<PAGE>
THE BRAZILIAN INVESTMENT FUND, INC.
- - ---------------------------------------------
OFFICERS AND DIRECTORS
Frederick B. Whittemore James W. Grisham
CHAIRMAN OF THE BOARD VICE PRESIDENT
OF DIRECTORS Harold J. Schaaff, Jr.
Warren J. Olsen VICE PRESIDENT
PRESIDENT AND DIRECTOR Joseph P. Stadler
Beverly Lannquist VICE PRESIDENT
Hamilton Valerie Y. Lewis
DIRECTOR SECRETARY
James P. Lyle Hilary D. Toole
DIRECTOR ASSISTANT SECRETARY
Frederick O. Robertshaw James R. Rooney
DIRECTOR TREASURER
R. Charles Tschampion Timothy F. Osborne
DIRECTOR ASSISTANT TREASURER
- - ---------------------------------------------
INVESTMENT ADVISER
Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, New York 10020
- - --------------------------------------------------------
U.S. ADMINISTRATOR
The United States Trust Company of New York
73 Tremont Street
Boston, Massachusetts 02108
- - --------------------------------------------------------
BRAZILIAN ADMINISTRATOR AND CUSTODIAN
Unibanco-Uniao de Bancos Brasileiros S.A.
Avenida Eusebio Matoso, 891,
Sao Paulo, S.P., Brazil
- - --------------------------------------------------------
U.S. CUSTODIAN
The United States Trust Company of New York
770 Broadway
New York, New York 10003
- - --------------------------------------------------------
SHAREHOLDER SERVICING AGENT
The United States Trust Company of New York
73 Tremont Street
Boston, Massachusetts 02108
- - --------------------------------------------------------
LEGAL COUNSEL
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
- - --------------------------------------------------------
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036
- - --------------------------------------------------------
[LOGO]
THE
BRAZILIAN INVESTMENT
FUND, INC.
[LOGO]
FIRST QUARTER REPORT
MARCH 31, 1995
MORGAN STANLEY ASSET MANAGEMENT INC.
INVESTMENT ADVISER
<PAGE>
LETTER TO SHAREHOLDERS
- - --------
For the first quarter of 1995, the total return of The Brazilian Investment
Fund, Inc. based on net asset value per share was -36.50% in US dollars versus
- - -31.31% for the IFC Global Total Return Index for Brazil (IFC Index). The
decline was driven by: 1) the ripple effect of the Mexican currency crisis, 2)
domestic concerns over political delays in the constitutional reform process and
3) reversal of the country's trade balance from a surplus to a deficit.
Although Mr. Cardoso's Plan Real has successfully stabilized the Brazilian
economy and brought about inflation control, there is significant opposition to
the pace at and manner in which structural reforms are being introduced by the
administration. During the quarter, Congress handed Mr. Cardoso procedural
defeats on social security reform. While this is a secondary issue, Congress
wanted to send the message that the major reforms will need to be negotiated. In
response, the administration has shifted to a strategy implementing the least
controversial amendments while negotiating privatization and fiscal
restructuring, the most significant reforms, behind the scenes. We expect
progress on privatization and fiscal reform to proceed steadily, albeit slowly,
and with a low degree of visibility. As a result, we expect the market to
continue to be highly sensitive to political developments.
On the economic front, the success of the Plan Real produced a
post-stabilization increase in domestic demand which has led to concerns that
inflation could reignite. This possibility of resurgent inflation remains the
major risk in the market. With the decline in inflation, the purchasing power of
the poorest segments of society increased dramatically, leading to a consumption
boom despite high interest rates and consumer credit restrictions. Due to the
high REAL rates, capital inflows and Mr. Cardoso's monetary policy, the REAL,
Brazil's currency, appreciated against the dollar, further increasing consumer
purchasing power. As a result, imports surged, exports declined and Brazil's
trade surplus turned to deficit. This shift in the balance of payments was
exacerbated as investors grew concerned over the current account deficit in
light of the Mexican experience. The government has taken steps to alleviate
these pressures. Nevertheless, we view Brazil's finances as inherently more
stable than Mexico's due to the country's high foreign exchange reserves, low
level of debt and low level of foreign investors in the market.
Currently, the Fund is equally weighted between public and private sector
companies. The public sector companies trade at depressed asset valuations which
reflect their low profitability as state-run companies. The upside in this
sector comes from the possibility of privatization, better tariff structures and
professional management which would unlock the earnings potential of these
companies. The private sector companies in the portfolio trade at low multiples
of earnings. Given the low leverage of the Brazilian private sector, we believe
there is substantial upside both from earnings growth and multiple expansion.
Sincerely,
[SIG]
Warren J. Olsen
PRESIDENT
[SIG]
Robert L. Meyer
SENIOR PORTFOLIO MANAGER
[SIG]
James Colmenares
PORTFOLIO MANAGER
April 20, 1995
2
<PAGE>
INVESTMENTS (UNAUDITED)
- - ---------
MARCH 31, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- - ---------------------------------------------------------
---------------
BRAZILIAN INVESTMENT FUND (101.1%)
- - --------------------------------------------------
-------------
BRAZILIAN PREFERRED STOCKS (98.7%)
(Unless otherwise noted)
- - -----------------------------------------------------------
-----------------
APPLIANCES & HOUSEHOLD DURABLES (7.9%)
Brasmotor 2,521,800 U.S.$ 575
Multibras 853,500 779
Refripar 700,357,927 1,348
------------
2,702
------------
- - -----------------------------------------------------------
-----------------
AUTOMOBILES (2.3%)
Iochpe Maxion 1,500,000 726
Marco Polo 'B' 500,000 67
------------
793
------------
- - -----------------------------------------------------------
-----------------
BANKING (12.7%)
Banco Bradesco 210,109,400 1,414
Banco do Brasil 96,800,000 1,002
Banco do Estado Sao Paulo 66,900,000 394
Banco Itau 5,249,000 1,250
Banco Nacional 17,153,664 286
------------
4,346
------------
- - -----------------------------------------------------------
-----------------
BEVERAGES & TOBACCO (1.2%)
Brahma 1,765,700 422
------------
- - -----------------------------------------------------------
-----------------
CHEMICALS (4.0%)
Rhodia Ster ADS 111,000 1,360
------------
- - -----------------------------------------------------------
-----------------
ENERGY SOURCES (7.1%)
Petrobras 34,877,333 2,425
------------
- - -----------------------------------------------------------
-----------------
FOOD & HOUSEHOLD PRODUCTS (2.3%)
Dixie Lalekla 1,171,291 795
------------
- - -----------------------------------------------------------
-----------------
INDUSTRIAL COMPONENTS (2.2%)
Schulz 18,000,000 756
------------
- - -----------------------------------------------------------
-----------------
MERCHANDISING (1.6%)
Lojas Americanas (Bonus
Rights) 183,270 25
Mesbla 5,232,050 518
------------
543
------------
- - -----------------------------------------------------------
-----------------
METALS -- NON-FERROUS (2.3%)
CVRD 5,823,800 787
------------
- - -----------------------------------------------------------
-----------------
METALS -- STEEL (8.4%)
Cosipa 'B' 159,000,000 278
CSN (Common) 50,800,000 1,186
Usiminas 1,226,123,300 1,405
------------
2,869
------------
- - -----------------------------------------------------------
-----------------
RECREATION, OTHER CONSUMER GOODS (0.1%)
Estrela 39,500,000 39
------------
- - -----------------------------------------------------------
-----------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- - ---------------------------------------------------------
---------------
TELECOMMUNICATIONS (18.5%)
Telebras 135,023,890 U.S.$ 3,635
Telebras (Common) 52,700,000 1,225
Telesp 14,450,601 1,495
------------
6,355
------------
- - -----------------------------------------------------------
-----------------
TEXTILES & APPAREL (7.7%)
Brasperola 'A' 1,000,000 990
Moinho Santista 144,000 208
Wentex 1,315,000 1,463
------------
2,661
------------
- - -----------------------------------------------------------
-----------------
UTILITIES -- ELECTRICAL & GAS (20.4%)
CELESC 'B' 1,265,000 739
Cemig ADR 67,500 1,350
CPFL 4,350,000 165
CPFL (Common) 16,140,000 709
Eletrobras 'B' 10,397,000 1,989
Eletrobras (Common) 8,408,000 1,655
Light (Common) 1,353,000 399
------------
7,006
------------
- - -----------------------------------------------------------
-----------------
TOTAL BRAZILIAN PREFERRED STOCKS
(Cost U.S. $33,053) 33,859
------------
- - -----------------------------------------------------------
-----------------
PURCHASED OPTIONS (0.5%)
- - ---------------------------------------------------------
---------------
UTILITIES -- ELECTRICAL & GAS (0.5%)
CPFL 7010 call, expiring
10/16/95, strike price BRL
70.00 18,700,000 31
Eletrobras call, expiring
6/19/95, strike price BRL
30.58 11,660,000 130
------------
(Cost U.S. $795) 161
------------
- - -----------------------------------------------------------
-----------------
<CAPTION>
AMOUNT
(000)
<S> <C> <C>
- - ---------------------------------------------------------
---------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (1.9%)
Brazilian Real
(Cost U.S. $637) BRL 575 640
------------
- - -----------------------------------------------------------
-----------------
TOTAL BRAZILIAN INVESTMENT FUND
(Cost U.S. $34,485) 34,660
------------
- - -----------------------------------------------------------
-----------------
TOTAL INVESTMENTS (101.1%)
(Cost U.S. $34,485) 34,660
------------
- - -----------------------------------------------------------
-----------------
OTHER ASSETS AND LIABILITIES (-1.1%)
Other Assets U.S. $315
Liabilities (680) (365)
------------- ------------
- - -----------------------------------------------------------
-----------------
NET ASSETS (100%)
Applicable to 593,154 issued
and
outstanding U.S. $.01 par
value
shares (50,000,000 shares
authorized) U.S.$ 34,295
-------------
- - -----------------------------------------------------------
-----------------
NET ASSET VALUE PER SHARE U.S.$ 57.82
-------------
- - -----------------------------------------------------------
-----------------
<FN>
ADR -- American Depositary Receipt
ADS -- American Depositary Share
</TABLE>
3
