45)
-------- -------- -------
Anti-dilutive impact due to capital shares repurchased............... 0.24 0.53 0.01
Dilutive impact due to capital share rights offering................. -- -- --
Net asset value, end of period....................................... $18.07 $17.55 $11.49
======== ======== =======
Market value, end of period.......................................... $14.875 $13.063 $8.188
======== ======== =======
Total investment return (a).......................................... 13.88% 65.69% (39.56)%
======== ======== =======
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted).............................. $112,956 $115,584 $91,099
Ratio of expenses to average net assets (b).......................... 2.21%(c) 1.89% 2.39%
Ratio of expenses to average net assets, excluding fee waivers....... 2.33%(c) 2.01% 2.51%
Ratio of expenses to average net assets, excluding taxes............. 2.13%(c) 1.85% 1.80%
Ratio of net investment income to average net assets................. 3.01%(c) 4.33% 2.91%
Portfolio turnover rate.............................................. 55.94% 115.42% 172.62%
-------------------------------------------------------------------------------
* Commencement of investment 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.
++ Includes a $0.05 per share decrease to the Fund's net asset value per share
resulting from the dilutive impact of shares issued pursuant to the Fund's
automatic dividend reinvestment program for the year ended December 31,
1998.
(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 program. Total investment return does not reflect brokerage
commissions or initial underwriting discounts and has not been annualized.
(b) Ratios reflect actual expenses incurred by the Fund. Amounts are net of fee
waivers and inclusive of taxes.
(c) Annualized.
</TABLE>
================================================================================
16 See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
For the Years Ended December 31,
-----------------------------------------
1997 1996 1995
-------- -------- --------
PER SHARE OPERATING PERFORMANCE
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period................................. $19.07 $17.09 $20.18
-------- -------- --------
Net investment income................................................ 0.11 0.28 0.19
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions...................................... 1.66 1.93 (3.09)
-------- -------- --------
Net increase/(decrease) in net assets resulting from operations...... 1.77 2.21 (2.90)
-------- -------- --------
Dividends and distributions to shareholders:
Net investment income............................................ (0.21) (0.23) --
Net realized gain on investments and foreign currency related
transactions.................................................... (2.42) -- (0.19)
In excess of net realized gains.................................. -- -- --
-------- -------- --------
Total dividends and distributions to shareholders.................... (2.63) (0.23) (0.19)
-------- -------- --------
Anti-dilutive impact due to capital shares repurchased............... -- -- --
Dilutive impact due to capital share rights offering................. -- -- --
-------- -------- --------
Net asset value, end of period....................................... $18.21 $19.07 $17.09
======== ======== ========
Market value, end of period.......................................... $14.313 $15.750 $14.750
======== ======== ========
Total investment return (a).......................................... 8.21% 8.26% (20.34)%
======== ======== ========
RATIOS/SUPPLEMENTAL DATA
-------------------------
Net assets, end of period (000 omitted).............................. $143,358 $150,007 $134,290
Ratio of expenses to average net assets (b).......................... 2.46% 1.70% 2.00%
Ratio of expenses to average net assets, excluding fee waivers....... 2.58% 1.82% 2.12%
Ratio of expenses to average net assets, excluding taxes............. 1.68% -- 1.78%
Ratio of net investment income to average net assets................. 0.53% 1.47% 1.10%
Portfolio turnover rate.............................................. 124.98% 50.21% 38.71%
-----------------------------------------
1994 1993 1992
-------- -------- --------
PER SHARE OPERATING PERFORMANCE
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period................................. $25.73 $25.36 $26.05
-------- -------- --------
Net investment income................................................ 0.09+ 0.08 0.24
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions...................................... 1.29 10.18 1.51
-------- -------- --------
Net increase/(decrease) in net assets resulting from operations...... 1.38 10.26 1.75
-------- -------- --------
Dividends and distributions to shareholders:
Net investment income............................................ (0.07) (0.22) --
Net realized gain on investments and foreign currency related
transactions.................................................... (4.33) (8.61) (2.44)
In excess of net realized gains.................................. -- (0.04) --
-------- -------- --------
Total dividends and distributions to shareholders.................... (4.40) (8.87) (2.44)
-------- -------- --------
Anti-dilutive impact due to capital shares repurchased............... -- -- --
Dilutive impact due to capital share rights offering................. (2.53) (1.02) --
-------- -------- --------
Net asset value, end of period....................................... $20.18 $25.73 $25.36
======== ======== ========
Market value, end of period.......................................... $18.750 $31.500 $24.375
======== ======== ========
Total investment return (a).......................................... (26.63)% 89.45% 2.35%
======== ======== ========
RATIOS/SUPPLEMENTAL DATA
--------------------------
Net assets, end of period (000 omitted).............................. $156,673 $140,458 $102,259
Ratio of expenses to average net assets (b).......................... 2.02% 2.06% 2.61%
Ratio of expenses to average net assets, excluding fee waivers....... -- -- --
Ratio of expenses to average net assets, excluding taxes............. 1.72% -- 2.31%
Ratio of net investment income to average net assets................. 0.63% 1.45% 1.15%
Portfolio turnover rate.............................................. 77.81% 70.17% 55.40%
For the Period
August 1, 1990*
-------- through
1991 December 31, 1990
-------- -----------------
PER SHARE OPERATING PERFORMANCE
----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period................................. $14.24 $13.64**
-------- --------
Net investment income................................................ 0.61 0.29
Net realized and unrealized gain/(loss) on investments and foreign
currency related transactions...................................... 14.66 0.58
-------- --------
Net increase/(decrease) in net assets resulting from operations...... 15.27 0.87
-------- --------
Dividends and distributions to shareholders:
Net investment income............................................ (0.63) (0.27)
Net realized gain on investments and foreign currency related
transactions.................................................... (2.83) --
In excess of net realized gains.................................. -- --
-------- --------
Total dividends and distributions to shareholders.................... (3.46) (0.27)
-------- --------
Anti-dilutive impact due to capital shares repurchased............... -- --
Dilutive impact due to capital share rights offering................. -- --
-------- --------
Net asset value, end of period....................................... $26.05 $14.24
======== ========
Market value, end of period.......................................... $26.500 $11.125
======== ========
Total investment return (a).......................................... 167.96% (18.35)%
======== ========
RATIOS/SUPPLEMENTAL DATA
-------------------------
Net assets, end of period (000 omitted).............................. $104,435 $57,081
Ratio of expenses to average net assets (b).......................... 2.30% 3.27%(c)
Ratio of expenses to average net assets, excluding fee waivers....... -- --
Ratio of expenses to average net assets, excluding taxes............. -- --
Ratio of net investment income to average net assets................. 2.85% 5.10%(c)
Portfolio turnover rate.............................................. 82.39% 52.49%
</TABLE>
===============================================================================
17
<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:
MANAGEMENT ESTIMATES: The preparation of financial statements in accordance
with accounting principles generally accepted in the United States requires
management to make certain estimates and assumptions that may affect the
reported amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
PORTFOLIO VALUATION: Investments are stated at value in the accompanying
financial statements. All securities shall be valued at the closing price on
the exchange or market on which the security is primarily traded ("Primary
Market"). If the security did not trade on the Primary Market, it shall be
valued at the closing price on another exchange where it trades. If there are
no such sale prices, the value shall be the most recent bid, and if there is
no bid, the security shall be valued at the most recent asked. If no pricing
service is available and there are more than two dealers, the value shall be
the mean of the highest bid and lowest ask. If there is only one dealer, then
the value shall be the mean if bid and ask are available, otherwise the value
shall be the bid. 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 Board of Directors has established general guidelines for
calculating fair value of non-publicly traded securities. At June 30, 2000,
the Fund held 3.50% of its net assets in securities valued in good faith by
the Board of Directors with an aggregate cost of $2,859,998 and fair value of
$3,957,033. The net asset value per share of the Fund is calculated on each
business day, with the exception of those days on which the New York Stock
Exchange is closed.
CASH: Deposits held at Brown Brothers Harriman & Co., the Fund's custodian,
in a variable rate account are classified as cash. At June 30, 2000, the
interest rate was 6.00%, 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, 1999, the Fund had a capital loss carryforward of $23,556,041
of which $22,881,266 expires in 2006 and $674,775 expires in 2007.
For U.S. federal income tax purposes, realized foreign currency losses and
net realized capital losses from investments incurred after October 31, 1999,
within the Fund's prior fiscal year, are deemed to arise on the first day of
the current fiscal year. The Fund incurred and elected to defer such losses
of $42,115 and $1,243,892, respectively.
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.
===============================================================================
18
<PAGE>
-------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
-------------------------------------------------------------------------------
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, 2000, the Fund incurred no such expense.
From January 23, 1997 through January 22, 1999, Brazil imposed a 0.20%
CONTRIBUCAO SOBRE MOVIMENTACAO FINANCIERA ("CPMF") tax that applied to most
debit transactions carried out by financial institutions. Effective January
23, 1999, the CPMF tax expired and was reinstated on June 17, 1999 for a
period of three years. The tax is assessed at a rate of 0.38% for the initial
year and dropped to 0.30% for the remaining two years. For the six months
ended June 30, 2000, the Fund incurred $45,451 of such expense.
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:
(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.
Net currency gains or losses from valuing foreign currency denominated assets
and liabilities at period end exchange rates are reflected as a component of
net unrealized appreciation/depreciation in value of investments and
translation of other assets and liabilities denominated in foreign currencies.
Net realized foreign exchange gains 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.
===============================================================================
19
<PAGE>
-------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
-------------------------------------------------------------------------------
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.
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 exchanges 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 substantially less than those originally paid by the Fund or
the current carrying values. 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.
The Fund may enter into repurchase agreements ("repos") on U.S. Government
securities with primary government securities dealers recognized by the
Federal Reserve Bank of New York and member banks of the Federal Reserve
System and on securities issued by the governments of foreign countries,
their instrumentalities and with creditworthy parties in accordance with
established procedures. Repos are contracts under which the buyer of a
security simultaneously buys and commits to resell the security to the seller
at an agreed upon price and date. Repos are deposited with the Fund's
custodian and, pursuant to the terms of the repo, the collateral must have an
aggregate market value greater than or equal to the repurchase price plus
accrued interest at all times. If the value of the underlying securities fall
below the value of the repurchase price plus accrued interest, the Fund will
require the seller to deposit additional collateral by the next business day.
If the request for additional collateral is not met, or the seller defaults
on its repurchase obligation, the Fund maintains the right to sell the
underlying securities at market value and may claim any resulting loss
against the seller; collectibility of such claims may be limited. At June 30,
2000, the Fund had no such agreements.
===============================================================================
20
<PAGE>
-------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
-------------------------------------------------------------------------------
NOTE B. AGREEMENTS
Credit Suisse Asset Management, LLC ("CSAM") serves as the Fund's investment
adviser, with respect to all investments other than sovereign debt. As
compensation for its advisory services, CSAM 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. CSAM has agreed to waive its portion of the advisory fee
previously payable to the Fund's former sub-advisers. For the six months
ended June 30, 2000, CSAM earned $585,631 for advisory services, of which
CSAM waived $56,708. CSAM also provides certain administrative services to
the Fund and is reimbursed by the Fund for costs incurred on behalf of the
Fund (up to $20,000 per annum). For the six months ended June 30, 2000, CSAM
was reimbursed $8,383 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 the former sub-advisers.
For the six months ended June 30, 2000, advisory fees amounted to $103,347,
of which $10,007 was waived by SBAM.
Celfin Servicios Financieros Limitada ("Celfin") serves as the 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 CSAM 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, 2000, these
sub-advisory fees amounted to $27,793.
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, 2000, BSFM earned $54,403 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 $56,000 at June 30, 2000) 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 $6,000 at June 30, 2000). For the six months
ended June 30, 2000, Celfin earned $32,909 and $2,941 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 6,250,239 shares outstanding at June 30,
2000, CSAM owned 7,169 shares.
===============================================================================
21
<PAGE>
-------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
-------------------------------------------------------------------------------
NOTE D. INVESTMENT IN SECURITIES
For U.S. federal income tax purposes, the cost of securities owned at June
30, 2000 was $97,548,429. Accordingly, the net unrealized appreciation of
investments (including investments denominated in foreign currencies) of
$14,431,469, was composed of gross appreciation of $17,045,963 for those
investments having an excess of value over cost and gross depreciation of
$2,614,494 for those investments having an excess of cost over value.
For the six months ended June 30, 2000, purchases and sales of securities,
other than short-term investments, were $60,531,240 and $61,842,973
respectively.
NOTE E. CREDIT FACILITY
The Fund, together with other funds advised by CSAM established a $350
million committed, unsecured, line of credit facility ("Credit Facility")
with Deutsche Bank AG as administrative agent, State Street Bank and Trust
Company as operations agent, Bank of Nova Scotia as syndication agent as well
as certain other lenders, for temporary or emergency purposes. Under the
terms of the Credit Facility, the Funds with access to the terms of the
Credit Facility pay an aggregate commitment fee at a rate of 0.075% per annum
on the average daily balance of the Credit Facility that is undisbursed and
uncanceled during the preceding quarter allocated among the participating
funds in such manner as is determined by the governing Boards of the various
funds. In addition, the participating funds will pay interest on borrowing at
the Federal Funds rate plus 0.50%. At June 30, 2000 and during the six months
ended June 30, 2000, the Fund had no borrowings under the Credit Facility.
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 units/shares held, the acquisition dates,
aggregate costs, fair value as of June 30, 2000, value per unit/share of such
securities and percent of net assets which the securities comprise.
<TABLE>
<CAPTION>
FAIR VALUE AT VALUE PERCENT
NUMBER OF ACQUISITION JUNE 30, PER OF NET
SECURITY UNITS/SHARES DATES COST 2000 UNIT/SHARE ASSETS
-------- ------------ ----------------- -------- ------------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Emerging Markets Ventures I L.P....... 711,734 01/22/98-12/21/99 $742,022 $1,018,086 $ 1.43 0.90
91,609 03/21/00 91,609 131,040 0.12
------------ -------- ------------- --------
803,343 833,631 1,149,126 1.02
------------ -------- ------------- --------
Jamaican Assets I L.P................. 794,973 07/29/97-10/17/97 859,192 2,021,338 2.54 1.79
------------ -------- ------------- --------
Venworld Telecommunications........... 40,140 07/30/92-08/07/92 816,959 436,012 10.86 0.38
------------ -------- ------------- --------
</TABLE>
The Fund may incur certain costs in connection with the disposition of the
above securities.
===============================================================================
22
<PAGE>
-------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
-------------------------------------------------------------------------------
NOTE G. SHARE REPURCHASE PROGRAM
On October 21, 1998, the Fund's Board of Directors authorized the repurchase
by the Fund of up to 15% of the Fund's outstanding common stock, for the
purposes of enhancing shareholder value. The Fund's Board had authorized
management of the Fund to repurchase such shares in open market transactions
at prevailing market prices from time to time and in a manner consistent with
the Fund continuing to seek to achieve its investment objectives. The Board's
actions were taken in light of the significant discounts at which the Fund's
shares were trading. It is intended both to provide additional liquidity to
those shareholders that elect to sell their shares and to enhance the net
asset value of the shares held by those shareholders that maintain their
investment. The repurchase program is subject to review by the Board of
Directors of the Fund. By July 1999, the Fund had repurchased the full amount
so authorized (1,200,000). On October 14, 1999, the Fund announced that its
Board of Directors has authorized the repurchase by the Fund of up to an
additional 15% of the Fund of the Fund's outstanding common shares, for the
purpose of further enhancing shareholder value. For the year ended December
31, 1999, the Fund repurchased 1,338,000 of its shares for a total cost of
$12,985,948 at a weighted average discount of 23.03% from net asset value.
The discount of individual repurchases ranged from 17.53% - 26.78%. For the
six months ended June 30, 2000, the Fund repurchased 336,900 of its shares
for a total cost of $4,560,172 at a weighted average discount of 25.24% from
net asset value. The discount of individual repurchases ranged from 20.59% -
28.84%.
NOTE H. SUBSEQUENT EVENTS
The Fund engaged an Investment Banking Firm during the year to look at
various strategic options for the Fund. As a result of such engagement, on
July 24, 2000, the Fund's Board of Directors approved the merger (the
"Merger") of The Latin America Equity Fund, Inc. ("LAQ") with and into the
Fund. As a result of the Merger, LAQ will cease to exist, and the Fund will
be the surviving legal corporation and each share of common stock of LAQ will
be converted into an equivalent dollar amount of full shares of common stock
of the Fund based on the net asset value of each of the Fund and LAQ. The
Fund will not issue any fractional shares to LAQ's shareholders. The Fund's
transfer agent will aggregate all fractional shares, sell the resulting
shares on the New York Stock Exchange at the current market price for the
shares and remit the cash proceeds to LAQ's shareholders in proportion to
their fractional shares. Upon consummation of the Merger, the Fund will
change its name to "The Latin America Equity Fund, Inc." and will adopt LAQ's
investment objective and policies.
Consummation of the Merger is subject to a number of conditions, including
shareholder approval and certain regulatory approvals.
In addition, on May 23, 2000 the Board of Directors of the Fund determined
that it was in the best interests of the Fund to initiate a tender offer to
acquire up to 50% of its shares of common stock at a price per share equal to
95% of the Fund's net asset value per share as of the end of the tender offer
period. The tender offer is subject to approval of the Merger by the
shareholders of both the Fund and LAQ and satisfaction of the other
conditions to closing the Merger.
In addition, on June 27, 2000 the Board of Directors of the Fund approved the
overall terms of a self-tender program that the Fund intends to launch in
calendar year 2001, which terms include the following: (i) LAQ
===============================================================================
23
<PAGE>
-------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
-------------------------------------------------------------------------------
will make a tender offer to acquire at least 15% of its outstanding shares
during each calendar year of the program, and (ii) the per share purchase
price will be at least 95% of LAQ's net asset value per share. Implementation
of the self-tender program is conditioned on consummation of the Merger. Upon
consummation of the Merger, the Fund, as the surviving corporation and
renamed "The Latin America Equity Fund, Inc.," will launch the self-tender
programs. The self-tender program is subject to change based on economic or
market conditions or other factors. For example, a sustained reduction in the
market discount at which the Fund's shares trade, a risk of material adverse
tax consequences, or a risk of the Fund becoming subject to delisting may
lead the Board of Directors to conclude that it is appropriate to suspend the
self-tender program.
===============================================================================
24
<PAGE>
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
On May 23, 2000, 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>
Dr. Enrique R. Arzac 5,007,089 195,982 1,315,568
George W. Landau 4,992,927 210,144 1,315,568
Richard W. Watt 5,008,592 194,479 1,315,568
</TABLE>
In addition to the directors re-elected at the meeting, James J. Cattano,
Riordan Roett, Martin M. Torino and William W. Priest, Jr. continue to serve
as directors of the Fund.
(2) To ratify the selection of PricewaterhouseCoopers LLP as independent public
accountants for the fiscal year ending December 31, 2000.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN NON-VOTES
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
5,069,678 117,278 16,115 1,315,568
</TABLE>
(3) To approve a shareholder proposal requesting that the Board of Directors
present for shareholder approval a program to permit shareholders to realize
net asset value for their shares.
<TABLE>
<CAPTION>
DELEGATED
NON-VOTES/
FOR AGAINST ABSTAIN NON-VOTES
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
2,732,610 695,593 51,822 3,038,614
</TABLE>
===============================================================================
25
<PAGE>
DESCRIPTION OF INVESTLINK-SM-* PROGRAM (UNAUDITED)
The InvestLink-SM- Program is sponsored and administered by EquiServe, L.P.,
not by The Latin America Investment Fund, Inc. (the "Fund"). EquiServe, L.P.
will act as program administrator (the "Program Administrator") of the
InvestLink-SM- Program (the "Program"). The purpose of the Program is to
provide interested investors with a simple and convenient way to invest funds
and reinvest dividends in shares of the Fund's common stock ("Shares") at
prevailing prices, with reduced brokerage commissions and fees.
An interested investor may join the Program at any time. Purchases of Shares
with funds from a participant's cash payment or automatic account deduction
will begin on the next day on which funds are invested. If a participant
selects the dividend reinvestment option, automatic investment of dividends
generally will begin with the next dividend payable after the Program
Administrator receives his enrollment form. Once in the Program, a person
will remain a participant until he terminates his participation or sells all
Shares held in his Program account, or his account is terminated by the
Program Administrator. A participant may change his investment options at any
time by requesting a new enrollment form and returning it to the Program
Administrator.
A participant will be assessed certain charges in connection with his
participation in the Program. First-time investors will be subject to an
initial service charge which will be deducted from their initial cash
deposit. All optional cash deposit investments will be subject to a service
charge. Sales processed through the Program will have a service fee deducted
from the net proceeds, after brokerage commissions. In addition to the
transaction charges outlined above, participants will be assessed per share
processing fees (which include brokerage commissions). Participants will not
be charged any fee for reinvesting dividends.
The number of Shares to be purchased for a participant depends on the amount
of his dividends, cash payments or bank account or payroll deductions, less
applicable fees and commissions, and the purchase price of the Shares. The
Program Administrator uses dividends and funds of participants to purchase
Shares of the Fund's common stock in the open market. Such purchases will be
made by participating brokers as agent for the participants using normal cash
settlement practices. All Shares purchased through the Program will be
allocated to participants as of the settlement date, which is usually three
business days from the purchase date. In all cases, transaction processing
will occur within 30 days of the receipt of funds, except where temporary
curtailment or suspension of purchases is necessary to comply with applicable
provisions of the Federal Securities laws or when unusual market conditions
make prudent investment impracticable. In the event the Program Administrator
is unable to purchase Shares within 30 days of the receipt of funds, such
funds will be returned to the participants.
The average price of all Shares purchased by the Program Administrator with
all funds received during the time period from two business days preceding
any investment date up to the second business day preceding the next
investment date shall be the price per share allocable to a participant in
connection with the Shares purchased for his account with his funds or
dividends received by the Program Administrator during such time period. The
average price of all Shares sold by the Program Administrator pursuant to
sell orders received during such time period shall be the price per share
allocable to a participant in connection with the Shares sold for his account
pursuant to his sell orders received by the Program Administrator during such
time period.
EquiServe, L.P., as Program Administrator, administers the Program for
participants, keeps records, sends statements of account to participants and
performs other duties relating to the Program. Each participant
===============================================================================
26
<PAGE>
DESCRIPTION OF INVESTLINK-SM-* PROGRAM (UNAUDITED) (CONTINUED)
in the Program will receive a statement of his account following each
purchase of Shares. The statements will also show the amount of dividends
credited to such participant's account (if applicable), as well as the fees
paid by the participant. In addition, each participant will receive copies of
the Fund's annual and semi-annual reports to shareholders, proxy statements
and, if applicable, dividend income information for tax reporting purposes.
If the Fund is paying dividends on the Shares, a participant will receive
dividends through the Program for all Shares held on the dividend record date
on the basis of full and fractional Shares held in his account, and for all
other Shares of the Fund registered in his name. The Program Administrator
will send checks to the participants for the amounts of their dividends that
are not to be automatically reinvested at no cost to the participants.
Shares of the Fund purchased under the Program will be registered in the name
of the accounts of the respective participants. Unless requested, the Fund
will not issue to participants certificates for Shares of the Fund purchased
under the Program. The Program Administrator will hold the Shares in
book-entry form until a Program participant chooses to withdraw his Shares or
terminate his participation in the Program. The number of Shares purchased
for a participant's account under the Program will be shown on his statement
of account. This feature protects against loss, theft or destruction of stock
certificates.
A participant may withdraw all or a portion of the Shares from his Program
account by notifying the Program Administrator. After receipt of a
participant's request, the Program Administrator will issue to such
participant certificates for the whole Shares of the Fund so withdrawn or, if
requested by the participant, sell the Shares for him and send him the
proceeds, less applicable brokerage commissions, fees, and transfer taxes, if
any. If a participant withdraws all full and fractional Shares in his Program
account, his participation in the Program will be terminated by the Program
Administrator. In no case will certificates for fractional Shares be issued.
The Program Administrator will convert any fractional Shares held by a
participant at the time of his withdrawal to cash.
Participation in any rights offering, dividend distribution or stock split
will be based upon both the Shares of the Fund registered in participants'
names and the Shares (including fractional Shares) credited to participants'
Program accounts. Any stock dividend or Shares resulting from stock splits
with respect to Shares of the Fund, both full and fractional, which
participants hold in their Program accounts and with respect to all Shares
registered in their names will be automatically credited to their accounts.
All Shares of the Fund (including any fractional share) credited to his
account under the Program will be voted as the participant directs. The
participants will be sent the proxy materials for the annual meetings of
shareholders. When a participant returns an executed proxy, all of such
Shares will be voted as indicated. A participant may also elect to vote his
Shares in person at the Shareholders' meeting.
A participant will receive tax information annually for his personal records
and to help him prepare his U.S. federal income tax return. The automatic
reinvestment of dividends does not relieve him of any income tax which may be
payable on dividends. For further information as to tax consequences of
participation in the Program, participants should consult with their own tax
advisors.
The Program Administrator in administering the Program will not be liable for
any act done in good faith or for any good faith omission to act. However,
the Program Administrator will be liable for loss or damage due to error
caused by its negligence, bad faith or willful misconduct. Shares held in
custody by the Program
===============================================================================
27
<PAGE>
DESCRIPTION OF INVESTLINK-SM-* PROGRAM (UNAUDITED) (CONTINUED)
Administrator are not subject to protection under the Securities Investors
Protection Act of 1970.
The participant should recognize that neither the Fund nor the Program
Administrator can provide any assurance of a profit or protection against
loss on any Shares purchased under the Program. A participant's investment in
Shares held in his Program account is no different than his investment in
directly held Shares in this regard. The participant bears the risk of loss
and the benefits of gain from market price changes with respect to all of his
Shares. Neither the Fund nor the Program Administrator can guarantee that
Shares purchased under the Program will, at any particular time, be worth
more or less than their purchase price. Each participant must make an
independent investment decision based on his own judgment and research.
While the Program Administrator hopes to continue the Program indefinitely,
the Program Administrator reserves the right to suspend or terminate the
Program at any time. It also reserves the right to make modifications to the
Program. Participants will be notified of any such suspension, termination or
modification in accordance with the terms and conditions of the Program. The
Program Administrator also reserves the right to terminate any participant's
participation in the Program at any time. Any question of interpretation
arising under the Program will be determined in good faith by the Program
Administrator and any such good faith determination will be final.
Any interested investor may participate in the Program. To participate in the
Program, an investor who is not already a registered owner of the Shares must
make an initial investment of at least $250.00. All other cash payments or
bank account deductions must be at least $100.00, up to a maximum of
$100,000.00 annually. An interested investor may join the Program by reading
the Program description, completing and signing the enrollment form and
returning it to the Program Administrator. The enrollment form and
information relating to the Program (including the terms and conditions) may
be obtained by calling the Program Administrator at one of the following
telephone numbers: First Time Investors--(800) 337-9697; Current
Shareholders--(800) 730-6001. All correspondence regarding the Program should
be directed to: EquiServe, L.P., InvestLink Program, P.O. Box 8040, Boston,
MA 02266-8040.
-----------------------------------------------------------
* InvestLink is a service mark of EquiServe, L.P.
===============================================================================
28
<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 Credit Suisse Asset
Management, LLC ("CSAM"). CSAM is a diversified asset manager, handling
equity, balanced, fixed income, international and derivative based accounts.
Portfolios include international and emerging market investments, common
stocks, taxable and non-taxable bonds, options, futures and venture capital.
CSAM manages money for corporate pension and profit-sharing funds, public
pension funds, union funds, endowments and other charitable institutions and
private individuals. As of June 30, 2000, CSAM-Americas managed approximately
$70.0 billion in assets.
-------------------------------------------------------------------------------
SHAREHOLDER INFORMATION
-------------------------------------------------------------------------------
The market price is published in: THE NEW YORK TIMES (daily) under the
designation "LatInv" 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."
-------------------------------------------------------------------------------
THE CSAM GROUP OF FUNDS
-------------------------------------------------------------------------------
LITERATURE REQUEST--Call today for free descriptive information on the
closed-end funds listed below at 1-800-293-1232 or visit our website on the
Internet: http://www.cefsource.com.
CLOSED-END FUNDS
SINGLE COUNTRY
The Brazilian Equity Fund, Inc. (BZL)
The Chile Fund, Inc. (CH)
The First Israel Fund, Inc. (ISL)
The Indonesia Fund, Inc. (IF)
The Portugal Fund, Inc. (PGF)
MULTIPLE COUNTRY
The Emerging Markets Infrastructure Fund, Inc. (EMG)
The Emerging Markets Telecommunications Fund, Inc. (ETF)
The Latin America Equity Fund, Inc. (LAQ)
FIXED INCOME
Credit Suisse Asset Management Income Fund, Inc. (CIK)
Credit Suisse Asset Management Strategic Global Income Fund, Inc. (CGF)
-------------------------------------------------------------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that The Latin America Investment Fund, Inc.
may from time to time purchase shares of its capital stock in the open market.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>
-------------------------------------------------------------------------------
DIRECTORS AND CORPORATE OFFICERS
-------------------------------------------------------------------------------
Dr. Enrique R. Arzac Director
James J. Cattano Director
George W. Landau Director
Riordan Roett Director
Martin M. Torino Director
William W. Priest, Jr. Chairman of the Board of
Directors
Richard W. Watt President and Director
Emily Alejos Chief Investment Officer
Yarek Aranowicz Investment Officer
Hal Liebes Senior Vice President
Michael A. Pignataro Chief Financial Officer and
Secretary
Rocco A. Del Guercio Vice President
Robert M. Rizza Treasurer
-------------------------------------------------------------------------------
INVESTMENT ADVISERS
-------------------------------------------------------------------------------
Credit Suisse Asset Management, LLC
466 Lexington Avenue
New York, NY 10017
Salomon Brothers Asset Management Inc.
7 World Trade Center
New York, NY 10048
-------------------------------------------------------------------------------
ADMINISTRATOR
-------------------------------------------------------------------------------
Bear Stearns Funds Management Inc.
575 Lexington Avenue
New York, NY 10022
-------------------------------------------------------------------------------
CUSTODIAN
-------------------------------------------------------------------------------
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
-------------------------------------------------------------------------------
SHAREHOLDER SERVICING AGENT
-------------------------------------------------------------------------------
EquiServe, L.P.
P.O. Box 1865
Mail Stop 45-02-62
Boston, MA 02105
-------------------------------------------------------------------------------
INDEPENDENT ACCOUNTANTS
-------------------------------------------------------------------------------
PricewaterhouseCoopers LLP
Two Commerce Square, Suite 1700
2001 Market Street
Philadelphia, PA 19103
-------------------------------------------------------------------------------
LEGAL COUNSEL
-------------------------------------------------------------------------------
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019
This report, including the financial statements herein, is sent to the
shareholders of the Fund for their information. The financial information
included herein is taken from the records of the Fund without examination by
independent accountants who do not express an opinion thereon. It is not a
prospectus, circular or representation intended for use in the purchase or
sale of shares of the Fund or of any securities mentioned in this
report.
[GRAPHIC]
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3914-SAR-00
