____________________________________________________________
____________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(Pursuant to Section 13(e)(1) of
the Securities Exchange Act of 1934)
THE BRAZILIAN INVESTMENT FUND, INC.
-----------------------------------
(Name of Issuer)
THE BRAZILIAN INVESTMENT FUND, INC.
-----------------------------------
(Name of Person Filing Statement)
COMMON STOCK ($.01 PAR VALUE)
-----------------------------
(Title of Class of Securities)
NOT APPLICABLE
-------------------------------------
(CUSIP Number of Class of Securities)
Harold J. Schaaff, Esq.
Vice President
The Brazilian Investment Fund, Inc.
1221 Avenue of the Americas
New York, New York 10020
(212) 296-7188
Copy to:
John Baumgardner, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
(212) 558-4000
----------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of the Person Filing Statement)
April 8, 1996
--------------------------
(Date Tender Offer First
Published, Sent or Given to
Security Holders)
____________________________________________________________
____________________________________________________________
<PAGE>
- --------------------------------------------------------------
Transaction Valuation Amount of Filing Fee:
$20,754,914.03* $4,150.98
- --------------------------------------------------------------
* Pursuant to Section 13(e)(3) of the Securities Exchange
Act of 1934, as amended, and Rule 0-11(b)(1)
thereunder, the transaction value was calculated by
multiplying 505,724.026 shares of Common Stock of The
Brazilian Investment Fund, Inc. by $41.04, the Net Asset
Value per share as of 5:00 P.M. April 4, 1996.
__
/__/ Check box if any part of the fee is offset as provided
by Rule 0-11(a)(2) and identify the filing with which
the offsetting fee was previously paid. Identify the
previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
Amount Previously Paid:_____________
Form or Registration No.:___________
Filing Party:_______________________
Date Filed:_________________________
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<PAGE>
EXPLANATORY NOTE
Copies of the Offer to Purchase, dated April 8,
1996 and the Letter of Transmittal, among other documents,
have been filed by The Brazilian Investment Fund, Inc. (the
"Company") as Exhibits to this Issuer Tender Offer Statement
on Schedule 13E-4 (the "Statement"). Unless otherwise
indicated, all material incorporated by reference in this
Statement in response to items or sub-items of this
Statement is incorporated by reference to the corresponding
caption in the Offer to Purchase, including the information
stated under such captions as being incorporated in response
thereto.
Item 1. Security and Issuer.
-------------------
(a) The Brazilian Investment Fund, Inc.
1221 Avenue of the Americas
New York, New York 10020
(b) See the Introduction Section and Section 1.
No securities are to be purchased from any
officer, director or affiliate of the issuer.
(c) See the Introduction Section and Section 6.
(d) Not applicable.
Item 2. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
(a) See Section 8.
(b) Not applicable.
Item 3. Purpose of the Tender Offer and Plans or
----------------------------------------
Proposals of the Issuer or Affiliate.
------------------------------------
See the Introduction Section, Section 7 and
Section 8.
Item 4. Interest in Securities of the Issuer.
------------------------------------
See Section 10.
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<PAGE>
Item 5. Contracts, Arrangements, Understandings or
------------------------------------------
Relationships With Respect to the Issuer's
------------------------------------------
Securities.
----------
See Section 10.
Item 6. Persons Retained, Employed or to be Compensated.
-----------------------------------------------
Not applicable.
Item 7. Financial Information.
---------------------
(a) See Exhibit A to the Offer to
Purchase dated April 8, 1996.
(b) Not applicable.
Item 8. Additional Information.
----------------------
(a) Not applicable.
(b) See Section 11.
(c) Not applicable.
(d) Not applicable.
(e) See Exhibits (a)(1) and (a)(2).
Item 9. Material to be Filed as Exhibits.
--------------------------------
Exhibit No. Description
- ---------- ------------
(a)(1) Offer to Purchase, dated
April 8, 1996.
(a)(2) Letter of Transmittal to holders of
Common Stock.
(a)(3) Letter to Brokers, Dealers, Commercial
Banks, Trust Companies and Other
Nominees.
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<PAGE>
(a)(4) Letter to Clients of Brokers, Dealers,
Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Guidelines of the Internal Revenue
Service for Certification of Taxpayer
Identification Number.
(a)(6) Letter to Shareholders, dated
April 8, 1996.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
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<PAGE>
SIGNATURE
---------
After due inquiry and to the best of my knowledge
and belief, I certify that the information set forth in this
statement is true, complete and correct.
Dated: April 8, 1996
THE BRAZILIAN INVESTMENT FUND, INC.
By /s/ James R. Rooney
------------------------------------
James R. Rooney
Treasurer
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<PAGE>
Exhibit Index
-------------
Exhibit No. Description
- ---------- -----------
(a)(1) Offer to Purchase, dated April 8, 1996.
(a)(2) Letter of Transmittal to holders of
Common Stock.
(a)(3) Letter to Brokers, Dealers, Commercial
Banks, Trust Companies and Other
Nominees.
(a)(4) Letter to Clients of Brokers, Dealers,
Commercial Banks, Trust Companies and
Other Nominees.
(a)(5) Guidelines of the Internal Revenue
Service for Certification of Taxpayer
Identification Number.
(a)(6) Letter to Shareholders, dated
April 8, 1996.
Offer to Purchase for Cash
by
The Brazilian Investment Fund, Inc.
up to 505,724.026 Shares of its Common Stock
at
a Price Net Per Share Equal to the Net Asset Value Per Share
_________________
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON MAY 6, 1996
UNLESS THE OFFER IS EXTENDED.
________________
THIS OFFER IS CONDITIONED UPON, AMONG OTHER THINGS,
NO MORE THAN 505,724.026 SHARES BEING TENDERED AND NOT
WITHDRAWN AS OF THE EXPIRATION DATE (AS HEREINAFTER
DEFINED). IF MORE THAN 505,724.026 SHARES ARE TENDERED, THE
FUND WILL NOT PURCHASE ANY SHARES IN THE OFFER AND,
PURSUANT TO ARTICLE ELEVENTH OF THE FUND'S ARTICLES OF
INCORPORATION, THE BOARD OF DIRECTORS OF THE FUND SHALL
CONVENE A SHAREHOLDERS MEETING TO CONSIDER A PLAN OF
LIQUIDATION OF THE FUND.
NEITHER THE FUND NOR ITS BOARD OF DIRECTORS NOR
MORGAN STANLEY ASSET MANAGEMENT INC. (THE INVESTMENT ADVISER
TO THE FUND) NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR
REFRAIN FROM TENDERING SHARES. THE FUND HAS BEEN ADVISED
THAT NO DIRECTOR OR EXECUTIVE OFFICER OF THE FUND INTENDS TO
TENDER ANY SHARES PURSUANT TO THE OFFER.
IMPORTANT
Any shareholder desiring to tender all or any
portion of his shares of Common Stock of the Fund
should either (1) complete and sign the Letter of Transmittal
or a facsimile thereof in accordance with the instructions
in the Letter of Transmittal, and mail or deliver the
Letter of Transmittal or such facsimile with his
certificates for the tendered Shares if such Shareholder has
been issued physical certificates, signature guarantees for
all shareholders tendering uncertificated Shares and any
other required documents to the Depository,
or (2) request his broker, dealer, commercial bank, trust company
or other nominee to effect the transaction for him.
Shareholders having Shares registered in the name of a
broker, dealer, commercial bank, trust company or other
nominee are urged to contact such broker, dealer,
commercial bank, trust company or other nominee if they
desire to tender Shares so registered.
<PAGE>
Questions and requests for assistance may be
directed to the Depository in the manner set forth on page
17 of this Offer to Purchase. Requests for additional
copies of this Offer to Purchase and the Letter of Transmittal
may also be directed to the Depository.
April 8, 1996
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION
ON BEHALF OF THE FUND OR MORGAN STANLEY ASSET MANAGEMENT INC.
AS TO WHETHER SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE
OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE,
ANY SUCH RECOMMENDATION OR ANY SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUND.
<PAGE>
TABLE OF CONTENTS
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Section Page
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1. Terms of the Offer; Expiration Date 2
2. Acceptance for Payment and
Payment for Shares 3
3. Procedure for Tendering Shares 4
4. Rights of Withdrawal 6
5. Certain United States Federal Income Tax
Consequences of the Offer 6
6. Price Range of Shares; Dividends 9
7. Purpose of the Offer; Certain Effects of
the Offer 9
8. Source and Amount of Funds 10
9. Certain Information Concerning
the Fund 11
10. Interest of Directors and Executive
Officers; Transactions and Arrangements
Concerning the Shares 12
11. Certain Legal Matters; Regulatory
Approvals 12
12. Certain Conditions of the Offer 13
13. Fees and Expenses 15
14. Miscellaneous 15
<PAGE>
To the Holders of Common Stock of The Brazilian Investment
- -----------------------------------------------------------
Fund, Inc.:
- -----------
The Brazilian Investment Fund, Inc., a
Maryland corporation (the "Fund"), hereby offers to purchase
505,724.026 shares of its Common Stock, par value $.01 per share
(the "Shares"), at a price per Share, net to the seller in
cash, equal to the net asset value in U.S. dollars ("NAV") per
share as of 5:00 P.M., New York City time on the Expiration
Date (as herein defined) upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the
related Letter of Trans mittal (which together constitute the
"Offer").
THE OFFER IS CONDITIONED UPON NO MORE THAN
505,724.026 SHARES BEING TENDERED AND NOT WITHDRAWN AS OF
THE EXPIRATION DATE. THE OFFER IS ALSO SUBJECT TO CERTAIN
OTHER CONDITIONS. SEE SECTION 12.
THIS OFFER IS BEING MADE PURSUANT TO ARTICLE
ELEVENTH OF THE FUND'S ARTICLES OF INCORPORATION ("ARTICLE
ELEVENTH"), WHICH REQUIRES THE FUND, FOR SO LONG AS THE FUND'S
COMMON STOCK IS NOT LISTED ON A STOCK EXCHANGE, TO MAKE PERIODIC
OFFERS TO PURCHASE ALL SHARES OF ITS COMMON STOCK. IF MORE THAN
505,724.026 SHARES ARE TENDERED, THE FUND WILL NOT PURCHASE ANY
SHARES IN THE OFFER AND, PURSUANT TO ARTICLE ELEVENTH, THE
BOARD OF DIRECTORS OF THE FUND SHALL CONVENE A SHAREHOLDERS
MEETING TO CONSIDER A PLAN OF LIQUIDATION OF THE FUND.
NEITHER THE FUND NOR ITS BOARD OF DIRECTORS NOR
MORGAN STANLEY ASSET MANAGEMENT INC. (THE "INVESTMENT ADVISER")
NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY
SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING SHARES. EACH SHAREHOLDER MUST MAKE HIS OWN
DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY
SHARES TO TENDER AND AT WHAT PRICES.THE FUND HAS BEEN ADVISED
THAT NO DIRECTOR OR EXECUTIVE OFFICER OF THE FUND
INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
As of April 4, 1996, there was outstanding
1,011,448.053 Shares. As of March 31, 1996, there was approximately
61 holders of record of Shares. The Shares are not currently
publicly traded. On April 4, 1996, the NAV per Share was
$41.04. Shareholders are urged to contact Chase Global Funds
Services Company (the "Depository") at (800) 221-6726 to
obtain current NAV quotations for the Shares.
See Section 6. Pursuant to the requirements of Article
Eleventh, the Fund currently
<PAGE>
intends each quarter to make a tender offer for its
shares of Common Stock at a price per share equal to the then
current NAV.
Any Shares acquired by the Fund pursuant to the
Offer will become treasury Shares and will be available for
issuance by the Fund without further shareholder action
(except as required by applicable law). Tendering shareholders
will not be obligated to pay brokerage fees or commissions or,
subject to Instruction 6 of the Letter of Transmittal,
transfer taxes on the purchase of Shares by the Fund.
1. Terms of the Offer; Expiration Date. Upon
the terms and subject to the conditions set forth in the
Offer (including, if the Offer is extended or amended, the
terms and conditions of such extension or amendment), the Fund
will accept for payment, and pay for, all Shares validly
tendered on or prior to the Expiration Date (as herein
defined) and not withdrawn as permitted by Section 4. The
term "Expiration Date" means 12:00 Midnight, New York City
time, on May 6, 1996, unless and until the Fund, in its
sole discretion, shall have extended the period for which the
Offer is open, in which event the term "Expiration Date" shall
mean the latest time and date on which the Offer, as so
extended by the Fund, shall expire.
The Fund expressly reserves the right, in its
sole discretion, at any time or from time to time, to
extend the period of time during which the Offer is open by
giving oral or written notice of such extension to the
Depository. Any such extension will also be publicly
announced by press release issued no later than 9:00 A.M., New
York City time, on the next business day after the previously
scheduled Expiration Date.
The Fund confirms that if it makes a material change
in the terms of the Offer or the information concerning the
Offer, or if it waives a material condition of the Offer, the
Fund will extend the Offer to the extent required by Rules 13e-
4(d)(2) and 13e-4(e)(2) under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
During any extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer,
subject to the right of a tendering shareholder to withdraw
his Shares. See Section 4.
Subject to the applicable regulations of the
Securities and Exchange Commission (the "Commission"),
the Fund also expressly reserves the right, in its sole
discretion, at any time or from time to time (i) to delay
acceptance for payment of, or, regardless
of whether such Shares were therefore accepted for
payment, payment for,
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<PAGE>
any Shares or to terminate the Offer and not accept for
payment or pay for any Shares not therefore accepted for
payment, or paid for, upon the occurrence of any of the
conditions specified in Section 12 and (ii) waive any
condition or otherwise amend the Offer in any respect, by
giving oral or written notice of such delay, termination or
amendment to the Depository and by making a public announcement
thereof. The Fund confirms that its reservation of the right
to delay payment for Shares which it has accepted for payment
is limited by Rule 13e-4(f)(5) under the Exchange Act, which
requires that a tender offer or pay the consideration offered
or return the tendered securities promptly after the termination
or withdrawal of a tender offer. If, following the Expiration Date,
the Fund is permitted under applicable law to delay acceptance for
payment of or payment for Shares and does so, the Fund may
not thereafter assert conditions to the Offer to delay or
avoid acceptance for payment of or payment for Shares except
to the extent permitted by applicable law. The Fund has been
advised by the Staff of the Commission that the Exchange Act
and the rules and regulations promulgated thereunder require that
all conditions to the Offer, other than the receipt of certain governmental
approvals, must be satisfied or waived prior to the Expiration
Date.
Any extension, delay, termination or amendment will
be followed as promptly as practicable by public
announcement thereof, such announcement in the case of an
extension to be issued no later than 9:00 A.M., New York
City time, on the next business day after the previously
scheduled Expiration Date. Subject to applicable law
(including Rule 13e-4(e)(2) under the Exchange Act, which
requires that any material change in the information
published, sent or given to shareholders
in connection with the Offer be promptly disseminated
to shareholders in a manner reasonably designed to
inform shareholders of such change) and without limiting the
manner in which the Fund may choose to make any public announcement,
the Fund shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than
by making a release to the Dow Jones News Service.
2. Acceptance for Payment and Payment for Shares.
Upon the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the
Fund will accept for payment, and will pay for, all Shares that are
validly tendered and not withdrawn as promptly as practicable
after the Expiration Date. Subject to applicable rules of the Commission,
the Fund expressly reserves the right to delay acceptance
for payment of, or payment for, Shares in order to comply, in
whole or in part, with any applicable law. See
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<PAGE>
Section 1. In all cases, payment for Shares tendered and accepted
for payment pursuant to the Offer will be made only after
timely receipt by the Depository of certificates for such
Shares (unless such Shares are held in uncertificated form),
a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other required documents.
For purposes of the Offer, the Fund will be deemed
to have accepted for payment Shares validly tendered and
not withdrawn as, if and when the Fund gives oral or written
notice to the Depository of its acceptance for payment of such
Shares pursuant to the Offer. Payment for Shares accepted for
payment pursuant to the Offer will be made by deposit of the
aggregate purchase price therefor with the Depository, which
will act as agent for the tendering shareholders for
purpose of receiving payments from the Fund and
transmitting such payments to the tendering shareholders.
Under no circumstances will interest on the purchase price for
Shares be paid, regardless of any delay in making such payment.
If any tendered Shares are not accepted for
payment pursuant to the terms and conditions of the Offer for
any reason, or if certificates are submitted for more
Shares than are tendered, certificates for such
unpurchased Shares will be returned, without expense to the
tendering shareholder, as soon as practicable following
expiration or termination of the Offer.
3. Procedure for Tendering Shares. For a
shareholder validly to tender Shares pursuant to the
Offer, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required
signature guarantees and any other required documents, must be
transmitted to and received by the Depository at one of its
addresses set forth on page 17 of this Offer to Purchase and,
if such shareholder's tendered Shares are represented by
certificates, the certificates for the tendered Shares
must be received by the Depository at such address, in
each case prior to the Expiration Date.
Signatures on Letters of Transmittal must be
guaranteed by a firm which is a member of a registered
national securities exchange or of the National Association
of Securities Dealers, Inc. (the "NASD") or by a commercial
bank or trust company having an office, branch or agency in
the United States (an "Eligible Institution") in cases where
Shares held in uncertificated form are tendered. If the
certificates are registered in the name of a person other
than the signer of the Letter of Transmittal the certificates
must be endorsed or accompanied by appropriate stock powers, in
either case signed
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<PAGE>
exactly as the name or names of the registered owner or owners
appear on the certificates, with the signature(s) on the
certificates or stock powers guaranteed as aforesaid. The method
of delivery of all required documents is at the election and
risk of each tendering shareholder. If delivery is by mail,
registered mail with return receipt requested, properly insured,
is recommended.
To prevent United States federal income tax
backup withholding with respect to the purchase price of
Shares purchased pursuant to the Offer, a shareholder who
does not otherwise establish an exemption from such backup
withholding must provide the Depository with his
correct taxpayer identification number and certify that
he is not subject to backup withholding by completing the
Substitute Form W-9 included in the Letter of Transmittal.
Foreign shareholders who have not previously submitted a Form W-8
to the Fund must do so in order to avoid backup withholding.
See Section 5.
All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for
payment of any tender of Shares will be determined by the
Fund, in its sole discretion, which determination shall be
final and binding. The Fund reserves the absolute right to reject
any and all tenders of Shares it determines not to be in proper
form or the acceptance for payment of which may, in the opinion
of its counsel, be unlawful. The Fund also reserves the absolute
right to waive any of the conditions of the Offer or any
defect or irregularity in the tender of any Shares. No tender
of Shares will be deemed to have been validly made until all defects
and irregularities have been cured or waived. None of the Fund,
the Investment Adviser, the Depository or any other person will be under any
duty to give notification of any defects or irregularities in
tenders or will incur any liability for failure to give any
such notification. The Fund's interpretation of the terms
and conditions of the Offer (including the Letter of
Transmittal and instructions thereto) will be final and
binding.
In all cases, payment for Shares tendered and
accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depository of certificates for such
Shares (unless such Shares are held in uncertificated form),
properly completed and duly executed Letter(s) of
Transmittal (or facsimile(s) thereof) and any other required
documents.
The tender of Shares pursuant to any of the
procedures described above will constitute an agreement
between the tendering shareholder and the Fund upon the terms and
subject to the conditions of the Offer.
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<PAGE>
4. Rights of Withdrawal. Tenders of Shares made
pursuant to the Offer are irrevocable except that Shares
tendered pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date, and, unless therefore accepted
for payment by the Fund pursuant to the Offer, may also be
withdrawn at any time after June 4, 1996.
To be effective, a written, telegraphic, telex
or facsimile transmission notice of withdrawal must be
timely received by the Depository at one of its addresses set
forth on page 17 of this Offer to Purchase. Any notice of
withdrawal must specify the name of the person having tendered
the Shares to be withdrawn, the number of Shares to be
withdrawn and the names in which the Shares to be
withdrawn are registered. The signature(s) on the notice of
withdrawal must be guaranteed by an Eligible Institution. If
certificates have been delivered to the Depository, the name
of the registered holder and the serial numbers of the
particular certificates evidencing the Shares withdrawn must
also be furnished to the Depository as aforesaid prior to
the physical release of such certificates. All questions as
to the form and validity (including time of receipt) of any notice of
withdrawal will be determined by the Fund, in its sole
discretion, which determination shall be final and binding.
None of the Fund, the Investment Adviser, the Depository, or
any other person will be under any duty to give notification
of any defects or irregularities in any notice of withdrawal
or incur any liability for failure to give such notification.
Any Shares properly withdrawn will be deemed not to have
been validly tendered for purposes of the Offer. However,
withdrawn Shares may be retendered by following the
procedures described in Section 3 at any time prior to the
Expiration Date.
If the Fund is delayed in its acceptance for payment
of Shares, or is unable to accept for payment Shares
tendered pursuant to the Offer, for any reason, then, without
prejudice to the Fund's rights under this Offer, the Depository
may, nevertheless, on behalf of the Fund, retain tendered Shares,
and such Shares may not be withdrawn except to the extent
that tendering shareholders are entitled to withdrawal rights
as set forth in this Section 4.
5. Certain United States Federal Income Tax
Consequences of the Offer. The discussion below is a summary
of the material United States federal income tax consequences
of a sale of Shares pursuant to the Offer. Certain
shareholders (including insurance companies, tax-exempt
organizations and financial institutions or broker-dealers)
may be subject to special rules not discussed below.
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<PAGE>
The sale of Shares pursuant to the Offer will
be treated as a "sale or exchange" if the sale (a) is
"not essentially equivalent to a dividend" with respect
to the shareholder, (b) is "substantially disproportionate"
with respect to the shareholder, or (c) results in a "complete
termination" of all of the shareholder's interest in the
Fund. In determining whether any of these tests is met, Shares
considered to be owned by the shareholder by reason of
certain constructive ownership rules, as well as Shares
actually owned, will be taken into account. Thus,
a shareholder may be deemed to own Shares
actually owned, and in some cases constructively owned,
by certain related individuals and certain entities in which
the shareholder has an interest (or which have an interest
in the shareholder) and Shares which such shareholder has the
right to acquire by exercise of an option. In addition, each
shareholder should be aware that, under certain
circumstances, a sale or purchase of Shares contemporaneous
with the Offer may be taken into account in determining
whether any of the tests is satisfied.
Whether a sale will be "not essentially equivalent to
a dividend" with respect to any shareholder will depend on
the shareholder's facts and circumstances and on the
response of other shareholders to the Offer, but will, in any
event, require a "meaningful reduction" in a shareholder's
interest in the Fund. The sale of Shares by a shareholder
will be "substantially disproportionate" with respect to such
shareholder if after the sale (i) the percentage of the
outstanding Shares that the shareholder actually and
constructively owns is less than 80% of the percentage of
the outstanding Shares actually and
constructively owned by such shareholder immediately before
the sale, and (ii) the shareholder owns less than 50%
of the outstanding Shares. Finally, if a shareholder sells
all the Shares actually owned by him, such shareholder may be
eligible to waive certain constructive ownership provisions
and, thus, meet the requirements for a "complete termination"
of his interest in the Fund.
If any of the above tests is satisfied, the
shareholder will recognize gain (or loss) in the amount by
which the purchase price received by the shareholder
pursuant to the Offer is greater (or less) than the
shareholder's tax basis in the Shares sold. Such gain (or
loss) will be capital gain (or loss) if the Shares are held
as a capital asset and will be long-term capital gain (or
loss) if the Shares have been held for more than one year.
However, any such loss will be treated as a long-term
capital loss to the extent of any long-term capital
gain dividends and undistributed long-term capital gains
included in income by the shareholder with respect to such
Shares, if the Shares have been held for 6 months or less.
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<PAGE>
Additionally, any such loss will be disallowed to the extent
the Shares sold are replaced within the 61-day period
beginning 30 days before the Shares are sold, and the
disallowed loss will be reflected in an adjustment to the
basis of the Shares acquired.
If none of the above tests is satisfied, (i)
the shareholder will be treated as having received a dividend
in the amount of the cash received for the Shares sold
pursuant to the Offer, assuming that the Fund's current or
accumulated earnings and profits equal or exceed the cash
paid to shareholders which is treated as a dividend and (ii)
the shareholder's tax basis in the Shares sold to the Fund
will be transferred to any remaining Shares held by the shareholder.
If the shareholder does not actually own any remaining Shares,
such shareholder may be permitted to transfer such basis to
Shares owned by a related person or may lose such basis entirely.
The amount treated as a dividend will not be eligible for the
dividends-received deduction allowed to domestic corporate shareholders.
The Depository may be required to backup
withhold United States federal income tax at the rate of 31% of
the gross payment made pursuant to the Offer to shareholders
who fail to provide their correct taxpayer identification
number or to make required certifications, or who have
been notified by the Internal Revenue Service that they
are subject to backup withholding. Corporate shareholders
and certain other shareholders are exempt from
such backup withholding. Any amounts withheld may be credited
against a shareholder's United States federal income tax liability.
The Depository will withhold 30% of the gross
payment to a shareholder that is a nonresident alien
individual, fiduciary of a foreign trust or estate, foreign
corporation or foreign partnership (a "foreign shareholder")
unless the Depository determines that a reduced rate of withholding or
an exemption from withholding is applicable pursuant to
an applicable income tax treaty. (Exemption from backup
withholding does not exempt a foreign shareholder from the 30%
withholding). The Depository will determine a shareholder's
status as a foreign shareholder and eligibility for a
reduced rate of, or an exemption from, withholding, by
reference to the shareholder's address and to any valid
certificates or statements concerning eligibility for a
reduced rate of, or exemption from, withholding, unless
facts and circumstances indicate that such reliance is not
warranted. A foreign shareholder that has not previously
submitted the appropriate certificates or statements with
respect to a reduced rate of, or exemption from, withholding
for which such shareholder may be eligible should consider
doing so in
-8-
<PAGE>
order to avoid over-withholding. A foreign shareholder may be
eligible to obtain a refund of tax withheld if such shareholder
meets one of the three tests for sale or exchange treatment
described above or is otherwise able to establish that no tax,
or a reduced amount of tax, was due.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION
SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY.
SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE SALE
OF SHARES PURSUANT TO THE OFFER, INCLUDING THE APPLICATION
AND EFFECT OF STATE, LOCAL, FOREIGN OR OTHER TAX LAWS AND
ANY POSSIBLE CHANGES IN TAX LAWS.
6. Price Range of Shares; Dividends. The Shares
are not currently publicly traded. During the past two years
the NAVs per Share as of 5:00 P.M. on the last day of each
of the Fund's fiscal quarters are as follows:
March 31, 1994 $112.47
June 30, 1994 $89.21
September 30, 1994 $154.78
December 31, 1994 $129.97
March 31, 1995 $57.82
June 30, 1995 $68.06
September 30, 1995 $73.96
December 31, 1995 $64.14
March 31, 1996 $40.92
The NAV per Share as of 5:00 P.M., April 4, 1996 was
$41.04 per Share.
IT IS ANTICIPATED THAT NO CASH DIVIDEND WILL
BE DECLARED BY THE BOARD OF DIRECTORS WITH A RECORD DATE
OCCURRING BEFORE THE EXPIRATION OF THE OFFER AND THAT,
ACCORDINGLY, HOLDERS OF SHARES PURCHASED PURSUANT TO THE
OFFER WILL NOT RECEIVE ANY SUCH DIVIDEND WITH RESPECT TO
SUCH SHARES. THE AMOUNT AND FREQUENCY OF DIVIDENDS IN THE
FUTURE WILL DEPEND ON CIRCUMSTANCES EXISTING AT THAT TIME.
7. Purpose of the Offer; Certain Effects of the
Offer. The purpose of the Offer is to fulfill the Fund's
obligation pursuant to Article Eleventh. Article Eleventh
provides for so long as the Shares are not listed on a stock
exchange, the Fund must make a tender offer, on the Monday
following the first Friday of each of
-9-
<PAGE>
January, April, July and October, to purchase all of the outstanding
Shares at a price per Share equal to the NAV per Share. Pursuant to
Article Eleventh, in the event that 50% or more of the then
outstanding Shares are tendered in any one tender offer, the
Fund shall not purchase any Shares in the tender offer and
the Fund's Board of Directors shall convene a shareholders'
meeting to consider a resolution to liquidate the Fund.
Any Shares acquired by the Fund pursuant to the
Offer will become treasury Shares and will be available for
issuance by the Fund without further shareholder action
(except as required by applicable law or the rules of national
securities exchanges on which the Shares are listed).
NEITHER THE FUND NOR ITS BOARD OF DIRECTORS NOR
THE INVESTMENT ADVISER NOR ITS BOARD OF DIRECTORS MAKES
ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER
OR REFRAIN FROM TENDERING ANY OR ALL OF SUCH SHAREHOLDER'S
SHARES AND NONE OF SUCH PERSONS HAS AUTHORIZED ANY PERSON TO
MAKE ANY SUCH RECOMMENDATION. SHAREHOLDERS ARE URGED
TO EVALUATE CAREFULLY ALL INFORMATION IN THE OFFER,
CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR
OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY
SHARES TO TENDER AND AT WHAT PRICE OR PRICES.
8. Source and Amount of Funds. If 505,724.026
Shares were to be purchased pursuant to the Offer, the cost to
the Fund (excluding expenses) would be approximately $20,754,914.03
based on a NAV per Share of $41.04 as of April 4, 1996. The
actual cost to the Fund cannot be determined at this time
because the number of Shares to be purchased will depend
on the number tendered, and the price will be based on the
NAV per Share on the Expiration Date, which may be more or less
than $41.04.
The monies to be used by the Fund to purchase
Shares pursuant to the Offer will be obtained from cash and
from sales of securities in the investment portfolios of the
Fund and BIFFundo de Investimento-Capital Estrangeiro
(the "Investment Fund"). The selection of which portfolio
securities to sell will be governed by principles of prudent
portfolio management, taking into account investment merit,
relative liquidity and applicable legal requirements. In
accordance with its stated investment policies, the Fund has
concentrated its investments in the equity securities of
companies that are registered with the Commisao de Valores
Mobili rios, the Brazilian Securities Commission. The
Brazilian securities markets are subject to price volatility
and limited liquidity. If the Fund must sell a substantial
amount of portfolio
-10-
<PAGE>
securities to raise cash, the market prices
of portfolio securities, and hence the Fund's net asset value,
can be expected to decline. If such a decline occurs, the
Fund cannot predict what its magnitude might be, or whether
such a decline would be temporary or continue to the
Expiration Date. Because the Fund's tender offer price is
dependent upon NAV per Share as determined on the Expiration
Date, if such a decline continued to the Expiration Date, the
consideration received by a tendering shareholder would be
reduced.
The Fund will sell portfolio securities during
the pendency of the Offer to raise cash for the purchase of
Shares. Thus, during the pendency of the Offer, and possibly
for a short time thereafter, the Fund will hold a greater
than normal percentage of its net assets in cash and cash
equivalents. The Fund is required by law to pay for tendered
Shares it accepts for payment promptly after the Expiration
Date of this Offer. Because the Fund will not know the number
of Shares tendered until the Expiration Date, the Fund will not
know until the Expiration Date the amount of cash required to
pay for such Shares. If on or prior to the Expiration Date
the Fund does not have, or believes it is unlikely to have,
sufficient cash to pay for all Shares tendered, it may
extend the Offer to allow additional time to sell portfolio
securities and raise sufficient cash. As of January 5, 1996, the
Fund had no position in cash and cash equivalents.
If the Fund purchases a substantial number of
Shares pursuant to the Offer, the net assets of the Fund
would be reduced accordingly. In such case the Fund would
have a higher expense ratio and possibly less investment
flexibility than it currently has.
9. Certain Information Concerning the Fund. The
Fund is a non-diversified, closed-end management investment
company incorporated under the laws of the State of
Maryland and registered under the Investment Company Act
of 1940. Its investment objective is long-term capital appreciation
through investment primarily in equity securities of Brazilian
companies.
Exhibit A to this Offer contains the Fund's
audited financial statements for the fiscal years ended
December 31, 1994 and December 31, 1995.
The Fund is subject to the information and
reporting requirements of the Investment Company Act of
1940 and in accordance therewith is obligated to file
reports and other information with the Commission
relating to its business, financial condition and other
-11-
<PAGE>
matters. The Fund has also filed an Issuer Tender Offer
Statement on Schedule 13E-4 with the Commission. Such
reports and other information should be
available for inspection at the public reference room at
the Commission's office 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C., and also should be available for
inspection and copying at the following regional offices of
the Commission: Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois; 7 World Trade Center,
New York, New York. Copies may be obtained, by mail, upon
payment of the Commission's customary charges, by writing to
its principal office at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549.
10. Interest of Directors and Executive
Officers; Transactions and Arrangements Concerning the Shares.
Neither the Fund nor any subsidiary of the Fund nor, to the
best of the Fund's knowledge, any of the Fund's
executive officers or directors or associates of any of the
foregoing, has effected any transaction in Shares during the
past 40 business days.
Except as set forth in this Offer to Purchase,
neither the Fund, nor, to the best of the Fund's knowledge,
any of the Fund's executive officers or directors, or any of
the executive officers or directors of any of its subsidiaries,
is a party to any contract, arrangement, understanding or
relationship with any other person relating, directly or indirectly
to the Offer with respect to any securities of the Fund, including, but
not limited to, any contract, arrangement, understanding or
relationship concerning the transfer or the voting of any
such securities, joint ven tures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties
against loss or the giving or withholding of proxies,
consents or authorizations.
11. Certain Legal Matters; Regulatory Approvals. The Fund's
investment in Brazilian securities has been registered
as foreign investment with the Central Bank of Brazil, which
has issued a Certificate of Registration for the foreign
currency value of such investment. Based on the Certificate of
Registration, the Fund's current investment in
Brazilian securities may be repatriated in order to permit the Fund
to purchase Shares in the Offer. The Fund is not aware of
any approval or other action by any government or
governmental, administrative or regulatory authority or
agency, domestic or foreign, that would be required for the
acquisition or ownership of Shares by the Fund as contemplated
herein. Should any such approval or other action be required,
the Fund presently contemplates that such approval or other action
will be sought. The Fund is unable to predict whether it may determine
that it is
-12-
<PAGE>
required to delay the acceptance for payment of, or
payment for, Shares tendered pursuant to the Offer pending the
outcome of any such matter. There can be no assurance that
any such approval or other action, if needed, would be
obtained without substantial conditions or that the failure
to obtain any such approval or other action might not
result in adverse consequences to the Fund's business. The
Fund's obligations under the Offer to accept for payment
and pay for Shares are subject to certain conditions. See
Section 12.
12. Certain Conditions of the Offer.
Notwithstanding any other provision of the Offer except as
otherwise provided in Section 1, the Fund shall not be
required to accept for payment or pay for any Shares, may
postpone the acceptance for payment of, or payment for,
tendered Shares, and may, in its sole discretion,
terminate or amend the Offer as to any Shares not then paid
for if (i) more than 505,724.026 Shares are tendered and not
withdrawn as of the Expiration Date, or (ii) in the
judgment of the Investment Adviser, the assets of the Fund
are not sufficiently liquid to fund the purchase of the Shares
in the Offer, or (iii) the Fund would not be able to liquidate
portfolio securities in a manner that is orderly and
consistent with the Fund's investment objectives and
policies in order to purchase Shares tendered pursuant to the
Offer, or (iv) at or prior to the time of payment for any
such Shares (whether or not any Shares have therefore been
accepted for payment or paid for pursuant to the Offer), any
of the following events shall occur:
(a) there shall be threatened,
instituted or pending any action, proceeding or
application before any court or governmental
authority or other regulatory or administrative
agency or commission, domestic or foreign, by any
government or governmental authority or other
regulatory or administrative agency or commission,
domestic or foreign, or by any other person,
domestic or foreign challenging the acquisition by
the Fund of the Shares or seeking to restrain,
delay or prohibit the making of the Offer, or the
acceptance for payment, purchase of, or payment
for, some or all of the Shares or resulting in a
delay in, or restricting, the ability of the Fund,
or rendering the Fund unable, to accept for
payment, purchase or pay for some or all of the
Shares, or otherwise directly or indirectly
relating in any manner to or affecting the Offer;
or
-13-
<PAGE>
(b) any statute, rule, regulation or order
or injunction shall be sought, proposed,
enacted, promulgated, entered, enforced or deemed
or become applicable to the Offer or any other
action shall have been taken, proposed or threatened,
by any government, governmental authority or
other regulatory or administrative agency or
commission or court, or any other person, domestic
or foreign, that, in the sole judgment of the
Fund, might, directly or indirectly, result in any
of the consequences referred to in paragraph (a)
above; or
(c) there shall have occurred
(i) any general suspension of, or limitation on
times or prices for, trading in securities on any
national securities exchange or in the over-the
counter market or in any securities exchange in
Brazil, (ii) a declaration of a banking moratorium
or any suspension of payments in respect of banks
in the United States or Brazil, (iii) a
commencement of a war, armed hostilities or other
international or national calamity directly or
indirectly involving the United States or Brazil,
(iv) any limitation (whether or not mandatory) by
any governmental authority on, or any other event
which, in the sole judgment of the Fund, might
affect, the extension of credit by banks or other
lending institutions or foreign currency
transactions by such institutions or (v) in the
case of any of the foregoing existing at the time
of the commencement of the Offer, in the sole
judgment of the Fund, a material acceleration or
worsening thereof; or
(d) any change (or any condition,
event or development involving a prospective
change) shall have occurred or be threatened in
the general economic, financial, currency exchange
or market conditions in the United States, in
Brazil or abroad that, in the sole judgment of the
Fund, has or may have a material adverse effect
upon the value of the assets of the Fund; or
(e) any other event shall have
occurred or condition shall exist which in the
judgment of the Fund would have a material adverse
effect on the Fund, its assets or its shareholders
or any such
-14-
<PAGE>
event will occur or such condition shall exist if
the Fund were to purchase Shares in the Offer
which in the sole judgment of the Fund with respect to each and
every matter referred to above and regardless of the circum
stances (including any action or inaction by the Fund) giving
rise to any such condition, makes it inadvisable to proceed with
the Offer or with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of
the Fund and may be asserted by the Fund regardless of the circum
stances (including any action or inaction by the Fund) giving
rise to any such conditions or may be waived by the Fund in whole
or in part at any time and from time to time in its sole
discretion. The failure by the Fund at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which
may be asserted at any time and from time to time. Any
determination by the Fund concerning the events described in this
Section shall be final and binding on all parties.
A public announcement shall be made of a material
change in, or waiver of, such conditions, and the Offer may, in
certain circumstances, be extended in connection with any such
change or waiver.
13. Fees and Expenses. The Depository is not charging
compensation for its services in connection with the Offer. The
Fund has agreed to indemnify the Depository against certain
liabilities and expenses in connection with the Offer, including
liabilities under the federal securities laws. Brokers, dealers,
commercial banks and trust companies will be reimbursed by the
Fund for customary mailing and handling expenses incurred by them
in forwarding material to their customers.
Chase Global Funds Services Company, which is the
Depository for the Offer, is an affiliate of Chase Manhattan
Bank, N.A.("Chase"), which provides administrative services to the
Fund pursuant to an Administration Agreement. As part of such
agreement, the Fund has agreed to pay to Chase an annual fee
of $75,000 plus .08% of the average weekly net assets of the
Fund, computed weekly and payable monthly.
14. Miscellaneous. The Offer is not being made to
(nor will tenders be accepted from or on behalf of) holders of
Shares in any jurisdiction in which the making of the Offer or
the acceptance thereof would not be in compliance with the laws
of such
-15-
<PAGE>
jurisdiction. The Fund may, in its sole discretion, take
such action as it may deem necessary to make the Offer in any
such jurisdiction.
The Fund is not aware of any jurisdiction in which the
making of the Offer or the acceptance of Shares in connection
therewith would not be in compliance with the laws of such
jurisdiction. Consequently, the Offer is currently being made to
all holders of Shares. However, the Fund reserves the right to
exclude shareholders in any jurisdiction in which it is asserted
that the Offer cannot lawfully be made. So long as the Fund
makes a good faith effort to comply with any state law deemed
applicable to the Offer, the Fund believes that the exclusion of
shareholders residing in such jurisdiction is permitted under
Rule 13e-4(f)(9) promulgated under the Exchange Act.
The Fund has filed with the Commission an Issuer Tender
Offer Statement on Schedule l3E-4 pursuant to Section 13(e)(1) of
the Exchange Act and Rule l3e-4 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional
information with respect to the Offer, and may file amendments
thereto. Such Statement and any amendments thereto, including
exhibits, may be examined and copies may be obtained from the
principal office of the Commission in Washington, D.C. in the
manner set forth in Section 9.
No person has been authorized to give any information
or make any representation on behalf of the Fund not contained in
this Offer to Purchase or in the Letter of Transmittal and, if
given or made, such information or representation must not be
relied upon as having been authorized.
THE BRAZILIAN INVESTMENT FUND, INC.
April 8, 1996
-16-
<PAGE>
Facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for the Shares
and any other required documents should be sent by each
shareholder of the Fund or his broker-dealer, commercial bank,
trust company or other nominee to the Depository as follows:
The Depository for the Offer is:
--------------------------------
Chase Global Funds Services Company
By Mail, Overnight Courier or Hand:
-----------------------------------
73 Tremont Street
Boston, MA 02108-3913
By Facsimile Transmission: Confirm by Telephone:
-------------------------- ---------------------
(617) 557-8697 (800) 221-6726
Any questions or requests for assistance or additional
copies of the Offer to Purchase and the Letter of Transmittal may
be directed to Susan DiBona at the Depository at the following
telephone number: (800) 221-6726. You may also contact your
broker, dealer, commercial bank or trust company or other nominee
for assistance concerning the Offer.
-17-
<PAGE>
The Brazilian Investment Fund, Inc.
Investment Summary as of December 31, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HISTORICAL
INFORMATION
TOTAL RETURN (%)
--------------------------------------------------
NET ASSET VALUE (2) INDEX (1)(3)**
----------------------- -------------------------
AVERAGE AVERAGE
CUMULATIVE ANNUAL CUMULATIVE ANNUAL
----------------------- -------------------------
<S> <C> <C> <C> <C>
ONE YEAR -26.61% -26.61% -20.24% -20.24%
SINCE INCEPTION* 135.61 20.59 180.44 25.20
</TABLE>
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
- --------------------------------------------------------------------------------
RETURNS AND PER SHARE INFORMATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31:
1991* 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
Net Asset Value Per Share $ 63.31 $ 55.28 $ 83.58 $ 129.97 $ 64.14
Income Dividends - - - $ 1.80 -
Capital Gains Distributions - - $ 7.06 $ 6.65 $ 37.73
Total Return (2) 26.62% (12.68%) 72.52% 68.32% (26.61%)
Index Total Return (3) ** 3.48% 0.32% 99.45% 69.83% (20.24%)
</TABLE>
(1) Assumes dividends and distributions, if any, were reinvested.
(2) Total investment return based on per share net asset value reflects the
effects of changes in net asset value on the performance of the Fund during
each period, and assumes dividends and distributions, if any, were
reinvested. The Fund's shares are issued in a private placement and not
traded; therefore, market value total investment return is not calculated.
(3) IFC Total Return Index for Brazil
* The Fund commenced operations on June 4, 1991.
** Unaudited.
4
<PAGE>
The Brazilian Investment Fund, Inc.
Portfolio Summary as of December 31, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENTS DIVERSIFICATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Equity Securities 99.0%
Short-Term Investments 1.0%
</TABLE>
- --------------------------------------------------------------------------------
SECTORS
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Telecommunications 24.9%
Utilities - Electrical &
Gas 20.0%
Beverages & Tobacco 13.9%
Banking 12.1%
Merchandising 7.7%
Metals -- Non-Ferrous 4.0%
Energy Sources 3.9%
Textiles & Apparel 2.3%
Machinery & Engineering 2.1%
Industrial Components 2.0%
Other 7.1%
</TABLE>
- --------------------------------------------------------------------------------
TEN LARGEST HOLDINGS
<TABLE>
<CAPTION>
PERCENT OF
NET ASSETS
------------
<C> <S> <C>
1. Telebras 17.4%
2. Brahma 14.0
3. Eletrobras (Common) 8.6
4. Lojas Renner 4.8
5. Banco Bradesco 4.6
<CAPTION>
PERCENT OF
NET ASSETS
------------
<C> <S> <C>
6. CVRD 4.0%
7. Petrobras 4.0
8. Banco do Brasil 3.7
9. Telebras ADR 3.5
10. Banco Itau 3.1
---
67.7%
---
---
</TABLE>
5
<PAGE>
FINANCIAL STATEMENTS
- ---------
STATEMENT OF NET ASSETS
- ---------
DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
BRAZILIAN INVESTMENT FUND (97.4%)
- --------------------------------------------------
- ----------
BRAZILIAN NON-VOTING PREFERRED STOCKS (96.4%)
(Unless otherwise noted)
- ---------------------------------------------------------
- -------------
APPLIANCES & HOUSEHOLD DURABLES (0.4%)
Refripar 43,520,927 U.S.$ 87
Refripar (Common) 23,893,000 42
-----------
129
-----------
- ---------------------------------------------------------
- -------------
BANKING (12.1%)
Banco Bradesco 187,301,708 1,638
+***Banco Bradesco (Rights) 8,660,218 14
+Banco do Brasil 117,642,000 1,332
Banco Itau 4,032,500 1,124
**Banco Nacional 112,483,664 232
-----------
4,340
-----------
- ---------------------------------------------------------
- -------------
BEVERAGES & TOBACCO (13.9%)
Brahma 12,187,489 5,016
-----------
- ---------------------------------------------------------
- -------------
ENERGY SOURCES (3.9%)
Petrobras 16,640,000 1,421
-----------
- ---------------------------------------------------------
- -------------
FOOD & HOUSEHOLD PRODUCTS (1.3%)
+Dixie Toga 461,291 403
+Dixie Toga (Receipts) 55,167 48
-----------
451
-----------
- ---------------------------------------------------------
- -------------
INDUSTRIAL COMPONENTS (2.0%)
Schulz 24,570,000 721
-----------
- ---------------------------------------------------------
- -------------
MACHINERY & ENGINEERING (2.1%)
WEG 1,822,000 750
-----------
- ---------------------------------------------------------
- -------------
MERCHANDISING (7.7%)
#+Cia Brasileira ADR 76,450 765
Lojas Americanas 183,270 26
+Lojas Arapua ADR 30,140 256
Lojas Renner 64,370,000 1,722
-----------
2,769
-----------
- ---------------------------------------------------------
- -------------
METALS -- NON-FERROUS (4.0%)
CVRD 8,700,000 1,432
-----------
- ---------------------------------------------------------
- -------------
METALS -- STEEL (1.8%)
Usiminas 776,700,000 631
-----------
- ---------------------------------------------------------
- -------------
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
TELECOMMUNICATIONS (24.9%)
Telebras 130,044,895 U.S.$6,262
Telebras ADR 26,200 1,241
Telebras (Common) 28,453,000 1,101
Telesp 1,245,601 183
Telesp (Common) 1,200,500 174
-----------
8,961
-----------
- ---------------------------------------------------------
- -------------
TEXTILES & APPAREL (2.3%)
Coteminas 1,200,000 401
+Wentex 318,000 439
-----------
840
-----------
- ---------------------------------------------------------
- -------------
UTILITIES--ELECTRICAL & GAS (20.0%)
Cemig 46,400,000 1,027
#Cemig ADR 18,357 406
+CESP 90 --
CPFL 22,591,000 604
Eletrobras ADR 15,250 206
Eletrobras 'B' 2,940,000 796
Eletrobras (Common) 11,372,000 3,077
Light (Common) 3,420,000 1,094
-----------
7,210
-----------
- ---------------------------------------------------------
- -------------
TOTAL BRAZILIAN NON-VOTING PREFERRED
STOCKS
(Cost U.S. $36,931) 34,671
-----------
- ---------------------------------------------------------
- -------------
<CAPTION>
FACE
AMOUNT
(000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
FOREIGN CURRENCY ON DEPOSIT WITH
CUSTODIAN (1.0%)
Brazilian Real (Cost U.S.
$344) BRL 334 344
-----------
- ---------------------------------------------------------
- -------------
TOTAL BRAZILIAN INVESTMENT FUND
(Cost U.S. $37,275) 35,015
-----------
- ---------------------------------------------------------
- -------------
TOTAL INVESTMENTS (97.4%)
(Cost U.S. $37,275) 35,015
-----------
- ---------------------------------------------------------
- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AMOUNT
(000) (000)
- ---------------------------------------------------------
<S> <C> <C>
- ------------
OTHER ASSETS (5.3%)
Cash U.S.$ 65
Receivable for Investments
Sold 1,642
Dividends Receivable 145
Deferred Organization Costs 38
Other Assets 7 U.S.$1,897
------------- -----------
- ---------------------------------------------------------
- -------------
LIABILITIES (-2.7%)
Payable for:
Investments Purchased (865)
Professional Fees (39)
Investment Advisory Fees (21)
Shareholder Reporting
Expenses (13)
Administrative and
Transfer Agent Fees (9)
Directors' Fees and
Expenses (6)
Brazilian Administrative
and Custodian Fees (4)
U.S. Custodian Fees (1) (958 )
------------- -----------
- ---------------------------------------------------------
- -------------
NET ASSETS (100%)
Applicable to 560,593
issued and outstanding
U.S. $0.01 par value
shares (50,000,000 shares
authorized) U.S.$35,954
-------------
- ---------------------------------------------------------
- -------------
NET ASSET VALUE PER SHARE U.S.$ 64.14
-------------
</TABLE>
- ---------------------------------------------
- ---------
+ -- Non-income producing
** -- Security valued at fair value -- see Note A-1 to financial statements.
*** -- Security valued at fair value as determined based on the market value of
the underlying security less subscription costs.
# -- 144A security -- certain conditions for public sale may exist.
ADR -- American Depositary Receipt.
December 31, 1995 exchange rate--Brazilian Real (BRL) 0.9719 = U.S. $1.00
<TABLE>
<CAPTION>
AMOUNT
(000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
AT DECEMBER 31, 1995, NET ASSETS CONSISTED OF:
- ------------------------------------------------------------
Common Stock U.S.$ 6
Capital Surplus 20,804
Accumulated Net Realized
Gain 17,409
Unrealized Depreciation on
Investments and Foreign
Currency Translations (2,265)
- ------------------------------------------------------------
TOTAL NET ASSETS U.S.$35,954
-------------
</TABLE>
- -----------------------------------------------------------------
- -------------
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
STATEMENT OF OPERATIONS (000)
<S> <C>
- -------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends............................................... U.S.$ 909
Interest................................................ 25
Less: Foreign Taxes Withheld............................ (129)
- -------------------------------------------------------------------------------
Total Income.......................................... 805
- -------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees................................ 375
U.S. Administrative and Transfer Agent Fees............. 118
Amortization of Organization Costs...................... 89
Brazilian Administrative and Custodian Fees............. 63
Audit Fees.............................................. 56
Directors' Fees and Expenses............................ 31
Shareholder Reporting Expenses.......................... 31
Legal Fees.............................................. 22
Custodian Fees.......................................... 2
Other Expenses.......................................... 78
- -------------------------------------------------------------------------------
Total Expenses........................................ 865
- -------------------------------------------------------------------------------
Net Investment Loss................................. (60)
- -------------------------------------------------------------------------------
NET REALIZED GAIN
Investment Securities Sold.............................. 17,408
Foreign Currency Transactions........................... 32
- -------------------------------------------------------------------------------
Net Realized Gain................................... 17,440
- -------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
Investments............................................. (34,668)
Foreign Currency Translations........................... (12)
- -------------------------------------------------------------------------------
Change in Unrealized Appreciation (Depreciation).... (34,680)
- -------------------------------------------------------------------------------
Total Net Realized Gain and Change in Unrealized
Appreciation (Depreciation)................................ (17,240)
- -------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS.... U.S.$(17,300)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1995
STATEMENT OF CHANGES IN NET ASSETS (000) (000)
<S> <C> <C>
- -----------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Loss........................... U.S.$ (446) U.S.$ (60)
Net Realized Gain............................. 24,028 17,440
Change in Unrealized Appreciation
(Depreciation)............................... 10,907 (34,680)
- -----------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Resulting from Operations.................... 34,489 (17,300)
- -----------------------------------------------------------------------------------------
Distributions:
In Excess of Net Investment Income............ (1,122) --
Net Realized Gain............................. (4,148) (23,408)
- -----------------------------------------------------------------------------------------
Total Distributions........................... (5,270) (23,408)
- -----------------------------------------------------------------------------------------
Capital Share Transactions:
Subscription of Shares (4,128 and 25,702
shares, respectively)........................ 445 1,853
Reinvestment of Distributions (50,471 and
286,103 shares, respectively)................ 5,220 23,041
Repurchase of Shares (53,929 and 376,486
shares, respectively)........................ (5,827) (29,496)
- -----------------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting From
Capital Share Transactions................... (162) (4,602)
- -----------------------------------------------------------------------------------------
Total Increase (Decrease)..................... 29,057 (45,310)
Net Assets:
Beginning of Year............................. 52,207 81,264
- -----------------------------------------------------------------------------------------
End of Year (including accumulated net
investment loss of U.S. $36 and U.S. $0,
respectively................................. U.S.$81,264 U.S.$ 35,954
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
<S> <C> <C> <C> <C> <C>
PERIOD FROM
JUNE 4, 1991* TO YEAR ENDED DECEMBER 31,
DECEMBER 31, --------------------------------------------------
SELECTED PER SHARE DATA AND RATIOS: 1991 1992 1993 1994 1995
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD........... U.S.$50.00 U.S.$63.31 U.S.$55.28 U.S.$83.58 U.S.$129.97
- ---------------------------------------------------------------------------------------------------------------------
Offering Costs................................. (0.21) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss)................... 0.84 (0.09) 1.42 (0.71) (0.11)
Net Realized and Unrealized Gain (Loss) on
Investments................................... 12.68 (7.94) 33.94 55.55 (27.99)
- ---------------------------------------------------------------------------------------------------------------------
Total from Investment Operations........... 13.52 (8.03) 35.36 54.84 (28.10)
- ---------------------------------------------------------------------------------------------------------------------
Distributions:
In Excess of Net Investment Income......... -- -- -- (1.80) --
Net Realized Gain.......................... -- -- (6.89) (6.65) (37.73)
In Excess of Net Realized Gain............. -- -- (0.17) -- --
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions........................ -- -- (7.06) (8.45) (37.73)
- ---------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD................. U.S.$63.31 U.S.$55.28 U.S.$83.58 U.S.$129.97 U.S.$64.14
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN:
Net Asset Value (1)........................ 26.62% (12.68)% 72.52% 68.32% (26.61)%
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
RATIOS, SUPPLEMENTAL DATA:
- ---------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (THOUSANDS).......... U.S.$51,159 U.S.$46,687 U.S.$52,207 U.S.$81,264 U.S.$35,954
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Expenses to Average Net Assets........ 2.00%**(2) 2.27%(2) 2.22% 1.82% 2.07%
Ratio of Net Investment Income (Loss) to
Average Net Assets............................ 3.49%** (0.07)% 1.57% (0.61)% (0.14)%
Portfolio Turnover Rate........................ 1% 36% 40% 52% 112%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
*Commencement of operations.
**Annualized.
(1)Total investment return based on per share net asset value reflects the
effects of changes in net asset value on the performance of the Fund during
each period, and assumes dividends and distributions, if any, were
reinvested. The Fund's shares are issued in a private placement and are not
traded; therefore, market value total investment return is not calculated.
Total return for the periods ended December 31, 1991 and 1992 would have been
lower were it not for voluntary expense limits.
(2)Reflects a voluntary expense limitation in effect during the period. As a
result of such limitation, expenses of the Fund for the periods ended
December 31, 1991 and 1992 reflect a benefit of U.S.$0.10 and U.S.$0.14,
respectively.
Note: Current period permanent book-tax differences, if any, are not included
in the calculation of net investment income (loss) per share.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
- ----------
The Brazilian Investment Fund, Inc. (the "Fund") was incorporated on
November 7, 1990, and is registered as a non-diversified, closed-end management
investment company under the Investment Company Act of 1940, as amended. The
Fund's common stock is not registered under the Securities Act of 1933. The
Fund's investment objective is long-term capital appreciation through
investments primarily in equity securities. The Fund makes its investments in
Brazil through an investment fund established in compliance with Brazilian law.
The accompanying financial statements are prepared on a consolidated basis and
present the financial position and results of operations of the investment fund
and the Fund.
A. The following significant accounting policies are in conformity with
generally accepted accounting principles for investment companies. Such policies
are consistently followed by the Fund in the preparation of its financial
statements. Generally accepted accounting principles may require management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results may differ from those estimates.
1. SECURITY VALUATION: In valuing the Fund's assets, all
listed securities, including purchased options, for which market quotations
are readily available are valued at the last sales price on the valuation
date, or if there was no sale on such date, at the mean between the current
bid and asked prices. Securities which are traded over-the-counter are
valued at the average of the mean of current bid and asked prices obtained
from reputable brokers. All non-equity securities as to which market
quotations are readily available are valued at their market values.
Short-term securities which mature in 60 days or less are valued at
amortized cost. Other securities and assets for which market values are not
readily available (including investments which are subject to limitations as
to their sale or for which a ready market for the securities in the
quantities owned by the Fund does not exist) are valued at fair value as
determined in good faith by the Board of Directors (the "Board"), although
the actual calculations may be done by others.
2. TAXES: It is the Fund's intention to continue to
qualify as a regulated investment company and distribute all of its taxable
income. Accordingly, no provision for U.S. Federal income taxes is required
in the financial statements.
Accumulated undistributed net investment income and accumulated realized
gain have been adjusted for current and prior period permanent book-tax
differences. Current period adjustments arose principally from differing
book-tax treatments for foreign currency transactions and net operating
losses.
3. REPURCHASE AGREEMENTS: In connection with
transactions in repurchase agreements, a bank as custodian for the Fund takes
possession of the underlying securities, the value of which equals or
exceeds the principal amount of the repurchase transaction, including
accrued interest. To the extent that any repurchase transaction exceeds one
business day, the value of the collateral is marked-to-market on a daily
basis to determine the adequacy of the collateral. In the event of default
on the obligation to repurchase, the Fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. To the
extent that proceeds from the sale of the underlying securities are less
than the repurchase price under the agreement, the Fund may incur a loss. In
the event of default or bankruptcy by the other party to the agreement,
realization and/or retention of the collateral or proceeds may be subject to
legal proceedings.
4. FOREIGN CURRENCY TRANSLATION: The books and
records of the Fund are maintained in U.S. dollars. Amounts denominated in
Brazilian currency are translated into U.S. dollars at the mean of the bid
and asked prices of such currency against U.S. dollars last quoted by a
major bank as follows:
- investments, other assets and liabilities at the prevailing rates of
exchange on the valuation date;
- investment transactions and investment income at the prevailing rates
of exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the foreign exchange
rate and market values at the close of the period, the Fund does not isolate
that portion of the results of operations arising as a result of changes in
the foreign exchange rates from the fluctuations arising from changes in the
market prices of the securities held at period end. Similarly, the Fund does
not isolate the effect of changes in foreign exchange rates from the
fluctuations arising from changes in the market prices of securities sold
during the period. Accordingly, realized and unrealized foreign currency
gains (losses) are included in the reported net realized and unrealized
gains (losses) on investment transactions and balances.
Net realized gains (losses) on foreign currency transactions represent net
foreign exchange gains (losses)
10
<PAGE>
from sales and maturities of forward foreign currency contracts, disposition
of foreign currency and currency gains or losses realized between the trade
and settlement dates on securities transactions. Foreign currency gains
(losses) also occur due to the difference between the amount of investment
income and foreign withholding taxes recorded on the Fund's books and the
U.S. dollar equivalent amounts actually received or paid. Net unrealized
currency gains (losses) from valuing foreign currency denominated assets and
liabilities at period end exchange rates are reflected as a component of
unrealized appreciation (depreciation) in the Statement of Net Assets. The
change in net unrealized currency gains (losses) for the period is reflected
in the Statement of Operations.
5. FORWARD FOREIGN CURRENCY CONTRACTS: The Fund
may enter into forward foreign currency contracts to protect securities and
related receivables and payables against changes in future foreign exchange
rates. A forward foreign currency contract is an agreement between two
parties to buy or sell currency at a set price on a future date. The market
value of the contract will fluctuate with changes in currency exchange
rates. The contract is marked-to-market daily and the change in market value
is recorded by the Fund as unrealized gain or loss. The Fund records
realized gains or losses when the contract is closed equal to the difference
between the value of the contract at the time it was opened and the value at
the time it was closed. Risk may arise upon entering into these contracts
from the potential inability of counterparties to meet the terms of their
contracts and is generally limited to the amount of unrealized gain on the
contracts, if any, at the date of default. Risks may also arise from
unanticipated movements in the value of a foreign currency relative to the
U.S. dollar.
6. PURCHASED OPTIONS: The Fund may purchase
options. In purchasing a call (put) option, the Fund will seek to benefit from
an increase (decline) in the market price of the underlying index or
security. Risks may arise in the event of default by the counterparty or
unanticipated movements in the market price of the underlying index or
security, however, the maximum exposure to loss for any purchased option is
limited to the premium initially paid for the option. Realized gains or
losses on purchased options are included with net gain (loss) on securities
sold in the financial statements.
7. OTHER: Security transactions are accounted for on
the date the securities are purchased or sold. Realized gains and losses on
the sale of investment securities are determined on the specific identified
cost basis. Interest income is recognized on the accrual basis. Dividend
income is recorded on the ex-dividend date (except certain dividends which
may be recorded as soon as the Fund is informed of such dividend) net of
applicable withholding taxes where recovery of such taxes is not reasonably
assured. Distributions to shareholders are recorded on the ex-date. Income
distributions and capital gain distributions are determined in accordance
with U.S. Federal income tax regulations which may differ from generally
accepted accounting principles. These differences are principally due to the
timing of the recognition of losses on securities and due to permanent
differences described in note A-2.
B. Morgan Stanley Asset Management Inc. (the "U.S. Adviser") provides
investment advisory services to the Fund under the terms of an Investment
Advisory Agreement (the "Agreement"). Under the Agreement, the U.S. Adviser is
paid a fee computed weekly and payable monthly at an annual rate of .90% of the
Fund's first $50 million of average weekly net assets, .70% of the Fund's next
$50 million of average weekly net assets and .50% of the Fund's average weekly
net assets in excess of $100 million.
C. Effective September 1, 1995, The Chase Manhattan Bank, N.A., through its
affiliate Chase Global Funds Services Company (the "Administrator"), (formerly
Mutual Funds Service Company, a wholly owned subsidiary of the United States
Trust Company of New York), provides administrative and shareholder services to
the Fund under an Administration Agreement. Under the Administration Agreement,
the Administrator is paid a fee computed weekly and payable monthly at an annual
rate of .08% of the Fund's average weekly net assets, plus $75,000 per annum. In
addition, the Fund is charged certain out of pocket expenses by the
Administrator. Effective September 1, 1995, The Chase Manhattan Bank, N.A. acts
as custodian for the Fund's assets held in the United States. Prior to September
1, 1995, Mutual Funds Service Company and United States Trust Company of New
York provided administrative and custodian services, respectively, to the Fund
under the same terms, conditions and fees as stated above.
D. Unibanco - Uniao de Bancos Brasileiras S.A. ("the Brazilian Administrator
and Custodian") provides Brazilian administrative and custodian services to the
Fund under the terms of an agreement. Under the agreement, the Brazilian
Administrator and Custodian is paid a fee computed weekly and paid monthly at an
annual rate of .15% of the Fund's first $50 million of average weekly net
11
<PAGE>
assets, .125% of the Fund's next $50 million of average weekly net assets and
.10% of the Fund's average weekly net assets in excess of $100 million.
E. During the year ended December 31, 1995, the Fund made purchases and sales
totaling $48,108,000 and $77,135,000, respectively, of investment securities
other than long-term U.S. Government securities and short term investments.
There were no purchases and sales of long-term U.S. Government securities. At
December 31, 1995, the U.S. Federal income tax cost basis of securities was
$37,106,000 and accordingly, net unrealized depreciation for U.S. Federal income
tax purposes was $2,435,000, of which $2,412,000, related to appreciated
securities and $4,847,000 related to depreciated securities.
F. In connection with its organization the Fund incurred $445,000 of
organization costs which are being amortized on a straight-line basis over a
five year period beginning June 4, 1991, the date the Fund commenced operations.
G. At December 31, 1995, a significant portion of the Fund's net assets consist
of securities denominated in Brazilian currency. Changes in currency exchange
rates will affect the value of and investment income from such securities.
Brazilian securities are subject to greater price volatility, limited
capitalization and liquidity, and higher rates of inflation than securities of
companies based in the United States. In addition, Brazilian securities may be
subject to substantial governmental involvement in the economy and greater
social, economic and political uncertainty.
H. The Fund's Articles of Incorporation provide that, commencing January 6,
1992 and on each calendar quarter thereafter, the Fund will make a tender offer
to repurchase its outstanding shares of Common Stock at a price equal to the net
asset value per share at the time of repurchase.
During the year ended December 31, 1995, the Fund repurchased the following
shares:
<TABLE>
<CAPTION>
U.S.
DATE SHARES (000)
- --------- --------- ---------
<S> <C> <C>
2/6/95 312,637 $ 24,964
5/5/95 41,019 $ 2,975
8/4/95 2,544 $ 180
11/6/95 20,286 $ 1,377
</TABLE>
On February 5, 1996, the Fund repurchased 15,131 shares totaling $653,000.
I. Shareholders of the Fund may purchase shares of Common Stock from the Fund
at a price equal to the net asset value at the beginning of the month. Purchases
are not allowed during each month the Fund makes a tender offer to repurchase
its outstanding shares. During the year ended December 31, 1995, the Fund issued
25,702 shares totaling $1,853,000.
J. Each Director of the Fund who is not an officer of the Fund or an affiliated
person as defined under the Investment Company Act of 1940, as amended, may
elect to participate in the Directors' Deferred Compensation Plan (the "Plan").
Under the Plan, such Directors may elect to defer payment of a percentage of
their total fees earned as a Director of the Fund. These deferred portions are
treated, based on an election by the Director, as if they were either invested
in the Fund's shares or invested in U.S. Treasury Bills, as defined under the
Plan. At December 31, 1995, none of the Directors elected to participate in the
Plan.
K. During December 1995, the Board declared a distribution of $29.97 per share,
derived from net realized gains, payable on January 9, 1996, to shareholders of
record on December 29, 1995.
- --------------------------------------------------------------------------------
FEDERAL TAX INFORMATION (UNAUDITED):
For the year ended December 31, 1995, the Fund designates $17,954,000 as
long-term capital gain dividend.
12
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- ---------
To the Shareholders and Board of Directors of
The Brazilian Investment Fund, Inc.
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
The Brazilian Investment Fund, Inc. (the "Fund") at December 31, 1995, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended and the financial highlights
for each of the four years in the period then ended and for the period June 4,
1991 (commencement of operations) through December 31, 1991, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1995 by
correspondence with the custodians and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
February 9, 1996
<PAGE>
FINANCIAL STATEMENTS
- ---------
STATEMENT OF NET ASSETS
- ---------
DECEMBER 31, 1994
<TABLE>
<CAPTION>
VALUE
SHARES (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
BRAZILIAN INVESTMENT FUND (98.7%)
- --------------------------------------------------
- ----------
BRAZILIAN PREFERRED STOCKS (96.8%)
(Unless otherwise noted)
- ---------------------------------------------------------
- -------------
APPLIANCES & HOUSEHOLD DURABLES (9.2%)
Brasmotor 4,441,800 U.S.$ 1,799
Continental 2001 7,600,000 205
Multibras 1,274,500 1,670
Refripar 1,143,557,920 3,780
-----------
7,454
-----------
- ---------------------------------------------------------
- -------------
AUTOMOBILES (4.3%)
Iochpe Maxion 4,850,000 3,378
Marcopolo 'B' 500,000 134
-----------
3,512
-----------
- ---------------------------------------------------------
- -------------
BANKING (11.3%)
Banco Bradesco 360,509,400 3,065
Banco do Brasil 115,000,000 2,267
Banco Nacional 45,653,664 1,159
Banco Nacional (Common) 11,801,600 311
Itaubanco 8,639,000 2,417
-----------
9,219
-----------
- ---------------------------------------------------------
- -------------
BEVERAGES & TOBACCO (1.0%)
Brahma 2,385,700 785
-----------
- ---------------------------------------------------------
- -------------
CHEMICALS (2.9%)
Rhodia-Ster GDR 165,000 2,372
-----------
- ---------------------------------------------------------
- -------------
ENERGY SOURCES (9.1%)
Petrobras 58,477,320 7,387
-----------
- ---------------------------------------------------------
- -------------
FOOD & HOUSEHOLD PRODUCTS (2.5%)
Ceval Alimentos 12,000,000 177
+Dixie Lalekla 1,811,290 1,818
-----------
1,995
-----------
- ---------------------------------------------------------
- -------------
INDUSTRIAL COMPONENTS (1.0%)
SECTIONS Schulz 'B' 18,000,000 850
-----------
- ---------------------------------------------------------
- -------------
MERCHANDISING (1.6%)
+Lojas Americanas (Bonus Rights) 183,270 26
+Mesbla 6,982,050 1,253
-----------
1,279
-----------
- ---------------------------------------------------------
- -------------
METALS -- NON-FERROUS (1.5%)
Vale do Rio Doce 6,163,800 1,179
-----------
- ---------------------------------------------------------
- -------------
METALS -- STEEL (7.9%)
Cia Siderurgica Nacional
(Common) 78,800,000 U.S.$ 2,684
+Cosipa 'B' 194,000 564
Usiminas 2,361,123,300 3,206
-----------
6,454
-----------
- ---------------------------------------------------------
- -------------
RECREATION, OTHER CONSUMER GOODS (0.8%)
Manufatura Brinquedos de
Estrela 198,000,000 502
Tec Toy 175,000,000 182
-----------
684
-----------
- ---------------------------------------------------------
- -------------
TELECOMMUNICATIONS (17.8%)
Telebras 168,700,000 7,549
Telebras 'D' 6,323,895 235
Telebras (Common) 80,700,000 3,478
Telesp 22,157,978 3,152
Telesp 'P' 92,602 41
-----------
14,455
-----------
- ---------------------------------------------------------
- -------------
TEXTILES & APPAREL (4.9%)
Brasperola 'A' 1,000,000 1,346
Moinho Santista 261,000 647
SECTIONS Wentex 1,670,000 1,972
-----------
3,965
-----------
- ---------------------------------------------------------
- -------------
UTILITIES -- ELECTRICAL & GAS (21.0%)
Cemig ADR 67,500 1,637
+Centrais Eletricas de Santa Catarina
'B' 1,435,000 1,355
Cia Energetica de Sao Paulo 11,930 16
Cia Energetica de Sao Paulo
(Common) 138,236 180
Cia Paulista de Forca e
Luz 7,050,000 483
+Cia Paulista de Forca e
Luz (Common) 26,120,000 2,313
Eletrobras 'B' 21,097,000 7,323
Eletrobras (Common) 9,008,000 3,180
Light (Common) 1,575,000 569
-----------
17,056
-----------
- ---------------------------------------------------------
- -------------
TOTAL BRAZILIAN PREFERRED STOCKS
(Cost U.S. $46,960) 78,646
-----------
- ---------------------------------------------------------
- -------------
PURCHASED OPTIONS (1.9%)
+Cia Paulista de Forca e
Luz call, expiring
10/16/95, strike price
BRL 70.00 18,700,000 194
+Eletrobras call,
expiring 6/19/95,
strike price BRL 30.58 11,660,000 1,322
-----------
(Cost U.S. $794) 1,516
-----------
- ---------------------------------------------------------
- -------------
</TABLE>
The accompanying notes are an integral part of the financial
statements.
4
<PAGE>
<TABLE>
<CAPTION>
AMOUNT VALUE
(000) (000)
<S> <C> <C>
- ---------------------------------------------------------
- ------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (0.0%)
Brazilian Real
(Cost U.S. $28) BRL 23 U.S.$ 28
-----------
- ---------------------------------------------------------
- -------------
TOTAL BRAZILIAN INVESTMENT FUND
(Cost U.S. $47,782) 80,190
-----------
- ---------------------------------------------------------
- -------------
TOTAL INVESTMENTS (98.7%)
(Cost U.S. $47,782) 80,190
-----------
- ---------------------------------------------------------
- -------------
OTHER ASSETS (2.6%)
Receivable for Investments Sold U.S.$1,954
Dividends Receivable 54
Deferred Organization Costs 127
Other Assets 31 2,166
--------- -----------
- ---------------------------------------------------------
- -------------
LIABILITIES (-1.3%)
Payable For:
Bank Overdraft (850)
Investments Purchased (90)
Investment Advisory Fees (52)
Professional Fees (49)
Shareholder Reporting
Expenses (18)
U.S. Administrative Fees (12)
Directors' Fees and Expenses (10)
Brazilian Administrative and
Custodian Fees (9)
U.S. Custodian Fees (2) (1,092)
--------- -----------
- ---------------------------------------------------------
- -------------
NET ASSETS (100%)
Applicable to 625,274 issued and
outstanding U.S. $.01 par value shares
(50,000,000 shares authorized) U.S.$ 81,264
-------------
- ----------------------------------------------------------------
- -------------
NET ASSET VALUE PER SHARE U.S.$ 129.97
-------------
<FN>
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
+ -- Non-income producing
SECTIONS -- Security acquired through an initial public offering of
shares and
fair valued at cost pending listing -- see Note A-1 to
financial
statements
December 31, 1994 exchange rate--Brazilian Real (BRL) 0.847=U.S. $1.00
</TABLE>
<TABLE>
<CAPTION>
AMOUNT
(000)
<S> <C> <C>
- --------------------------------------------------------
- ------------
AT DECEMBER 31, 1994, NET ASSETS CONSISTED OF:
- -----------------------------------------------------------------
Common Stock U.S.$ 6
Capital Surplus 25,470
Accumulated Net Investment
Loss (36)
Accumulated Net Realized Gain 23,409
Unrealized Appreciation on
Investments and Foreign
Currency 32,415
- -----------------------------------------------------------------
TOTAL NET ASSETS U.S.$ 81,264
- ----------------------------------------------------------------
- ----------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of the financial
statements.
5
<PAGE>
<TABLE>
<CAPTION>
YEAR
ENDED
DECEMBER
31, 1994
STATEMENT OF OPERATIONS
(000)
<S> <C>
- -----------------------------------------------------------------------
- ----------
INVESTMENT INCOME
Dividends................................................. U.S.$
969
Interest..................................................
6
Less Foreign Taxes Withheld...............................
(86)
- -----------------------------------------------------------------------
- ----------
Total Income............................................
889
- -----------------------------------------------------------------------
- ----------
EXPENSES
U.S. Investment Advisory Fees.............................
607
U.S. Administrative Fees..................................
154
Brazilian Administrative and Custodian Fees...............
103
Brazilian Taxes...........................................
92
Amortization of Organization Costs........................
89
Legal Fees................................................
68
Audit Fees................................................
49
Directors' Fees and Expenses..............................
47
Brazilian Investment Advisory Fees........................
39
Shareholder Reporting Expenses............................
17
Custodian Fees............................................
5
Other Expenses............................................
65
- -----------------------------------------------------------------------
- ----------
Total Expenses..........................................
1,335
- -----------------------------------------------------------------------
- ----------
Net Investment Loss...................................
(446)
- -----------------------------------------------------------------------
- ----------
NET REALIZED GAIN (LOSS)
Investment Securities Sold................................
24,552
Foreign Currency Transactions.............................
(524)
- -----------------------------------------------------------------------
- ----------
Net Realized Gain.......................................
24,028
- -----------------------------------------------------------------------
- ----------
UNREALIZED APPRECIATION ON INVESTMENTS AND FOREIGN CURRENCY
Beginning of Year.........................................
21,508
End of Year...............................................
32,415
- -----------------------------------------------------------------------
- ----------
Change in Unrealized Appreciation.......................
10,907
- -----------------------------------------------------------------------
- ----------
Total Net Realized Gain and Change in Unrealized
Appreciation.................................................
34,935
- -----------------------------------------------------------------------
- ----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....... U.S.$
34,489
- -----------------------------------------------------------------------
- ----------
- -----------------------------------------------------------------------
- ----------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
YEAR ENDED
DECEMBER 31, 1993
DECEMBER 31, 1994
STATEMENT OF CHANGES IN NET ASSETS (000)
(000)
<S> <C>
<C>
- -----------------------------------------------------------------------
- ----------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Income (Loss).................. U.S.$ 851
U.S.$ (446)
Net Realized Gain............................. 10,349
24,028
Change in Unrealized Appreciation............. 18,449
10,907
- -----------------------------------------------------------------------
- ----------------------
Net Increase in Net Assets Resulting from
Operations................................... 29,649
34,489
- -----------------------------------------------------------------------
- ----------------------
Distributions:
In Excess of Net Investment Income............ --
(1,122)
Net Realized Gain............................. (5,821)
(4,148)
In Excess of Net Realized Gain................ (141)
- --
- -----------------------------------------------------------------------
- ----------------------
Total Distributions........................... (5,962)
(5,270)
- -----------------------------------------------------------------------
- ----------------------
Capital Share Transactions:
Subscription of Shares (2,355 and 4,128
shares, respectively)........................ 196
445
Reinvestment of Distributions (113,719 and
50,471 shares, respectively)................. 5,991
5,220
Repurchase of Shares (335,992 and 53,929
shares, respectively)........................ (24,354)
(5,827)
- -----------------------------------------------------------------------
- ----------------------
Net Decrease in Net Assets Resulting From
Capital Share Transactions................... (18,167)
(162)
- -----------------------------------------------------------------------
- ----------------------
Total Increase................................ 5,520
29,057
Net Assets:
Beginning of Year............................. 46,687
52,207
- -----------------------------------------------------------------------
- ----------------------
End of Year (including accumulated net
investment loss of
U.S. $15 and U.S. $36, respectively)......... U.S.$52,207
U.S.$81,264
- -----------------------------------------------------------------------
- ----------------------
- -----------------------------------------------------------------------
- ----------------------
</TABLE>
The accompanying notes are an integral part of the financial
statements.
6
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
PERIOD FROM
JUNE 4, 1991* TO
YEAR ENDED DECEMBER 31,
DECEMBER 31, -----------
- ---------------------------------------------
SELECTED PER SHARE DATA AND RATIOS: 1991 1992
1993 1994
<S> <C> <C>
<C> <C>
- -----------------------------------------------------------------------
- ---------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD.... U.S.$ 50.00 U.S.$63.31
U.S.$ 55.28 U.S.$ 83.58
- -----------------------------------------------------------------------
- ---------------------------------------------
Offering Costs.......................... (0.21) --
- -- --
- -----------------------------------------------------------------------
- ---------------------------------------------
Net Investment Income (Loss)............ 0.84 (0.09)
1.42 (0.71)
Net Realized and Unrealized Gain (Loss)
on Investments......................... 12.68 (7.94)
33.94 54.72
- -----------------------------------------------------------------------
- ---------------------------------------------
Total from Investment Operations.... 13.52 (8.03)
35.36 54.01
- -----------------------------------------------------------------------
- ---------------------------------------------
Distributions:
In Excess of Net Investment
Income............................. -- --
- -- (1.80)
Net Realized Gain................... -- --
(6.89) (6.65)
In Excess of Net Realized Gain...... -- --
(0.17) --
- -----------------------------------------------------------------------
- ---------------------------------------------
Total Distributions................. -- --
(7.06) (8.45)
- -----------------------------------------------------------------------
- ---------------------------------------------
Increase in Net Asset Value due to
Shares Issued on Reinvestment of
Distributions.......................... -- --
- -- 0.83
- -----------------------------------------------------------------------
- ---------------------------------------------
NET ASSET VALUE, END OF PERIOD.......... U.S.$ 63.31 U.S.$55.28
U.S.$ 83.58 U.S.$ 129.97
- -----------------------------------------------------------------------
- ---------------------------------------------
- -----------------------------------------------------------------------
- ---------------------------------------------
TOTAL INVESTMENT RETURN:
Net Asset Value (1)................. 26.62% (12.68)%
72.52% 68.32%
- -----------------------------------------------------------------------
- ---------------------------------------------
- -----------------------------------------------------------------------
- ---------------------------------------------
RATIOS, SUPPLEMENTAL DATA:
- -----------------------------------------------------------------------
- ---------------------------------------------
NET ASSETS, END OF PERIOD (THOUSANDS)... U.S.$51,159 U.S.$46,687
U.S.$52,207 U.S.$81,264
- -----------------------------------------------------------------------
- ---------------------------------------------
- -----------------------------------------------------------------------
- ---------------------------------------------
Ratio of Expenses to Average Net
Assets................................. 2.00%**(2) 2.27
%(2 2.22% 1.82%
Ratio of Net Investment Income (Loss) to
Average Net Assets..................... 3.49%**
(0.07)% 1.57% (0.61)%
Portfolio Turnover Rate................. 1% 36%
40% 52%
- -----------------------------------------------------------------------
- ---------------------------------------------
</TABLE>
*Commencement of operations
**Annualized
(1)Total investment return based on per share net asset value
reflects the
effects of changes in net asset value on the performance of the
Fund during
each period, and assumes dividends and distributions, if
any, were
reinvested. The Fund's shares are issued in a private placement and
are not
traded, therefore market value total investment return is not
calculated.
(2)Reflects a voluntary expense limitation in effect during the
period. As a
result of such limitation, expenses of the Fund for the
periods ended
December 31, 1991 and 1992 reflect a benefit of $.10 and $.14,
respectively.
The accompanying notes are an integral part of the financial
statements.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
- ----------
The Brazilian Investment Fund, Inc. (the "Fund") was
incorporated on
November 7, 1990, and is registered as a non-diversified, closed-end
management
investment company under the Investment Company Act of 1940, as
amended. The
Fund's common stock is not registered under the Securities Act of 1933.
The Fund
makes its investments in Brazil through an investment fund
established in
compliance with Brazilian law. The accompanying financial
statements are
prepared on a consolidated basis and present the financial position and
results
of operations of the investment fund and the Fund.
A. The following significant accounting policies are in
conformity with
generally accepted accounting principles for investment companies. Such
policies
are consistently followed by the Fund in the preparation of its
financial
statements.
1. SECURITY VALUATION: In valuing the Fund's assets, all listed
securities,
including purchased options, for which market quotations are readily
available
are valued at the last sales price on the valuation date, or if
there was no
sale on such date, at the mean between the current bid and asked
prices.
Securities which are traded over-the-counter are valued at the
average of the
mean of current bid and asked prices obtained from reputable
brokers. All
non-equity securities as to which market quotations are readily
available are
valued at their market values. Short-term securities which mature in 60
days or
less are valued at amortized cost. Other securities and assets for
which market
values are not readily available (including investments which are
subject to
limitations as to their sale or for which a ready market for the
securities in
the quantities owned by the Fund does not exist) are valued at fair
value as
determined in good faith by the Board of Directors (the "Board"),
although the
actual calculations may be done by others.
2. TAXES: It is the Fund's intention to continue to qualify as a
regulated
investment company and distribute all of its taxable income.
Accordingly, no
provision for U.S. Federal income taxes is required in the financial
statements.
Through December 31, 1993, the Fund was subject to a
Brazilian
repatriation tax with respect to remittances outside of Brazil
of its
dividend and interest income net of applicable expenses. Effective
January
1, 1994, this tax on dividend and interest income is being withheld
at the
source.
Effective January 1, 1994, the Brazilian Government announced a
0.25%
tax on banking transaction debits (withdrawals). The tax was
subsequently
repealed on January 1, 1995. This tax is included in Brazilian Taxes on
the
Statement of Operations.
Capital surplus, accumulated net investment loss and
accumulated
realized gain have been adjusted for permanent book-tax differences.
3. REPURCHASE AGREEMENTS: In connection with transactions in
repurchase
agreements, a bank as custodian for the Fund takes possession of the
underlying
securities, the value of which equals or exceeds the principal
amount of the
repurchase transaction, including accrued interest. To the extent
that any
repurchase transaction exceeds one business day, the value of the
collateral is
marked-to-market on a daily basis to determine the adequacy of the
collateral.
In the event of default on the obligation to repurchase, the Fund has
the right
to liquidate the collateral and apply the proceeds in
satisfaction of the
obligation. To the extent that proceeds from the sale of the
underlying
securities are less than the repurchase price under the agreement, the
Fund may
incur a loss. In the event of default or bankruptcy by the other
party to the
agreement, realization and/or retention of the collateral or
proceeds may be
subject to legal proceedings.
4. FOREIGN CURRENCY TRANSLATION: The books and records of the
Fund are
maintained in U.S. dollars. Amounts denominated in Brazilian
currency are
translated into U.S. dollars at the mean of the bid and asked prices
of such
currency against U.S. dollars last quoted by a major bank as follows:
- investments, other assets and liabilities at the prevailing
rates of
exchange on the valuation date;
- investment transactions and investment income at the
prevailing rates
of exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the foreign
exchange
rate and market values at the close of the period, the Fund does not
isolate
that portion of the results of operations arising as a result of
changes in
the foreign exchange rates from the fluctuations arising from changes
in the
market prices of the securities held at period end. Similarly, the Fund
does
not isolate the effect of changes in foreign exchange rates
from the
fluctuations arising from changes in the market prices of securities
sold
during the period. Accordingly, realized and unrealized foreign
currency
gains (losses) are included in the reported net realized and
unrealized
gains (losses) on investment transactions and balances.
Net realized gains (losses) on foreign currency transactions
represent
net foreign exchange gains
8
<PAGE>
(losses) from sales and maturities of forward currency contracts,
disposition of foreign currency and currency gains or losses realized
between the trade and settlement dates on securities
transactions.
Foreign currency gains (losses) also occur due to the difference
between the
amount of investment income and foreign withholding taxes recorded on
the
Fund's books and the U.S. dollar equivalent amounts actually received
or
paid. Net unrealized currency gains (losses) from valuing foreign
currency
denominated assets and liabilities at period end exchange rates are
reflected as a component of unrealized appreciation (depreciation).
5. FORWARD FOREIGN CURRENCY CONTRACTS: The Fund may enter into
forward foreign
currency contracts to protect securities and related receivables and
payables
against changes in future foreign exchange rates. A forward currency
contract is
an agreement between two parties to buy or sell currency at a set
price on a
future date. The market value of the contract will fluctuate with
changes in
currency exchange rates. The contract is marked-to-market daily and
the change
in market value is recorded by the Fund as unrealized gain or loss.
The Fund
records realized gains or losses when the contract is closed
equal to the
difference between the value of the contract at the time it was opened
and the
value at the time it was closed. Risk may arise upon entering
into these
contracts from the potential inability of counterparties to meet the
terms of
their contracts and is generally limited to the amount of unrealized
gain on the
contracts, if any, at the date of default. Risks may also
arise from
unanticipated movements in the value of a foreign currency relative to
the U.S.
dollar.
6. PURCHASED OPTIONS: The Fund may purchase options. In purchasing a
call (put)
option, the Fund will seek to benefit from an increase (decline) in
the market
price of the underlying index or security. Risks may arise in the
event of
default by the counterparty or unanticipated movements in the market
price of
the underlying index or security, however, the maximum exposure to
loss for any
purchased option is limited to the premium initially paid for the
option.
Realized gains or losses on purchased options are included with net
gain (loss)
on securities sold in the financial statements.
7. OTHER: Security transactions are accounted for on the date the
securities are
purchased or sold. Realized gains and losses on the sale of
investment
securities are determined on the specific identified cost basis.
Interest income
is recognized on the accrual basis. Dividend income and
distributions to
shareholders are recorded on the ex-date. Income distributions and
capital gain
distributions are determined in accordance with U.S. Federal
income tax
regulations which may differ from generally accepted accounting
principles.
These differences are primarily due to differing treatments for foreign
currency
transactions and deferral of post-October losses.
B. Morgan Stanley Asset Management Inc. (the "U.S. Adviser")
provides
investment advisory services to the Fund under the terms of an
Investment
Advisory Agreement (the "Agreement"). Under the Agreement, the U.S.
Adviser is
paid a fee computed weekly and payable monthly at an annual rate of
.90% of the
Fund's first $50 million of average weekly net assets, .70% of the
Fund's next
$50 million of average weekly net assets and .50% of the Fund's
average weekly
net assets in excess of $100 million.
C. For the period January 1, 1994 to June 14, 1994, Unibanco
Consulatoria de
Investmentos S/C Ltda. (the "Brazilian Adviser") provided investment
advice,
research and assistance on behalf of the Fund to Morgan Stanley Asset
Management
Inc. under terms of a contract. Under the contract, the Brazilian
Adviser was
paid a fee computed weekly and paid monthly at an annual rate of
.15% of the
Fund's first $50 million of average weekly net assets, .125% of the
Fund's next
$50 million of average weekly net assets and .10% of the Fund's
average weekly
net assets in excess of $100 million. On June 14, 1994, the contract
expired and
was not renewed. The Brazilian Adviser is a subsidiary of Unibanco-
Uniao de
Bancos Brasileiros S.A., a Brazilian bank and the Fund's Brazilian
Administrator
and Custodian.
During the period from January 1, 1994 to June 6, 1994, the
Fund made
purchases and sales of $8,746,000 and $8,929,000, respectively, of UBB
Financial
Fund, which is sponsored by Unibanco-Uniao de Bancos Brasileiros
S.A. (the
"Brazilian Administrator and Custodian"), an affiliate of the Brazilian
Adviser.
During the same period, the Fund earned income of $487,000 from UBB
Financial
Fund which was offset by foreign currency losses of $571,000. The
net loss of
$84,000 is included in net realized loss on foreign currency
transactions.
D. The United States Trust Company of New York ("U.S. Trust"),
through its
wholly owned subsidiary Mutual Funds Service Company, provides
administrative
and shareholder services to the Fund under an Administration
Agreement. Under
the Administration Agreement, U.S. Trust is paid a fee computed
weekly and
payable monthly at an annual rate of .08% of the Fund's average
weekly net
assets, plus $75,000 per annum. Effective May 15, 1994,
9
<PAGE>
U.S. Trust replaced Morgan Guaranty Trust Company of New York as
custodian for
the Fund's assets held in the United States.
E. The Brazilian Administrator and Custodian provides Brazilian
administrative
and custodian services to the Fund under the terms of an agreement.
Under the
agreement, the Brazilian Administrator and Custodian is paid a fee
computed
weekly and paid monthly at an annual rate of .15% of the Fund's
first $50
million of average weekly net assets, .125% of the Fund's next $50
million of
average weekly net assets and .10% of the Fund's average weekly net
assets in
excess of $100 million.
During the period from January 1, 1994 to June 14, 1994, the Fund
incurred
$5,000 in brokerage commission fees to Unibanco Corretora de Valores
Mobiliarios
S.A., a subsidiary of the Brazilian Administrator and Custodian.
F. During the year ended December 31, 1994, the Fund made purchases
and sales
totaling $37,250,000 and $43,938,000, respectively, of investment
securities
other than U.S. Government securities and short term investments. At
December
31, 1994, the U.S. Federal income tax cost basis of securities was the
same as
that for financial reporting purposes and accordingly, net
unrealized
appreciation for U.S. Federal income tax purposes was $32,408,000,
of which
$33,332,000 related to appreciated securities and $924,000
related to
depreciated securities. For the year ended December 31, 1994, the Fund
expects
to defer, to January 1, 1995 for U.S. Federal income tax purposes,
post-October
currency losses of $36,000.
G. In connection with its organization the Fund incurred
$445,000 of
organization costs which are being amortized on a straight-line
basis over a
five year period beginning June 4, 1991, the date the Fund commenced
operations.
H. At December 31, 1994, 98.7% of the Fund's net assets consist of
securities
denominated in Brazilian currency. Changes in currency exchange
rates will
affect the value of and investment income from such securities.
Brazilian
securities are subject to greater price volatility, limited
capitalization and
liquidity, and higher rates of inflation than securities of companies
based in
the United States.
I. The Fund's Articles of Incorporation provide that, commencing
January 6,
1992 and on each calendar quarter thereafter, the Fund will make a
tender offer
to repurchase its outstanding shares of Common Stock at a price equal
to the net
asset value per share at the time of repurchase.
During the year ended December 31, 1994, the Fund repurchased the
following
shares:
<TABLE>
<CAPTION>
U.S.
DATE SHARES (000)
- ---------- -------- ----------
<S> <C> <C>
2/4/94 45,452 $5,017
4/30/94 7,501 $ 678
8/1/94 242 $ 26
11/7/94 734 $ 106
</TABLE>
On February 13, 1995 the Fund repurchased 312,637 shares
totaling
$24,964,000.
J. Shareholders of the Fund may purchase shares of common stock from
the Fund
at a price equal to the net asset value at the beginning of the month.
Purchases
are not allowed during each month the Fund makes a tender offer to
repurchase
its outstanding shares. During the year ended December 31, 1994, the
Fund issued
4,128 shares totaling $445,000.
K. During December 1994, the Board declared a distribution of $34.88
per share,
derived from net realized gains, payable on January 10, 1995, to
shareholders of
record on December 30, 1994.
- -----------------------------------------------------------------------
- ---------
FEDERAL TAX INFORMATION: (UNAUDITED)
For the year ended December 31, 1994, the Fund designates $15,921,000
as
long-term capital gain.
10
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- ---------
To the Shareholders and Board of Directors of
The Brazilian Investment Fund, Inc.
In our opinion, the accompanying statement of net assets and
the related
statements of operations and of changes in net assets and the
financial
highlights present fairly, in all material respects, the financial
position of
The Brazilian Investment Fund, Inc. (the "Fund") at December 31,
1994, the
results of its operations for the year then ended, the changes in its
net assets
for each of the two years in the period then ended and the financial
highlights
for each of the three years in the period then ended and for the period
June 4,
1991 (commencement of operations) through December 31, 1991, in
conformity with
generally accepted accounting principles. These financial
statements and
financial highlights (hereafter referred to as "financial
statements") are the
responsibility of the Fund's management; our responsibility is to
express an
opinion on these financial statements based on our audits. We
conducted our
audits of these financial statements in accordance with generally
accepted
auditing standards which require that we plan and perform the audit
to obtain
reasonable assurance about whether the financial statements are free of
material
misstatement. An audit includes examining, on a test basis, evidence
supporting
the amounts and disclosures in the financial statements,
assessing the
accounting principles used and significant estimates made by
management, and
evaluating the overall financial statement presentation. We believe
that our
audits, which included confirmation of securities at December 31,
1994 by
correspondence with the custodians and brokers and the
application of
alternative auditing procedures where confirmations from brokers
were not
received, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
February 17, 1995
11
LETTER OF TRANSMITTAL
To Accompany Shares of Common Stock
or Order Tender of Uncertificated Shares of
THE BRAZILIAN INVESTMENT FUND, INC.
Tendered Pursuant to the Offer to Purchase
Dated April 8, 1996
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT,
EASTERN TIME, ON MAY 6, 1996, UNLESS THE OFFER IS EXTENDED.
To: Chase Global Funds Services Company, Depository
BY HAND, OVERNIGHT COURIER OR MAIL:
73 Tremont Street
Boston, MA 02108
BY FACSIMILE: FOR CONFIRMATION OF RECEIPT:
(617) 557-8697 (800) 221-6726
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES TENDERED
(See Instructions 3 and 4.)
Name(s) and Address(es) Share(s) Tendered (Attach
of Registered Owner(s) Signed List if Necessary.)
(Please fill in Exactly
as Apperar(s) on
Certificate(s) or Share
Register.)
Number
of Shares
Represented Number of
by Shares
Certificate(s) Not
Number of and Represented
Shares Certificate by
Tendered* Number(s) Certificates
<C> <C> <C>
Total
Shares
Tendered
* If you desire to tender fewer than all Shares evidenced by any
certificates listed above, please indicate in this column
the number of Shares you wish to tender. Otherwise, all
Shares evidenced by such certificates will be deemed to
have been tendered. See Instruction 4.
</TABLE>
Delivery of this instrument to an address other than those
shown above or transmission of instructions via a facsimile
number other than those listed above does not constitute a valid
delivery.
This Letter of Transmittal is to be used only (a) if
certificates for Shares (as defined below) are to be forwarded
with it or (b) if a tender of uncertificated Shares registered on
the share register maintained by the Depository is to be made
through notification hereby to the Depository.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to The Brazilian Investment
Fund, Inc., a Maryland corporation (the "Fund"), the above-
described shares of the Fund's Common Stock, $.01 par value per
share (the "Shares"), at a price per Share, net to the seller in
cash, equal to the net asset value in U.S. dollars ("NAV") per
Share as of 5:00 P.M., New York City time on the Expiration Date,
as herein defined, (the "Purchase Price") upon the terms and
subject to the conditions set forth in the Fund's Offer to
Purchase, dated April 8, 1996 (the "Offer to Purchase"), receipt
of which is hereby acknowledged, and in this Letter of
Transmittal (which together with the Offer to Purchase constitute
the "Offer"). The term "Expiration Date" means 12:00 midnight,
New York City time, on May 6, 1996, unless and until the Fund,
in its sole discretion, shall have extended the period for which
the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date on which the Offer, as so
extended by the Fund, shall expire.
Subject to and effective upon acceptance for payment of the
Shares tendered hereby in accordance with the terms of the Offer
(including, if the Offer is extended or amended, the terms or
conditions of any such extension or amendment), the undersigned
hereby sells, assigns and transfers to or upon the order of the
Fund all right, title and interest in and to all Shares tendered
hereby and hereby irrevocably constitutes and appoints the
Depository as attorney-in-fact of the undersigned with respect to
such Shares, with full power of substitution (such power of
attorney being an irrevocable power coupled with an interest),
to:
a. deliver certificates for such Shares, or transfer
ownership of such Shares on the share register of the Fund
maintained by the Depository, together in either such case
with all accompanying evidences of transfer and
authenticity, to or upon the order of the Fund, upon receipt
by the Depository, as the undersigned's agent, of the
Purchase Price with respect to such Shares;
b. present certificates for such Shares for cancellation
and transfer on the Fund's books; and
c. receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares all in
accordance with the terms of the Offer.
The undersigned here represents and warrants that:
(a) the undersigned "owns" the Shares tendered hereby within
the meaning of Rule 10b-4 promulgated under the Securities
Exchange Act of 1934, as amended, and has full power and
authority to validly tender, sell, assign and transfer the Shares
tendered hereby;
(b) when and to the extent that the Fund accepts for purchase
the Shares tendered hereby, the Fund will acquire good,
marketable and unencumbered title to such Shares, free and clear
of all security interests, liens, charges, encumbrances,
conditional sales agreements or other obligations relating to
their sale or transfer, and not subject to any adverse claim;
(c) on request, the undersigned will execute and deliver any
additional documents the Depository or the Fund deems necessary
or desirable to complete the assignment, transfer and purchase of
the Shares tendered hereby; and
(d) the undersigned has read and agrees to all of the terms of
the Offer.
The names and addresses of the registered owners should be
printed, if they are not already printed above, as they appear on
the certificates representing Shares tendered hereby. The number
of Shares that the undersigned wishes to tender and the
certificates, if any, that are being tendered should be indicated
in the appropriate boxes.
The undersigned recognizes that under certain circumstances
set forth in the Offer to Purchase, the Fund may terminate or
amend the Offer or may not be required to purchase the Shares
tendered hereby. The undersigned understands that certificate(s)
for any Shares not tendered or not purchased will be returned to
the undersigned at the address indicated above.
The undersigned recognizes that under certain circumstances
set forth in the Offer to Purchase, the Fund may terminate or
amend the Offer or may not be required to purchase any of the
Share tendered hereby. The undersigned understands that
certificate(s) for any shares not tendered or not purchased will
be returned to the undersigned at the address indicated above.
The undersigned understands that acceptance of Shares by the
Fund for payment will constitute a binding agreement between the
undersigned and the Fund upon the terms and subject to the
conditions of the Offer.
A check for the Purchase Price for tendered Shares that are
purchased will be issued to the order of the undersigned and
mailed to the address indicated above in the case of Shares
represented by certificates or to the address contained in the
share register of the Fund in the case of uncertificated Shares.
All authority conferred or agreed to be conferred in this
letter of Transmittal shall survive the death or incapacity of
the undersigned, and any obligations of the undersigned under
this Letter of Transmittal shall be binding upon the heirs,
personal representatives, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this
tender is irrevocable.
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
SHAREHOLDER(S) SIGN HERE
(See Instructions 1 and 5.)
Please Complete Substitute Form W-9 Included
Herein.
Must be signed by registered owner(s) exactly as
name(s) appear(s) on certificate(s) or on the
share register of the Fund or by person(s)
authorized to become registered owner(s) by
certificate(s) and documents transmitted with this
Letter of Transmittal. If signature is by
attorney-in-fact, executor, administrator,
trustee, guardian, officer of a corporation or
another acting in a fiduciary or representative
capacity, please set forth the full title. See
Instruction 5.
__________________________________________________
(Signature(s) of Owner(s))
Dated:______________________________________, 1996
Name(s):__________________________________________
__________________________________________________
(Please Print)
Area Code and Telephone Number:___________________
__________________________________________________
(Tax Identification or Social Security Number(s))
__________________________________________________
__________________________________________________
Guarantee of Signature(s)
(See Instructions 1 and 5.)
Authorized Signature:_____________________________
Name:_____________________________________________
(Please Print)
Title:____________________________________________
Name of Firm:_____________________________________
Address:__________________________________________
__________________________________________________
(Include Zip Code)
Area Code and Telephone Number:___________________
Dated:______________________________________, 1996
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a shareholder whose tendered
Shares are accepted for payment is required by law to provide the
Depository with such shareholder's correct TIN (e.g., social
security number or employer identification number) on Substitute
Form W-9 below. If the Depository is not provided with the
correct TIN, the Internal Revenue Service may subject the
shareholder or other payee to a $50 penalty. In addition,
payments that are made to such shareholder or other payee with
respect to Shares purchased pursuant to the Offer may be subject
to backup withholding.
Certain shareholders (including, among others, all
corporations and certain foreign individuals) are not subject to
these backup withholding and reporting requirements. In order
for a foreign individual to qualify as an exempt recipient, the
shareholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A
Form W-8 can be obtained from the Depository. See the enclosed
"Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9" for more instructions.
If backup withholding applies, the Depository is required to
withhold 31% of any such payments made to the shareholder or
other payee. Backup withholding is not an additional tax.
Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be
obtained.
Purpose of Substitute Form W-9
To prevent backup withholding on payments made to a
shareholder or other payee with respect to Shares purchased
pursuant to the Offer, the shareholder is required to notify the
Depository of the shareholder's correct TIN by completing the
form below, certifying that the TIN provided on Substitute
Form W-9 is correct (or that such shareholder is awaiting a TIN)
and that:
(a) the shareholder has not been notified by the Internal
Revenue Service that the shareholder is subject to backup
withholding as a result of failure to report all interest
or dividends; or
(b) the internal Revenue Service has notified the
shareholder that the shareholder is no longer subject to
backup withholding.
What Number to Give the Depository
The shareholder is required to give the Depository the TIN
of the record owner of the Shares. If the Shares are in more
than one name or are not in the name of the actual owner, consult
the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional
guidance on which number to report.
PAYER'S NAME: CHASE GLOBAL FUNDS SERVICES COMPANY
SUBSTITUTE
Form W-9
Department of the Treasury,
Internal Revenue Service
Payer's Request for Taxpayer
Identification Number (TIN)
Part 1-PLEASE Social security number or
PROVIDE YOUR TIN IN Employer identification number
THE BOX AT RIGHT AND ______________________________
CERTIFY BY SIGNING
AND DATING BELOW
Part 2-Check the box if you are NOT subject to backup withholding
under the provisions of Section 3406(a)(1)(C) of the Internal
Revenue Code because (1) you have not been notified that you
are subject to backup withholding as a result of failure to
report all interest or dividends or (2) the Internal Revenue Service
has notified you that you are no longer subject t backup
withholding [ ]
CERTIFICATION-UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE
INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE
SIGNATURE___________________ DATE__________________
Part 3-Awaiting TIN [ ]
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU
PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU
CHECK BOX IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office
or (b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number
within sixty (60) days, 31% of all reportable payments made to me thereafter
will be withheld until I provide a number.
__________________________ _______________________
Signature Date
<PAGE>
INSTRUCTIONS
Forming Part of the Terms of the Offer
1. GUARANTEE OF SIGNATURES. No signature guarantee is
required if
(a) this Letter of Transmittal is signed by the registered
owner of the Shares (which term, for purposes of this
document, shall include any nominee (for a beneficial owner))
and certificates representing the tendered Shares are delivered
with this Letter of Transmittal;
(b) such Shares are tendered for the account of a member
firm of a registered national securities exchange, a member
of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office, branch
or agency in the United States (each being referred to as an
"Eligible Institution").
In all other cases, including if Shares are tendered for
which certificates have not been issued, an Eligible Institution
must guarantee all signatures on this Letter of Transmittal. See
Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; LOST
CERTIFICATES. This Letter of Transmittal is to be used only if
certificates are delivered with it to the Depository or if
tenders are to be made through notification hereby to the
Depository to tender uncertificated Shares registered on the
share register of the Fund maintained by the Depository.
Certificates for all physically tendered Shares, a properly
completed and duly executed Letter of Transmittal or duly
executed photocopy of it, and any other documents required by
this Letter of Transmittal, should be mailed or delivered to the
Depository at the appropriate address set forth herein and must
be delivered to the Depository on or before the Expiration Date.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING
CERTIFICATES FOR SHARES, IS AT THE ELECTION AND RISK OF THE
TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
The Fund will not accept any alternative, conditional or
contingent tenders, nor will it purchase any fractional Shares.
All tendering shareholders, by execution of this Letter of
Transmittal (or a photocopy of it), waive any right to receive
any notice of the acceptance of their tender.
Any shareholder wishing to tender Shares for which the
certificate(s) have been lost, stolen or mutilated should contact
Susan DiBona of the Depository at (800) 221-6726.
3. INADEQUATE SPACE. If the space provided in the box
captioned "Description of Shares Tendered" is inadequate, the
certificate numbers and/or the number of Shares should be listed
on a separate signed schedule and attached to this Letter of
Transmittal.
4. PARTIAL TENDERS AND UNPURCHASED SHARES. (Not applicable
to shareholders who tender uncertificated Shares.) If fewer than
all of the Shares evidenced by any certificate are to be
tendered, fill in the number of Shares which are to be tendered
in the column entitled "Number of Shares Tendered." In such
case, if tendered Shares are purchased, a new certificate for the
remainder of the Shares evidenced by the old certificate(s) will
be issued and sent to the registered owner(s). All Shares
represented by the certificate(s) listed and delivered to the
Depository are deemed to have been tendered unless otherwise
indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND
ENDORSEMENTS.
(a) If this Letter of Transmittal is signed by the
registered owner(s) of the Shares tendered hereby, the
signature(s) must correspond exactly with the name(s) as
written on the face of the certificate(s), if any, or on the
share register maintained by the Depository without any
change whatsoever.
(b) If the Shares are registered in the names of two
or more joint owners, each such owner must sign this Letter
of Transmittal.
(c) If any tendered Shares are registered in different
names on several certificates, it will be necessary to
complete, sign and submit as many separate Letters of
Transmittal (or photocopies of it) as there are different
registrations of certificates.
(d) When this Letter of Transmittal is signed by the
registered owner(s) of the Shares listed and transmitted
hereby, no endorsements of certificate(s) representing such
Shares or separate stock powers are required. If this
Letter of Transmittal is signed by a person other than the
registered owner(s) of the certificate(s) listed, the
certificate(s) must be endorsed or accompanied by
appropriate stock powers, signed exactly as the name(s) of
the registered owner(s) appear on the certificate(s), and
the signature(s) on such certificate(s) or stock power(s)
must be guaranteed by an Eligible Institution. See
Instruction 1.
(e) If this Letter of Transmittal or any certificates
or stock powers are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate
when signing and must submit proper evidence satisfactory to
the Fund of their authority so to act.
6. STOCK TRANSFER TAXES. Except as provided in this
Instruction, no stock transfer tax stamps or funds to cover such
stamps need accompany this Letter of Transmittal. The Fund will
pay or cause to be paid any stock transfer taxes payable on the
transfer to it of Shares purchased pursuant to the Offer. If,
however tendered certificates are registered in the name(s) of
any person(s) other than the person(s) signing this Letter of
Transmittal, the Depository will deduct from the Purchase Price
the amount of any stock transfer taxes (whether imposed on the
registered owner or such other person) payable on account of the
transfer to such person unless satisfactory evidence of the
payment of such taxes, or an exemption from them, is submitted.
7. IRREGULARITIES. All questions as to the number of
Shares to be accepted, the price to be paid therefor and the
validity, form, eligibility (including time of receipt) and
acceptance for payment of any tender of Shares will be determined
by the Fund in its sole discretion, which determination shall be
final and binding on all parties. The Fund reserves the absolute
right to reject any or all tenders of Shares it determines not to
be in proper form or the acceptance of which or payment for which
may, in the opinion of the Fund's counsel, be unlawful. The Fund
also reserves the absolute right to waive any of the conditions
of the Offer and any defect or irregularity in the tender of any
particular Shares. No tender of Shares will be deemed to be made
properly until all defects and irregularities have been cured or
waived. Neither the Fund, the Depository nor any other person is
or will be obligated to give notice of any defects or
irregularities in tenders, and none of them will incur any
liability for failure to give any such notice.
<PAGE>
8. QUESTIONS AND REQUESTS FOR ASSISTANCE AND ADDITIONAL
COPIES. Questions and requests for assistance may be directed to
the Depository at the address and telephone number set forth in
the Offer to Purchase. Requests for additional copies of the
Offer to Purchase and this Letter of Transmittal may be directed
to the Depository or to brokers, dealers, commercial banks or
trust companies.
9. SUBSTITUTE FORM W-9. Each tendering shareholder who
does not otherwise establish an exemption from backup federal
income tax withholding is required to provide the Depository with
a correct taxpayer identification number ("TIN") on the
Substitute Form W-9 which is provided, and to indicate that the
shareholder is not subject to backup withholding by checking the
box in Part 2 of the form. Failure to provide the information on
the form or to check the box in Part 2 of the form may subject
the tendering shareholder to 31% federal income tax withholding
on the payments made to the shareholder or other payee with
respect to Shares purchased pursuant to the Offer. The box in
Part 3 of the form may be checked if the tendering shareholder
has not been issued a TIN and has applied for a TIN or intends to
apply for a TIN in the near future. If the box in Part 3 is
checked and the Depository is not provided with a TIN within
sixty (60) days, the Depository will withhold 31% on all such
payments thereafter until a TIN is provided to the Depository.
10. WITHHOLDING ON FOREIGN SHAREHOLDERS. The Depository
will withhold federal income taxes equal to 30% of the gross
payments payable to a foreign shareholder unless the Depository
determines that a reduced rate of withholding or an exemption
from withholding is applicable. (Exemption from backup
withholding does not exempt a foreign shareholder from the 30%
withholding.) For this purpose, a foreign shareholder is any
shareholder that is not (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity created
or organized in or under the laws of the United States or any
political subdivision thereof or (iii) an estate or trust the
income of which is subject to United States federal income
taxation regardless of the source of such income. The Depository
will determine a shareholder's status as a foreign shareholder
and eligibility for a reduced rate of, or an exemption from,
withholding by reference to the shareholder's address and to any
outstanding certificates or statements concerning eligibility for
a reduced rate of, or exemption from, withholding unless facts
and circumstances indicate that reliance is not warranted. A
foreign shareholder who has not previously submitted the
appropriate certificates or statements with respect to a reduced
rate of, or exemption from, withholding for which such
shareholder may be eligible should consider doing so in order to
avoid over-withholding. A foreign shareholder may be eligible to
obtain a refund of tax withheld if such shareholder meets one of
the exceptions for capital gain or loss treatment described in
Section 5 of the Offer to Purchase or is otherwise able to
establish that no tax or a reduced amount of tax was due.
IMPORTANT: This Letter of Transmittal or a manually signed
photocopy of it (together with certificate(s) for Shares or
confirmation of book-entry transfer and all other required
documents) must be received by the Depository on or before the
Expiration Date.
THE BRAZILIAN INVESTMENT FUND, INC.
Offer To Purchase for Cash up to 505,724.026 Shares of its
Common Stock at Net Asset Value Per Share
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We are enclosing the material listed below relating to an
offer by The Brazilian Investment Fund, Inc. (the "Fund") to
purchase up to 505,724.026 shares of its Common Stock, par value
$.01 per share (the "Shares"), for cash at a price per Share, net
to the seller, equal to the net asset value in U.S. dollars per
Share determined as of 5:00 P.M. New York City time on May 6,
1996 or such later date to which the Offer is extended, upon the
terms and subject to the conditions set forth in the Offer to
Purchase dated April 8, 1996 and in the related Letter of
Transmittal (which together constitute the "Offer").
The following documents are enclosed:
(1) Offer to Purchase dated April 8, 1996;
(2) Letter of Transmittal to be used to tender all
Shares;
(3) Guidelines for Certification of Taxpayer
Identification Number; and
(4) Letter to Clients, which should be sent to your
clients for whose account you hold Shares registered in your
name (or in the name of your nominee) with space provided
for obtaining such clients' instructions with regard to the
Offer.
We have provided you with a sufficient number of copies of
each of the above documents for each of the beneficial owners for
whom you hold Shares to receive a copy. Please forward a copy of
each of these documents to each beneficial owner.
PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT EASTERN TIME ON MAY 6, 1996, UNLESS THE OFFER IS
EXTENDED.
No fees or commissions will be payable to brokers, dealers
or other persons for soliciting tenders of Shares pursuant to the
Offer. The Fund will pay all transfer taxes on its purchase of
Shares, subject to Instruction 6 of the Letter of Transmittal.
Backup tax withholding at a 31% rate may be required unless an
exemption is provided or unless the required tax identification
information is or has previously been provided. Certain
withholdings may also apply with respect to payments to foreign
Shareholders. See Instructions 9 and 10 to the Letter of
Transmittal.
The Offer is not being made to (nor will tenders be accepted
from or on behalf of) Shareholders residing in any jurisdiction
in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction. To the
extent that the securities laws of any jurisdiction would require
the Offer to be made by a licensed broker dealer, the Offer shall
be deemed to be made on the Fund's behalf by one or more
registered brokers or dealers licensed under the laws of such
jurisdiction.
Any question you have with respect to the Offer should be
directed to the Depository at (800) 221-6726.
Very truly yours,
THE BRAZILIAN INVESTMENT FUND, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL
CONSTITUTE YOU OR ANY OTHER PERSON AS THE AGENT OF EITHER THE
FUND OR THE DEPOSITORY OR AUTHORIZE YOU OR ANY OTHER PERSON
(A) TO MAKE ANY STATEMENTS WITH RESPECT TO THE OFFER, OTHER
THAN THE STATEMENTS SPECIFICALLY SET FORTH IN THE OFFER TO
PURCHASE AND THE LETTER OF TRANSMITTAL, OR (B) TO DISTRIBUTE
ANY MATERIAL WITH RESPECT TO THE OFFER OTHER THAN AS
SPECIFICALLY AUTHORIZED HEREIN.
THE BRAZILIAN INVESTMENT FUND, INC.
Offer To Purchase for Cash up to 505,724.026 Shares of its Common
Stock at Net Asset Value Per Share
To Our Clients:
Enclosed for your consideration are an Offer to Purchase,
dated April 8, 1996, of The Brazilian Investment Fund, Inc. (the
"Fund") and the related Letter of Transmittal pursuant to which
the Fund is offering to purchase up to 505,724.026 shares of its
Common Stock, par value $.01 per share (the "Shares"), for cash
at a price per Share, net to the seller, equal to the net asset
value in U.S. dollars ("NAV") per Share determined as of 5:00
P.M. New York City time on May 6, 1996, or such later date to
which the Offer is extended, upon the terms and subject to the
conditions set forth in the Offer to Purchase and in the related
Letter of Transmittal (which together constitute the "Offer").
The Offer is being made pursuant of Article Eleventh of the
Fund's Articles of Incorporation ("Article Eleventh"), which
requires the Fund, for so long as the Fund's Common Stock is not
listed on a stock exchange, to make periodic offers to purchase
all Shares of its Common Stock. If more than 505,724.026 Shares
are tendered, the Fund will not purchase any Shares in the Offer
and, pursuant to Article Eleventh, the Board of Directors of the
Fund shall convene a shareholders meeting to consider a plan of
liquidation of the Fund. Information regarding this obligation
as well as information regarding possible future offers by the
Fund, is set forth in the Offer to Purchase. The Offer to
Purchase and the Letter of Transmittal are being forwarded to you
as the beneficial owner of Shares held by us for your account but
not registered in your name. We are sending you the Letter of
Transmittal for your information only; you cannot use it to
tender Shares we hold for your account. A tender of such Shares
can be made only by us as the holder of record and only pursuant
to your instructions.
Your attention is called to the following:
1. The purchase price is the NAV determined as of 5:00
P.M. New York City time on May 6, 1996, unless the Offer
is extended.
2. The Offer is conditioned on no more than
505,724.026 Shares being tendered and not withdrawn as of
the time the offer expires. The Fund is not required to
accept for payment, purchase or pay for any Shares tendered,
and the Fund may terminate or amend the Offer or may
postpone the acceptance for payment of, payment for or
purchase of any Shares, as described in the Offer to
Purchase.
3. The Offer and withdrawal rights expire at 12:00
midnight Eastern Time on May 6, 1996, unless extended.
4. Tendering Shareholders will not be obligated to pay
brokerage commissions or, subject to Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of
Shares by the Fund pursuant to the Offer; however, a broker,
dealer or other person may charge a fee for processing the
transactions on behalf of Shareholders.
If you wish to have us tender any or all of your Shares,
please so instruct us by completing, executing and returning to
us the instruction form on the reverse side hereof. YOUR
INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION OF
THE OFFER. THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT EASTERN TIME ON MAY 6, 1996, UNLESS THE OFFER IS
EXTENDED.
The Offer is not being made to (nor will tenders be accepted
from or on behalf of) owners of Shares in any jurisdiction in
which the Offer or its acceptance would violate the laws of such
jurisdiction. To the extent that the securities laws of any
jurisdiction would require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on the
Fund's behalf by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
<PAGE>
Instructions Regarding the Offer by
THE BRAZILIAN INVESTMENT FUND, INC.
To Purchase for Cash up to 505,724.026 Shares of its Common Stock
at Net Asset Value Per Share
THIS FORM IS NOT TO BE USED TO TENDER SHARES DIRECTLY TO THE
DEPOSITORY, IT SHOULD BE SENT TO YOUR BROKER, DEALER, COMMERCIAL
BANK, TRUST COMPANY OR OTHER NOMINEE ONLY IF SUCH FIRM IS THE
HOLDER OF RECORD OF YOUR SHARES AND WILL BE EFFECTING THE TENDER
ON YOUR BEHALF.
The undersigned acknowledge(s) receipt of your letter and
the enclosed Offer to Purchase, dated April 8, 1996 and the
related Letter of Transmittal (which together constitute the
"Offer") in connection with the offer by The Brazilian Investment
Fund, Inc. (the "Fund"), to purchase up to 505,724.026 shares of
its Common Stock, par value $.01 per share (the "Shares"), for
cash at a price, net to the seller, equal to the net asset value
in U.S. dollars per Share as of 5:00 P.M. New York City time on
the Expiration Date (as defined in the Offer to Purchase), on the
terms and subject to the conditions of the Offer.
The undersigned hereby instructs you to tender to the Fund
the number of Shares indicated below, which are held by you for
the account of the undersigned, upon the terms and subject to the
conditions of the Offer.
Shares to be tendered [ ] Tender all Shares held by you
[ ] Tender partial Shares held by you
(If partial, complete below)
Shares ___________________
(Number)
Account Number:________________________________________________
Tax Identification or
Social Security Number:________________________________________
Name(s) of Beneficial Owner(s):________________________________
_______________________________________________________________
Address:_______________________________________________________
_______________________________________________________________
Area Code and Telephone Number:________________________________
______________________________ ______________________________
(Signature of beneficial owner) (Signature of additional
beneficial owner, if any)
Date: _______________________________________
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to
Give the Payer. - Social Security numbers have nine digits
separated by two hyphens: i.e. 000-00-0000. Employer
identification numbers have nine digits separated by only one
hyphen: i.e. 00-0000000. The table below will help determine
the number to give the payer.
<TABLE>
<CAPTION>
- ---------------------------------
Give the
For this type SOCIAL
of account: SECURITY
number of -
- ---------------------------------
<C> <C>
1. An individual's The individual
account
2. Two or more The actual
individuals owner of
(joint account) the
account
or, if
combined
funds, the
first
individual
on the
account1
3. Husband and The actual
wife (joint owner of
account the
account
or, if
joint
funds, the
first
individual
on the
account1
4. Custodian The minor2
account of
a minor
(Uniform
Gift to
Minors
Act)
5. Adult and The adult or,
minor if the minor
(joint is the only
account) contributor,
the minor1
6. Account in the The ward,
name of minor, or
guardian of incompetent
committee for person3
a designated
ward, minor,
or incompetent
person
7. a The usual The
revocable guarantor-
savings trustee1
trust account
(grantor is
also trustee)
b So-called The
trust account actual
that is not a owner1
legal or valid
trust under
State law
8. Sole The
proprietorship owner4
account
<CAPTION>
- -------------------------------------
For this type Give the
of account: EMPLOYER
IDENTIFICATION
number of -
- --------------------------------------
<C> <C>
9. A valid trust Legal entity (Do
estate, or not furnish the
pension trust identifying number
of the personal
representative
or trustee unless
the legal entity
itself is not
designated in the
account title.)5
10. Corporate The corporation
account
11. Association, The organization
club,
religious,
charitable,
educational,
or other
tax-exempt
organization
12. Partnership The partnership
account
held in the
name of the
business
13. A broker or The broker of
registered nominee
nominee
14. Account with The public
the Department entity
of Agriculture
in the name
of a public
entity (such
as a state
or local
government,
school district,
or prison)
that receives
agricultural
program
payments
- --------------------------------
1 List first and circle the name of the person whose number you
furnish.
2 Circle the minor's name and furnish the minor's social security
number.
3 Circle the ward's, minor's or incompetent person's name and
furnish such person's social security number.
4 Show the name of the owner.
5 List first and circle the name of the legal trust, estate, or
pension trust.
NOTE: If no name is circled when there is more than one name, the
number will be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you
don't know your number, obtain Form SS-4, Application for
Social Security Number Card, or Form SS-4, Application for
Employer Identification Number, at the local office of the
Social Security Administration of the Internal Revenue Service
(IRS) and apply for a number.
PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING.-The following is a
list of payees exempt from backup withholding and for
which no information reporting is required. For interest and
dividends, all listed payees are exempt except item (9).
For broker transactions, payees listed in (1) through (13), and
a person registered under the Investment Advisers Act of 1940
who regularly acts as a broker are exempt. Payments subject
to reporting under sections 6041 and 6041A are generally
exempt from backup withholding only if made to payees
described in items (1) through (7), except that a corporation
that provides medical and health care services or bills
and collects payments for such services is not exempt from
backup withholding or information reporting:
(1) A corporation.
(2) An organization exempt
from tax under section
501(a), or an individual
retirement plan (IRA), or a custodial account under
403(b)(7).
(3) The United States or
any of its agencies or instrumentalities.
(4) A state, the District
of Columbia, a possession of
the United States, or any of
their political subdivisions
or instrumentalities.
(5) A foreign government or
any of its political
subdivisions, agencies or instrumentalities.
(6) An international
organization or any of its
agencies or
instrumentalities.
(7) A foreign central bank of
issue.
(8) A dealer in securities
or commodities required to
register in the U.S. or a
possession of the U.S.
(9) A futures commission
merchant registered with the
Commodity Futures Trading Commission.
(10) A real estate
investment trust.
(11) An entity registered at
all times during the tax
year under the Investment
Company Act of 1940.
(12) A common trust fund
operated by a bank under
section 584(a).
(13) A financial
institution.
(14) A middleman known in
the investment community as
a nominee or listed in the
most recent publication of
the American Society of
Corporate Secretaries, Inc.,
Nominee List.
(15) A trust exempt from tax
under section 664 or
described in section 4947.
Payments of dividends and patronage dividends not
generally subject to backup withholding also include the following:
- Payments to non resident
aliens subject to withholding
under section 1441.
- Payments to partnerships not
engaged in a trade or
business in the U.S. and
which have at least one
nonresident partner.
- Payments of patronage
dividends not paid in money.
- Payments made by certain
foreign organizations.
Payments of interest not generally subject to backup
withholding including the following:
- Payments of interest on
obligations issued by
individuals.
NOTE: You may be subject to
backup withholding if this
interest is $600 or more and
is paid in the course of the
payer's trade or business and
you have not provided your
correct taxpayer
identification number to the
payer.
- Payments of tax-exempt
interest (including exempt
interest dividends under
section 852).
- Payments described in section
6049(b)(5) to nonresident
aliens.
- Payments on tax-free covenant
bonds under section 1451.
- Payments made by certain
foreign organizations.
- Mortgage interest paid by
you.
Exempt payees described above should complete substitute Form
W-9 to avoid possible erroneous backup withholding. FILE THIS
FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION
NUMBER IN PART 1, WRITE "EXEMPT" ON THE FACE OF THE
FORM, AND SIGN AND DATE THE FORM.
Payments that are not subject to information reporting are
also not subject to backup withholding. For details, see
the regulations under sections 6041, 6041A(a), 6042, 6044,
6049, 6050A, and 6050N.
PRIVACY ACT NOTICE.-Section 6109 requires you to furnish
your correct taxpayer identification number (TIN) to
persons who must file information returns with IRS to
report interest, dividends, and certain other income paid to
you, mortgage interest you paid, the acquisition or
abandonment of secured property, or contributions you
made to an individual retirement arrangement (IRA).
IRS uses the numbers for identification purposes and to
help verify the accuracy of your tax return. You must
provide your TIN whether or not you are required to file a tax
return. Payers must generally withhold 20% of taxable
interest, dividend, and certain other payments to a payee who
does not furnish a TIN to a payer. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.-
If you fail to furnish your correct taxpayer identification
number to a payer, you are subject to a penalty of $50 for each such
failure unless your failure is due to reasonable cause and not
to willful neglect.
(2) FAILURE TO INCLUDE CERTAIN ITEMS ON YOUR TAX RETURN.-
If you fail to include property on your tax return certain
items reported to IRS, such failure will be treated as
being due to negligence and will be subject to a penalty of
5% on any portion of an underpayment of tax
attributable to that failure unless there is clear and
convincing evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.-
If you make a false statement with no reasonable basis that results
in no imposition of backup withholding, you are subject to
a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.-Willfully
falsifying certifications or affirmations may subject you to criminal
penalties including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR
THE INTERNAL REVENUE SERVICE
</TABLE>
THE BRAZILIAN INVESTMENT FUND, INC.
Offer To Purchase for Cash up to 505,724.026 Shares of its
Common Stock at Net Asset Value Per Share
Dear Shareholder:
We are enclosing the material listed below relating to an offer of
The Brazilian Investment Fund, Inc. (the "Fund") to purchase up to
505,724.026 shares of its Common Stock, par value $.01 per share
(the "Shares"), for cash at a price per Share, net to the seller,
equal to the net asset value in U.S. dollars ("NAV") per Share
determined as of 5:00 P.M., New York City time on May 6, 1996,
or such later date to which the Offer is extended, upon the terms
and subject to the conditions set forth in the Offer to Purchase
dated April 8, 1996 and in the related Letter of Transmittal (which
together constitute the "Offer"). THE OFFER BEING MADE PURSUANT
TO ARTICLE ELEVENTH OF THE FUND'S ARTICLES OF INCORPORATION
("ARTICLE ELEVENTH"), WHICH REQUIRES THE FUND, FOR SO LONG AS THE FUND'S
COMMON STOCK IS NOT LISTED ON A STOCK EXCHANGE, TO MAKE PERIODIC
OFFERS TO PURCHASE ALL SHARES OF ITS COMMON STOCK. If more
than 505,724.026 Shares are tendered, the Fund will not purchase any
Shares in the Offer and, pursuant to Article Eleventh, the Board of
Directors of the Fund shall convene a shareholders meeting to consider
a plan of liquidation of the Fund. Information regarding this obligation,
as well as information regarding possible future offers by the Fund,
is set forth in the Offer to Purchase.
The following documents are enclosed:
(1) Offer to Purchase dated April 8, 1996;
(2) Letter of Transmittal to be used to tender Shares
registered in your name; and
(3) Guidelines for Certification of Taxpayer
Identification Number.
PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT
EASTERN TIME ON MAY 6, 1996, UNLESS THE OFFER IS EXTENDED.
Neither the Fund nor its Board of Directors nor Morgan Stanley
Asset Management Inc. (the Fund's Investment Adviser) nor its Board of
Directors is making any recommendation to any holder of Shares as to
whether to tender or refrain from tendering Shares. If, after
carefully evaluating all information set forth in the Offer, you wish
to tender Shares pursuant to the Offer, please either follow the
instructions contained in the Offer to Purchase and Letter of Transmittal
or, if your Shares are held of record in the name of a broker, dealer,
commercial bank, trust company or other nominee, contact such firm to
effect the tender for you. Shareholders are urged to consult their own
investment and tax advisers and make their own decisions whether to
tender any Shares and, if so, how many Shares to tender.
Your attention is called to the following:
1. The purchase price is the NAV per Share determined
as of 5:00 P.M. on May 6, 1996, unless the Offer
is extended.
2. The Offer is conditioned on no more than
505,724.026 Shares being tendered and not withdrawn as
of the time the Offer expires.
3. The Offer and withdrawal rights expire at 12:00
midnight Eastern Time on May 6, 1996, unless extended.
4. Tendering Shareholders will not be obligated to pay
brokerage commissions or, subject to Instruction 6 of the
Letter of Transmittal, transfer taxes on the purchase of
Shares by the Fund pursuant to the Offer.
Should you have any questions on the enclosed material,
please call Warren Olsen, President of the Fund, at (212) 296-7236 or
the Depository at (800) 221-6726.
Very truly yours,
THE BRAZILIAN INVESTMENT FUND, INC.
