<PAGE>
[Photograph]
The Brazilian
Equity Fund, Inc.
.......................................
ANNUAL REPORT
MARCH 31, 1996
<PAGE>
CONTENTS
Letter to Shareholders .................................1
Portfolio Summary ......................................4
Schedule of Investments ................................5
Statement of Assets and Liabilities ....................7
Statement of Operations ................................8
Statement of Changes in Net Assets .....................9
Financial Highlights ..................................10
Notes to Financial Statements .........................11
Report of Independent Accountants .....................15
Results of Annual Meeting of Shareholders .............16
Tax Information .......................................16
Description of the Fund's Dividend Reinvestment
and Cash Purchase Plan ..............................18
PICTURED ON THE COVER IS THE NEW TRADING FLOOR OF THE SAO PAULO STOCK
EXCHANGE ("BOVESPA"), WHICH WAS INAUGURATED ON DECEMBER 7, 1992. THE
EXCHANGE, FOUNDED IN 1890, TRADES SECURITIES ISSUED BY PUBLIC COMPANIES AND
ASSETS AUTHORIZED BY THE BRAZILIAN SECURITIES & EXCHANGE COMMISSION ("CVM").
PHOTOGRAPH PROVIDED COURTESY OF BOVESPA.
<PAGE>
LETTER TO SHAREHOLDERS
May 15, 1996
DEAR SHAREHOLDERS:
We are pleased to report on the activities of The Brazilian Equity Fund, Inc.
(the "Fund") for the fiscal year ended March 31, 1996.
At March 31, 1996, the Fund's investments in Brazilian equity securities totaled
approximately $65 million. At March 31, 1996, the Fund's net asset value (NAV)
per share was $14.18 (net of dividends paid of $2.22 per share), as compared to
$13.02 on March 31, 1995.
Since inception, dividends and distributions totaling $6.19 per share have been
distributed to the Fund's shareholders. From inception through March 31, 1996,
the Fund's total return, based on net asset value and assuming reinvestment of
dividends and distributions was 43.8%. During the same period, the Morgan
Stanley Capital International Brazilian Index rose by 48.7% in U.S. dollar
terms.
POLITICAL DEVELOPMENTS
We view the past twelve months as an extremely important period, both
politically and economically, in the recent history of Brazil. Despite fears to
the contrary, the impact of the Mexican peso crisis was relatively light. The
limited effect of the crisis is even more impressive given the fact that
Brazil's new economic stabilization plan (the REAL Plan) was only just beginning
to bear fruit during the period. An additional positive is that stabilization
became a commonly accepted objective of most of the country's political parties.
This is truly remarkable for Brazil, whose politicians tend to adopt what others
might consider reasonable, liberal economic measures only as a last resort.
The architect of the stabilization process is former Finance Minister and
current President Fernando Enrique Cardoso, who has deftly navigated a difficult
course to keep the reform process on track. His numerous achievements in this
regard have been quite impressive. Among them, we consider the most important to
be his creation of a regulatory framework that 1) enables the former
state-controlled monopolies (I.E., electric utilities, telecommunications,
petrochemicals, gas distribution, mining) to become more competitive with the
private sector and 2) harmonizes the tariffs placed on these entities' products
and services to be more in line with international standards.
Recently, Cardoso has begun to encounter significant political resistance in
Congress, since some of stabilization's more controversial aspects require
congressional ratification. It is our view, however, that the essential thrust
of the program remains intact. Indeed, we believe the recent investigations into
the collapse of Banco Nacional are no more than temporary interruptions. We
fully expect, moreover, that several key reforms (E.G., the social security
system; administrative efficiencies in State governments; privatizations) will
be enacted in the coming months. These and other measures should provide
investors with a refreshed sense of confidence.
- --------------------------------------------------------------------------------
1
<PAGE>
LETTER TO SHAREHOLDERS
The Brazilian political environment, therefore, should become more positive,
which would set the stage for a renewed optimism about the economic outlook.
This takes on added significance in light of important municipal elections due
to be held later on this year.
ECONOMIC DEVELOPMENTS
As is the case with the political situation, many investors have tended to
become pessimistic about the country's economic prospects. This stems from
concerns that lack of fiscal reform would result in the maintenance of an overly
tight monetary policy and, especially, high real interest rates. Such concerns
have proven unwarranted, however, since both real rates and inflation have
substantially declined. Nominal interest rates have fallen to 25% from 70% over
the last twelve months, and with inflation likely to decline to an average of
12% this year, it is clear that there has been a significant easing of monetary
policy. Other measures, such as the lowering of reserve ratios for banks, have
also had an easing effect. We expect these trends to continue, particularly as
the fiscal reform process gathers momentum.
Brazil's increasingly encouraging political and monetary environment coincides
with an improvement in general growth conditions within the economy. There has
been a sharp recovery in economic activity lately after about six months of
weakness. The recovery has been fueled not only by the easing monetary policy,
but also by Brazilian corporations reacting to the rigors of greater competition
and new low-inflation conditions.
In the very near term, these conditions might lead to some temporary
disappointments for corporate earnings and, thus, also complicate comparisons
with previous results; new accounting regulations may do the same. The latter
will put an end to certain practices which have boosted results for some
companies and result in a more realistic valuation of assets. For the medium
term, however, we view these developments to be of little concern.
PORTFOLIO STRATEGY
In response to political and economic developments during the past year, the
Fund underwent several important changes in investment policy. Within the
private sector, our strategy was to reduce exposure to sectors most vulnerable
to the mid-1995 downturn in economic activity, such as construction and housing.
Additionally, we raised the Fund's exposure to the consumer sector by placing
increasing emphasis on defensive growth stocks in sectors such as appliances and
other household durables. We believe the shift to a more consumer-oriented
economy to be a secular growth theme, as the "tax" effect of inflation on the
vast mass of Brazil's population has been drastically reduced.
The Fund also increased its positions in former state-controlled monopolies, as
we felt they would benefit both from enthusiasm for privatization and the more
immediate benefits of reasonable tariff reforms. Within the two most prominent,
electric utilities and telecommunications, we decided to diversify away from the
major holding companies and into the regional operators. Our reasoning in making
this shift was twofold: regionals offer much greater value if reforms are
implemented, and they tend to be much less well-known and thus offer substantial
medium-term potential as other investors discover them.
- --------------------------------------------------------------------------------
2
<PAGE>
LETTER TO SHAREHOLDERS
This latter strategy will likely remain an important element of the Fund's
investment policy in the medium term. The possibilities offered by
privatizations and sensible pricing arrangements for formerly state-controlled
entities make these groups among the most attractive of any within the Brazilian
market and, arguably, the entire Latin American region.
Finally, as reforms serve to reinforce the stabilization process, we anticipate
that monetary policy can be eased further. This should be beneficial for general
economic activity, particularly for companies close to the lower end of the
consumer sector. The Fund is well-positioned to take advantage of these
developments.
We wish to remind shareholders whose shares are registered in their own names
that they automatically participate in the Fund's Dividend Reinvestment Program.
The automatic Dividend Reinvestment Program can be of value to shareholders in
maintaining their proportional ownership interest in the Fund in an easy and
convenient way. A shareholder whose shares are held in the name of a
broker/dealer or nominee should contact that party for details about
participating in the plan. The Fund also offers shareholders a voluntary Cash
Purchase Plan. The Dividend Reinvestment and Cash Purchase Plans are described
on pages 18-19 of this report.
We appreciate your continued confidence in the Fund and would be pleased to
respond to your questions and comments.
Respectfully,
[SIG]
Richard Watt
Chief Investment Officer*
- --------------------------------------------------------------------------------
* Richard Watt, who is a Senior Vice President of BEA Associates, is primarily
responsible for management of the Fund's assets. Mr. Watt has served the Fund in
such capacity since August 15, 1995. He joined BEA Associates on August 2, 1995.
Mr. Watt was formerly associated with Gartmore Investment Limited in London,
where he was head of emerging markets investments and research. In this
capacity, he led a team of four portfolio managers and was manager of a
closed-end Latin American fund focusing on smaller companies. Before joining
Gartmore in 1992, Mr. Watt was a director of Kleinwort Benson International
Investment in London, where he was responsible for research, analysis and
trading of equities in Latin America and other regions.
- --------------------------------------------------------------------------------
3
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
PORTFOLIO SUMMARY - AS OF MARCH 31, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
SECTOR ALLOCATION
AS A PERCENT OF NET ASSETS --
Banking --
Capital Goods --
Cash & other assets --
Consumer Goods --
Electric Distribution --
Electric Generation --
Food & Beverages --
Holding Companies --
Other --
Paper & Pulp --
Petrochemicals --
Retail --
Steel --
Telecommunications --
Textiles --
TOP 10 HOLDINGS, BY ISSUER
<TABLE>
<CAPTION>
Percent of Net
Holding Sector Assets
<C> <S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
1. Companhia Energetica de Minas Gerais Electric Distribution 10.6
- --------------------------------------------------------------------------------------------------------------------------------
2. Centrais Eletricas Brasileiras S.A. Electric Generation 8.2
- --------------------------------------------------------------------------------------------------------------------------------
3. Telecomunicacoes de Sao Paulo S.A. Telecommunications 5.3
- --------------------------------------------------------------------------------------------------------------------------------
4. Investimentos Itau S.A. Holding Companies 5.0
- --------------------------------------------------------------------------------------------------------------------------------
5. Banco Bradesco S.A. Banking 4.8
- --------------------------------------------------------------------------------------------------------------------------------
6. Dixie Toga S.A. Consumer Goods 4.7
- --------------------------------------------------------------------------------------------------------------------------------
7. Companhia Cervejaria Brahma Food & Beverages 4.6
- --------------------------------------------------------------------------------------------------------------------------------
8. Refrigeracao Parana S.A. Consumer Goods 4.5
- --------------------------------------------------------------------------------------------------------------------------------
9. Lojas Americanas S.A. Retail 4.4
- --------------------------------------------------------------------------------------------------------------------------------
10. Telecomunicacoes do Parana S.A. Telecommunications 4.0
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
SCHEDULE OF INVESTMENTS - MARCH 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
<S> <C> <C>
- -----------------------------------------------------
EQUITY OR EQUITY-LINKED SECURITIES-98.87%
BRAZIL-98.87%
BANKING-4.76%
Banco Bradesco S.A. PN... 298,286,081 $ 3,125,233
-----------
CAPITAL GOODS-3.93%
Bardella S.A. Industrias
Mecanicas PN............ 14,084 1,297,407
Trafo Equipamentos
Electricos S.A. PN+..... 986,205 1,287,852
-----------
2,585,259
-----------
CHEMICALS-2.08%
Metalurgica Schultz PN... 4,100,000 95,460
S.A. White Martins ON.... 1,197,900,000 1,273,265
-----------
1,368,725
-----------
CONSTRUCTION MATERIALS-1.19%
Confab Industrial S.A.
PN...................... 1,020,000 268,462
Eternit S.A. ON.......... 1,683,500 515,522
-----------
783,984
-----------
CONSUMER GOODS-12.79%
Dixie Toga S.A. PN....... 3,190,242 3,100,301
Multibras da Amazonia
S.A. PN................. 1,633,000 1,702,678
Refrigeracao Parana S.A.
ADR..................... 111,000 1,441,266
Refrigeracao Parana S.A.
PN...................... 579,293,000 1,530,551
Tec Toy Industria e
Comercio PN+............ 1,145,620,000 626,244
-----------
8,401,040
-----------
ELECTRIC DISTRIBUTION-16.82%
Centrais Eletricas de
Santa Catarin PN+....... 2,695,500 1,746,338
Companhia Energetica de
Minas Gerais ADR........ 39,000 1,092,000
Companhia Energetica de
Minas Gerais PN......... 210,196,595 5,894,058
Companhia Paulista de
Forca e Luz ON.......... 38,154,041 2,317,399
-----------
11,049,795
-----------
<CAPTION>
No. of Value
Description Shares (Note A)
- -----------------------------------------------------
<S> <C> <C>
ELECTRIC GENERATION-8.24%
Centrais Eletricas
Brasileiras S.A. ON..... 20,738,500 $ 5,416,342
-----------
FOOD & BEVERAGES-8.34%
Companhia Cervejaria
Brahma ON, Warrants
(expiring 09/30/96)+.... 57,495 13,387
Companhia Cervejaria
Brahma PN............... 5,816,922 2,808,799
Companhia Cervejaria
Brahma PN, Warrants
(expiring 09/30/96)+.... 737,029 201,445
Santista Alimentos S.A.
ON+..................... 2,020,000 2,453,814
-----------
5,477,445
-----------
HOLDING COMPANIES-8.88%
Brasmotor S.A. PN........ 9,795,000 2,528,446
Investimentos Itau S.A.
PN...................... 4,869,000 3,302,354
-----------
5,830,800
-----------
PAPER & PULP-1.56%
Companhia Suzano de Papel
e Celulose PN+.......... 166,000 630,156
Industrias de Papel Simao
PN...................... 20,861,609 397,022
-----------
1,027,178
-----------
RETAIL-4.42%
Lojas Americanas S.A.
ON...................... 37,162,776 790,017
Lojas Americanas S.A.
PN...................... 87,797,078 2,115,271
-----------
2,905,288
-----------
STEEL-2.46%
Companhia Siderurgicas
Nacional ON............. 50,150,000 1,464,623
Mannesmann S.A. ON....... 1,053,000 148,700
-----------
1,613,323
-----------
</TABLE>
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
- -----------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS-15.04%
Telecomunicacoes de Minas
Gerais S.A. ON.......... 1,500,000 $ 107,840
Telecomunicacoes de Minas
Gerais S.A. PNB......... 20,282,989 1,601,326
Telecomunicacoes de Sao
Paulo S.A. PN........... 20,269,589 3,447,174
Telecomunicacoes do
Parana S.A. ON.......... 3,220,000 1,026,775
Telecomunicacoes do
Parana S.A. PN.......... 4,671,709 1,574,813
Telecomunicacoes do Rio
de Janeiro S.A. ON...... 4,680,000 345,368
Telecomunicacoes do Rio
de Janeiro S.A. PN...... 26,071,200 1,776,172
-----------
9,879,468
-----------
<CAPTION>
No. of Value
Description Shares (Note A)
- -----------------------------------------------------
<S> <C> <C>
TEXTILES-6.68%
Artex S.A. Fabrica de
Artefatos Texteis PN.... 115,254,000 $ 140,006
Companhia de Tecidos
Norte de Minas S.A.
PN...................... 5,453,100 2,263,270
Wembly Roupas S.A. PN.... 123,000,000 996,103
Wentex Textil S.A. PN+... 470,000 989,624
-----------
4,389,003
-----------
TRANSPORTATION-1.68%
Marcopolo S.A. PN........ 6,528,700 1,103,703
-----------
TOTAL INVESTMENTS-98.87%
(Cost $60,493,133)
(Notes A,D)............................ 64,956,586
-----------
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES-1.13%...................... 739,098
-----------
NET ASSETS-100.00%...................... $65,695,684
-----------
-----------
- ---------------------------------------------------------
+ Security is non-income producing.
ADR American Depositary Receipts.
ON Ordinary Shares.
PN Preferred Shares.
PNB Preferred Shares, Class B.
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
6
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - MARCH 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost $60,493,133)
(Note A)............................... $64,956,586
Cash (Note A)........................... 1,021,937
Dividends receivable.................... 12,270
Prepaid expenses and other assets....... 46,582
-----------
Total Assets............................ 66,037,375
-----------
LIABILITIES
Payables:
Advisory fee (Note B)................. 161,552
Administration fees (Note B).......... 7,795
Other accrued expenses................ 172,344
-----------
Total Liabilities....................... 341,691
-----------
NET ASSETS (applicable to 4,634,005
shares of common stock outstanding)
(Note C)............................... $65,695,684
-----------
-----------
NET ASSET VALUE PER SHARE ($65,695,684
DIVIDED BY 4,634,005)................. $14.18
-----------
-----------
NET ASSETS CONSIST OF
Capital stock, $0.001 par value;
4,634,005 shares issued and outstanding
(100,000,000 shares authorized)........ $ 4,634
Paid-in capital......................... 63,935,529
Undistributed net investment income..... 135,329
Accumulated net realized loss on
investments and foreign currency
related transactions................... (2,843,283)
Net unrealized appreciation in value of
investments and translation of other
assets and liabilities denominated in
foreign currency....................... 4,463,475
-----------
Net assets applicable to shares
outstanding............................ $65,695,684
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
7
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
STATEMENT OF OPERATIONS - FOR THE FISCAL YEAR ENDED MARCH 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Income (Note A):
Dividends............................. $ 1,650,657
Interest.............................. 67,406
Less: Foreign taxes withheld.......... (249,257)
-----------
Total Investment Income............... 1,468,806
-----------
Expenses:
Investment advisory fees (Note B)..... 921,310
Administration fees (Note B).......... 111,049
Custodian fees (Note B)............... 110,667
Audit and legal fees.................. 78,618
Accounting fees....................... 44,542
Printing.............................. 42,920
Insurance............................. 37,734
Directors' fees....................... 36,400
Transfer agent fees................... 29,120
Amortization of organizational costs
(Note A)............................. 9,974
Other................................. 17,525
-----------
Total Expenses........................ 1,439,859
-----------
Less: Fee waivers (Note B)............ (239,270)
-----------
Net Expenses........................ 1,200,589
-----------
Net Investment Income................. 268,217
-----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY
RELATED TRANSACTIONS
Net realized loss from:
Investments........................... (2,788,751)
Foreign currency related
transactions......................... (125,031)
Net change in unrealized depreciation in
value of investments and translation of
other assets and liabilities
denominated in foreign currency........ 18,231,683
-----------
Net realized and unrealized gain on
investments and foreign currency
related transactions................... 15,317,901
-----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS........................ $15,586,118
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Fiscal Years Ended
March 31,
-----------------------------
1996 1995
<S> <C> <C>
-----------------------------
INCREASE/(DECREASE) IN NET ASSETS
Operations:
Net investment income/(loss).......... $ 268,217 $ (566,466)
Net realized gain/(loss) on
investments and foreign currency
related transactions................. (2,913,782) 30,121,431
Net change in unrealized
appreciation/(depreciation) in value
of investments and translation of
other assets and liabilities
denominated in foreign currency...... 18,231,683 (47,668,256)
------------ ------------
Net increase/(decrease) in net
assets resulting from operations... 15,586,118 (18,113,291)
------------ ------------
Dividends and distributions to
shareholders:
In excess of net investment income.... -- (138,215)
Net realized gain on investments...... (10,254,782) (17,645,457)
------------ ------------
Total dividends and distributions to
shareholders....................... (10,254,782) (17,783,672)
------------ ------------
Capital share transactions (Note C):
Proceeds from 14,734 and 12,102
shares, respectively, issued in
reinvestment of dividends............ 208,220 232,844
------------ ------------
Total increase/(decrease) in net
assets............................. 5,539,556 (35,664,119)
------------ ------------
NET ASSETS
Beginning of year....................... 60,156,128 95,820,247
------------ ------------
End of year (including undistributed net
investment income of $135,329 and $0,
respectively).......................... $ 65,695,684 $ 60,156,128
------------ ------------
------------ ------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
9
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share of common
stock outstanding, total investment return, ratios to average net assets and
other supplemental data for each period indicated. This information has been
derived from information provided in the financial statements and market price
data for the Fund's shares.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the period
For the Fiscal Years Ended April 10,
March 31, 1992*
--------------------------- through
1996 1995 1994 March 31, 1993
<S> <C> <C> <C> <C>
---------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.............. $13.02 $20.80 $11.83 $13.79**
Net investment income/(loss)...................... 0.06 (0.12) (0.04) 0.06
Net realized and unrealized gain/(loss) on
investments and foreign currency related
transactions.................................... 3.32+ (3.80) 9.09 (1.99)
------- ------- ------- --------------
Net increase/(decrease) in net assets resulting
from operations................................. 3.38 (3.92) 9.05 (1.93)
------- ------- ------- --------------
Dividends and distributions to shareholders:
In excess of net investment income................ -- (0.03) -- --
Net investment income............................. -- -- (0.08) (0.03)
Net realized gain on investments.................. (2.22) (3.83) -- --
------- ------- ------- --------------
Total dividends and distributions to
shareholders.................................... (2.22) (3.86) (0.08) (0.03)
------- ------- ------- --------------
Net asset value, end of period.................... $14.18 $13.02 $20.80 $11.83
------- ------- ------- --------------
------- ------- ------- --------------
Market value, end of period....................... $13.875 $14.75 $19.00 $11.25
------- ------- ------- --------------
------- ------- ------- --------------
Total investment return(a)........................ 8.85% (6.79)% 69.55% (19.16)%
------- ------- ------- --------------
------- ------- ------- --------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000 omitted)........... $65,696 $60,156 $95,820 $54,493
Ratio of expenses to average net assets, net of
fee waivers..................................... 1.76% 1.86%# 2.05%# 2.45%(b)
Ratio of expenses to average net assets, excluding
fee
waivers......................................... 2.11% 2.13% 2.05% 2.45%(b)
Ratio of net investment income/(loss) to average
net assets...................................... 0.39% (0.62)% (0.28)% 0.61%(b)
Portfolio turnover................................ 55% 69% 73% 50%(c)
</TABLE>
- ---------------------------------------------------------------------------
* Commencement of investment operations.
** Initial public offering price of $15.00 per share less underwriting
discount of $1.05 per share and offering expenses of $0.16 per share.
+ Includes a $0.01 per share increase to the Fund's net asset value per
share resulting from the anti-dilutive impact of shares issued
pursuant to the Fund's automatic dividend reinvestment plan in 1996.
# For the calendar year ending December 31, 1994, the Brazilian Congress
imposed a 0.25% withholding tax on financial transactions. If such tax
had not been imposed, the ratio of expenses to average net assets
would have been 1.73% for the fiscal year ended March 31, 1995 and
2.02% for the fiscal year ended March 31, 1994, net of fee waivers and
2.00% for the fiscal year ended March 31, 1995 and 2.02% for the
fiscal year ended March 31, 1994 excluding fee waivers.
(a) Total investment return at market value is based on the changes in
market price of a share during the period and assumes reinvestment of
dividends and distributions, if any, at actual prices pursuant to the
Fund's dividend reinvestment plan. Total investment return does not
reflect brokerage commissions or initial underwriting discounts and
has not been annualized.
(b) Annualized.
(c) Not annualized.
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE A. SIGNIFICANT ACCOUNTING POLICIES
The Brazilian Equity Fund, Inc. (the "Fund") was incorporated in Maryland on
February 10, 1992 and commenced investment operations on April 10, 1992. The
Fund is registered under the Investment Company Act of 1940, as amended, as a
closed-end, non-diversified management investment company. Significant
accounting policies are as follows:
PORTFOLIO VALUATION: Investments are stated at value in the accompanying
financial statements. All equity securities for which market quotations are
readily available are valued at the last sales price prior to the time of
determination, or, if no sales price is available at that time, at the closing
price quoted for the securities (but if bid and asked quotations are available,
at the mean between the current bid and asked prices). Securities that are
traded over-the-counter are valued at the mean between the current bid and the
asked prices, if available. All other securities and assets are valued at the
fair value as determined in good faith by the Board of Directors. Short-term
investments having a maturity of 60 days or less are valued on the basis of
amortized cost. The Board of Directors has established general guidelines for
calculating fair value of non-publicly traded securities. At March 31, 1996, the
Fund held no securities valued in good faith by the Board of Directors. The net
asset value per share of the Fund is calculated weekly, at the end of each month
and at any other times determined by the Board of Directors.
CASH: Deposits held at Brown Brothers Harriman & Co. (Grand Cayman), the Fund's
custodian, in a variable rate account are classified as cash. At March 31, 1996,
the interest rate was 4.875% which resets on a daily basis. Amounts are
generally available on the same business day.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
income tax purposes. Interest income is recorded on an accrual basis; dividend
income is recorded on the ex-dividend date.
TAXES: No provision is made for U.S. federal income or excise taxes as it is the
Fund's intention to continue to qualify as a regulated investment company and to
make the requisite distributions to its shareholders which will be sufficient to
relieve it from all or substantially all U.S. federal income and excise taxes.
No Brazilian income tax is imposed on capital gains. Through December 31, 1995,
a 15% withholding tax was imposed on dividends and interest from stock market
investments. Effective January 1, 1996, no Brazilian withholding tax is imposed
on dividends paid from post December 31, 1995 earnings.
At March 31, 1996, the Fund had capital loss carryover for U.S. federal income
tax purposes of $2,788,751 which expires in 2004.
For U.S. federal income tax purposes, realized capital losses and foreign
exchange losses incurred after October 31, 1995, within the fiscal year, are
deemed to arise on the first day of the following fiscal year. For the fiscal
year ended March 31, 1996, the Fund did not elect to defer any such losses.
FOREIGN CURRENCY TRANSLATIONS: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(I) market value of investment securities, assets and liabilities at the
current rate of exchange; and
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11
<PAGE>
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THE BRAZILIAN EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
(II) purchases and sales of investment securities, income and expenses at
the relevant rates of exchange prevailing on the respective dates of
such transactions.
The Fund does not isolate that portion of gains and losses in investments in
equity securities which is due to changes in the foreign exchange rates from
that which is due to changes in market prices of equity securities. Accordingly,
realized and unrealized foreign currency gains and losses with respect to such
securities are included in the reported net realized and unrealized gains and
losses on investment transactions balances.
The Fund reports certain foreign currency related transactions and foreign taxes
withheld on security transactions as components of realized gains for financial
reporting purposes, whereas such components are treated as ordinary income for
U.S. federal income tax purposes.
Net currency gains from valuing foreign currency denominated assets and
liabilities at period end exchange rates are reflected as a component of net
unrealized appreciation/depreciation on investments, foreign currency holdings,
and other assets and liabilities denominated in foreign currency.
Net realized foreign exchange losses represent foreign exchange gains and losses
from transactions in foreign currencies and forward foreign currency contracts,
exchange gains or losses realized between the trade date and settlement date on
security transactions, and the difference between the amounts of interest and
dividends recorded on the Fund's books and the U.S. dollar equivalent of the
amounts actually received.
DISTRIBUTIONS OF INCOME AND GAINS: The Fund distributes at least annually to
shareholders, substantially all of its net investment income and net realized
short-term capital gains, if any. The Fund determines annually whether to
distribute any net realized long-term capital gains in excess of net realized
short-term capital losses, including capital loss carryovers, if any. An
additional distribution may be made to the extent necessary to avoid the payment
of a 4% U.S. federal excise tax. Dividends and distributions to shareholders are
recorded by the Fund on the ex-dividend date.
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for U.S.
federal income tax purposes due to U.S. generally accepted accounting
principles/tax differences in the character of income and expense recognition.
OTHER: Costs incurred by the Fund in connection with its organization of $50,000
are being amortized on a straight line basis over a five-year period beginning
at the commencement of investment operations of the Fund.
Securities denominated in currencies other than U.S. dollars are subject to
changes in value due to fluctuations in exchange rates.
The Brazilian securities markets are substantially smaller, less liquid and more
volatile than the major securities markets in the United States. A significant
proportion of the aggregate market value of equity securities listed on the
Brazilian Exchanges are held by a small number of investors and are not publicly
traded. Consequently, acquisition and disposition of securities by the Fund may
be inhibited.
Investments in Brazil may involve certain considerations and risks not typically
associated with investments in the United States, including the
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
possibility of future political and economic developments and the level of
Brazilian governmental supervision and regulation of its securities markets.
NOTE B. AGREEMENTS
BEA Associates ("BEA") serves as the Fund's investment adviser with respect to
all investments. As compensation for its advisory services, BEA receives from
the Fund an annual fee, calculated weekly and paid quarterly, equal to 1.35% of
the first $100 million of the Fund's average weekly net assets and 1.05% of the
Fund's average weekly net assets in excess of $100 million. In addition, BEA
receives from the Fund an administration fee which represents a reimbursement of
certain Fund expenses. For the fiscal year ended March 31, 1996, advisory and
administration fees amounted to $921,310 and $3,640, respectively.
Garantia Administracao de Recursos S.A. ("Garantia") and Patrimonio Planejamento
Financiero Ltda. ("Patrimonio") served as the Fund's sub-advisers. In return for
its services, Garantia was paid a fee, out of the advisory fee payable to BEA,
computed and paid quarterly at an annual rate of 0.25% of the Fund's average
weekly net assets. Patrimonio was paid a fee for its services, out of the
advisory fee payable to BEA, computed and paid quarterly at an annual rate of
0.10% of the Fund's average weekly net assets. Effective June 21, 1994 and
August 15, 1994, Garantia and Patrimonio, respectively, resigned as sub-advisers
to the Fund. BEA has voluntarily elected to waive $239,270 in investment
advisory fees that would have been paid to Garantia and Patrimonio during the
fiscal year ended March 31, 1996.
Through August 6, 1995, Mitchell Hutchins Asset Management, Inc. ("Mitchell
Hutchins") served as the Fund's U.S. administrator. The Fund paid Mitchell
Hutchins a monthly fee that was computed at an annual rate of 0.15% of the
Fund's average weekly net assets. For the period April 1, 1995 through August 6,
1995, Mitchell Hutchins earned $39,621 for administrative services.
Effective August 7, 1995, Bear Stearns Funds Management Inc. ("BSFM") serves as
the Fund's administrator. The Fund pays BSFM a monthly fee that is computed
weekly at an annual rate of 0.10% of the first $100 million of the Fund's
average weekly net assets and 0.08% of amounts in excess of $100 million. For
the period August 7, 1995 through March 31, 1996, BSFM earned $44,654 for
administrative services.
Through September 30, 1995, Banco de Investimentos Garantia S.A. ("Banco
Garantia") served as the Fund's Brazilian administrator. For its services, Banco
Garantia was paid an annual fee by the Fund equal to 0.05% of the Fund's average
weekly net assets invested in Brazil. For the period April 1, 1995 through
September 30, 1995, Banco Garantia earned $23,134 for administrative services.
Effective October 1, 1995, The First National Bank of Boston, Sao Paulo ("FNBB")
serves as the Fund's Brazilian administrator. FNBB is paid for its services, out
of the custody fee payable to Brown Brothers Harriman & Co., the Fund's
accounting agent and custodian, a quarterly fee based on an annual rate of 0.12%
of the average month-end assets of the Fund held in Brazil. For the period
October 1, 1995 through March 31, 1996, FNBB earned $36,465 for administrative
services.
Through June 20, 1995, Banco Bradesco de Investimento S.A. served as the
custodian for the Fund's foreign assets and PNC Bank, N.A. served as the
custodian for the Fund's U.S. assets. Effective June 21, 1995, Brown Brothers
Harriman & Co. serves as the custodian for all of the Fund's U.S. and foreign
assets.
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13
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Through September 4, 1995, PNC Bank, N.A. served as the Fund's transfer agent
and registrar. Effective September 5, 1995, The First National Bank of Boston
serves as the Fund's transfer agent and registrar.
NOTE C. CAPITAL STOCK
The authorized capital stock of the Fund is 100,000,000 shares of common stock,
$0.001 par value. Of the 4,634,005 shares outstanding at March 31, 1996, BEA
owned 7,169 shares.
NOTE D. INVESTMENT IN SECURITIES
For U.S. federal income tax purposes, the cost of securities owned at March 31,
1996 was $60,547,664. Accordingly, the net unrealized appreciation of
investments (including investments denominated in foreign currency) of
$4,408,922, was composed of gross appreciation of $11,599,161 for those
investments having an excess of value over cost and gross depreciation of
$7,190,239 for those investments having an excess of cost over value.
For the fiscal year ended March 31, 1996, purchases and sales of securities,
other than short-term obligations, were $36,553,532 and $46,471,214,
respectively.
NOTE E. CREDIT AGREEMENT
The Fund, along with 15 other U.S. regulated investment companies for which BEA
serves as investment adviser, has a credit agreement with The First National
Bank of Boston. The agreement provides that each fund is permitted to borrow an
amount equal to the lesser of $50,000,000 or 25% of the net assets of the fund.
However, at no time shall the aggregate outstanding principal amount of all
loans to any of the 16 funds exceed $50,000,000. The line of credit will bear
interest at (i) the greater of the bank's prime rate or the Federal Funds
Effective Rate plus 0.50% or (ii) the Adjusted Eurodollar Rate plus 1.50%. The
Fund had no amounts outstanding under the credit agreement at March 31, 1996.
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14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
of The Brazilian Equity Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of The
Brazilian Equity Fund, Inc., including the schedule of investments, as of March
31, 1996 and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the periods presented. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
March 31, 1996 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Brazilian Equity Fund, Inc., as of March 31, 1996, 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 periods
presented, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
May 15, 1996
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15
<PAGE>
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
On July 25, 1995, the annual meeting of shareholders of The Brazilian Equity
Fund, Inc. (the "Fund") was held and the following matters were voted upon:
(1) To re-elect three directors to the Board of Directors of the Fund.
<TABLE>
<CAPTION>
VOTES
NAME OF DIRECTOR VOTES FOR WITHHELD NON-VOTES
- ------------------------------------------------------------------------------ ---------- ------------- ----------
<S> <C> <C> <C>
David Garlow* 2,985,351 38,242 1,595,678
George Landau 2,985,441 38,152 1,595,678
Daniel Sigg 2,984,551 39,042 1,595,678
</TABLE>
In addition to the directors re-elected at the meeting, Emilio Bassini, John
Bult, James Cattano and Peter Gordon continue to serve as directors of the Fund.
* Effective May 14, 1996, David Garlow resigned as a director of the Fund.
(2) To ratify the selection of Coopers & Lybrand L.L.P. as independent public
accountants for the fiscal year ending March 31, 1996.
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST VOTES WITHHELD NON-VOTES
---------- ------------- --------------- ----------
<S> <C> <C> <C> <C>
3,009,812 4,767 9,014 1,595,678
</TABLE>
TAX INFORMATION (UNAUDITED)
The Fund is required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise its shareholders within 60 days of the Fund's fiscal year end
(March 31, 1996) as to the U.S. federal tax status of distributions received by
the Fund's shareholders in respect of such fiscal year. Of the $2.22 per share
dividend and distribution paid in respect of such fiscal year, $1.65 per share
was from net realized short-term capital gains and $0.57 per share was from net
realized long-term capital gains. There were no distributions which would
qualify for the dividend received deduction available to corporate shareholders.
The Fund does not intend to make an election under Section 853 to pass through
foreign taxes paid by the Fund to its shareholders. This information is given to
meet certain requirements of the Internal Revenue Code of 1986, as amended.
Shareholders should refer to their Form 1099-DIV to determine the amount
includable, if any, on their respective tax returns for 1996.
Because the Fund's fiscal year is not the calendar year, another notification
will be sent in respect of calendar year 1996. The second notification, which
will reflect the amount to be used by calendar year taxpayers on their 1996
federal income tax returns, will be made in conjunction with Form 1099-DIV and
will be mailed in January, 1997.
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16
<PAGE>
TAX INFORMATION (UNAUDITED)
Foreign shareholders will generally be subject to U.S. withholding tax on the
amount of their dividends and distributions. They will generally not be entitled
to a foreign tax credit or deduction for the withholding taxes paid by the Fund.
In general, dividends and distributions received by tax-exempt recipients (e.g.,
IRAs and Keoghs) need not be reported as taxable income for U.S. federal income
tax purposes. However, some retirement trusts (e.g., corporate, Keogh and
403(b)(7) plans) may need this information for their annual information
reporting.
Shareholders are advised to consult their own tax advisers with respect to the
tax consequences of their investment in the Fund.
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17
<PAGE>
DESCRIPTION OF THE FUND'S DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Pursuant to The Brazilian Equity Fund, Inc.'s (the "Fund") Dividend Reinvestment
and Cash Purchase Plan (the "Plan"), each shareholder will be deemed to have
elected, unless the Fund's transfer agent, as the Plan Agent (the "Plan Agent"),
is otherwise instructed by the shareholder in writing, to have all
distributions, net of any applicable U.S. withholding tax, automatically
reinvested in additional shares of the Fund. Shareholders who do not participate
in the Plan will receive all dividends and distributions in cash, net of any
applicable U.S. withholding tax, paid in dollars by check mailed directly to the
shareholder by the Plan Agent, as dividend-paying agent. Shareholders who do not
wish to have dividend and distributions automatically reinvested should notify
the Plan Agent for the Fund, at the address set forth below. Dividends and
distributions with respect to shares registered in the name of a broker-dealer
or other nominee (i.e., in "street name") will be reinvested under the Plan
unless such service is not provided by the broker or nominee or the shareholder
elects to receive dividends and distributions in cash. A shareholder whose
shares are held by a broker or nominee that does not provide a dividend
reinvestment program may be required to have his shares registered in his own
name to participate in the Plan. Investors who own shares of the Fund's common
stock registered in street name should contact the broker or nominee for details
concerning participation in the Plan.
Certain distributions of cash attributable to (a) some of the dividends and
interest amounts paid to the Fund and (b) certain capital gains earned by the
Fund that are derived from securities of certain foreign issuers are subject to
taxes payable by the Fund at the time amounts are remitted. Such taxes, if any,
will be borne by the Fund and allocated to all shareholders in proportion to
their interests in the Fund.
The Plan Agent serves as agent for the shareholders in administering the Plan.
If the Board of Directors of the Fund declares an income dividend or a capital
gains distribution payable either in the Fund's common stock or in cash, as
shareholders may have elected, non-participants in the Plan will receive cash
and participants in the Plan will receive common stock to be issued by the Fund.
If the market price per share on the valuation date equals or exceeds net asset
value per share on that date, the Fund will issue new shares to the participants
valued at net asset value or, if the net asset value is less than 95% of the
market price on the valuation date, then valued at 95% of the market price. If
net asset value per share on the valuation date exceeds the market price per
share on that date, the Plan Agent, as agent for the participants, will buy
shares of common stock in the open market, on the New York Stock Exchange or
elsewhere, for the participants' accounts.
The valuation date is the dividend or distribution payment date or, if that date
is not a New York Stock Exchange trading day, the next preceding trading day. If
the Fund should declare an income dividend or capital gains distributions
payable only in cash, the Plan Agent will, as agent for the participants, buy
Fund shares in the open market, on the New York Stock Exchange or elsewhere, for
the participants' accounts on, or shortly after, the payment date.
Participants in the Plan have the option of making additional cash payments to
the Plan Agent, semi-annually, in any amount from $100 to $3,000, for investment
in the Fund's common stock. The Plan Agent will use all funds received from
participants to purchase Fund shares in the open market on or about February 15
and August 15 of each year. Any voluntary cash payments received more than 30
days prior to these dates will be returned by the Plan Agent and interest will
not be paid on any uninvested cash payments. To avoid unnecessary cash
accumulations, and also to allow ample time for receipt and processing by the
Plan Agent, it is suggested that participants send in voluntary cash payments to
be received by the Plan Agent approximately 10 days before February 15 or August
15, as the case may be. A participant may withdraw a voluntary cash payment by
written notice, if the notice is received by the Agent not less
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18
<PAGE>
DESCRIPTION OF THE FUND'S DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
(CONTINUED)
than 48 hours before the payment is to be invested. A participant's tax basis in
his shares acquired through his optional investment right will equal his cash
payments to the Plan, including any cash payments used to pay brokerage
commissions allocable to his acquired shares.
The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in the account, including information
needed by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in the name of the
participant and each shareholder's proxy will include those shares purchased
pursuant to the Plan.
In the case of a shareholder, such as a bank, broker or nominee, that holds
shares for other who are the beneficial owners, the Plan Agent will administer
the Plan on the basis of the number of shares certified from time to time by the
shareholder as representing the total amount registered in the shareholder's
name and held for the account of beneficial owners who are to participate in the
Plan.
There is no charge to participants for reinvesting dividends or capital gains
distributions payable in either stock or cash. The Plan Agent's fees for the
handling of reinvestment of such dividends and capital gains distributions will
be paid by the Fund. There will be no brokerage charges with respect to shares
issued directly by the Fund as a result of dividends or capital gains
distributions payable either in stock of in cash. However, each participant will
be charged by the Plan Agent a pro rata share of brokerage commissions incurred
with respect to the Plan Agent's open market purchases in connection with
voluntary cash payments made by the participant or the reinvestment of dividends
or capital gains distributions payable only in cash. Brokerage charges for
purchasing small amounts of stock for individual accounts through the Plan are
expected to be less than the usual brokerage charges for such transactions
because the Plan agent will be purchasing stock for all participants in blocks
and prorating the lower commission thus obtainable. Brokerage commissions will
vary based on, among other things, the broker selected to effect a particular
purchase and the number of participants on whose behalf such purchase is being
made. The Fund cannot predict, therefore, whether the cost to a participant who
makes a voluntary cash payment will be less than if a participant were to make
an open market purchase of the Fund's common stock on his own behalf.
The receipt of dividends and distributions in stock under the Plan will not
relieve participants of any income tax (including withholding tax) that may be
payable on such dividends or distributions.
The Fund and the Plan Agent reserve the right to terminate the Plan as applied
to any voluntary cash payments made and any dividend or distribution paid
subsequent to notice of the termination sent to the members of the Plan at least
30 days before the semi-annual contribution date, in the case of voluntary cash
payments, or the record date for dividends or distributions. The Plan also may
be amended by the Fund or the Plan Agent, but (except when necessary or
appropriate to comply with applicable law, rules or policies of a regulatory
authority) only by at least 30 days written notice to members of the Plan. All
correspondence concerning the Plan should be directed to The First National Bank
of Boston, Investor Relations Department, P.O. Box 644, Mail Stop 45-02-09,
Boston, Massachusetts 02102-0644 or by telephone at 1-800-730-6001.
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19
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
SUMMARY OF GENERAL INFORMATION
The Fund -- The Brazilian Equity Fund, Inc. -- is a closed-end,
non-diversified management investment company whose shares trade on the New
York Stock Exchange. Its investment objective is long-term capital
appreciation through investments primarily in Brazilian equity securities.
The Fund is managed and advised by BEA Associates.
SHAREHOLDER INFORMATION
Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Transactions section of newspapers under the designation
"BrazEqtyFd". The Fund's New York Stock Exchange trading symbol is BZL.
Weekly comparative net asset value (NAV) and market price information about
The Brazilian Equity Fund, Inc. shares are published each Monday in THE WALL
STREET JOURNAL, THE NEW YORK TIMES, and BARRON's as well as other newspapers
in a table called "Closed End Funds."
To request a prospectus or annual report, or to be placed on the Fund's
mailing list shareholders should call 1-800-293-1232.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN -- SUMMARY
An automatic Dividend Reinvestment and Cash Purchase Plan (the "Plan") is
available to provide shareholders with automatic reinvestment of their
dividend income and capitals gains distributions in additional shares of the
Fund's common stock. A brochure describing the Plan is available from the
Plan agent, The First National Bank of Boston, by calling: 1-800-730-6001.
As per the Plan, each shareholder will be automatically reinvested in
additional shares of the Fund by The First National Bank of Boston, unless
otherwise instructed by the shareholder in writing. Shareholders who do not
participate in the Plan will receive all dividends and distributions in cash
paid by check in U.S. dollars. Shares registered in street name will be
reinvested under the Plan, unless the broker does not provide a dividend
reinvest plan or the shareholder elects to receive their dividends in cash.
- ------------------------------------------------------------------------------
<PAGE>
DIRECTORS AND CORPORATE OFFICERS ADMINISTRATOR
Emilio Bassini Chairman of the Board Bear Stearns Funds Management Inc.
of Directors, President 245 Park Avenue
and Investment Officer New York, NY 10167
John Bult Director
CUSTODIAN
James Cattano Director
Brown Brothers Harriman & Co.
Peter Gordon Director 40 Water Street
Boston, MA 02109
George Landau Director
Daniel Sigg Director, Senior Vice SHAREHOLDER SERVICING AGENT
President
Martin Torino Director The First National Bank of Boston
P.O. Box 1865
Richard Watt Director, Senior Vice Mail Stop 45-02-62
President and Chief Boston, MA 02105-1865
Investment Officer
Paul Stamler Senior Vice President INDEPENDENT ACCOUNTANTS
Michael Pignataro Chief Financial Officer Coopers & Lybrand L.L.P.
and Secretary 2400 Eleven Penn Center
Philadelphia, PA 19103
Rachel Manney Vice President and
Treasurer
INVESTMENT ADVISER LEGAL COUNSEL
BEA Associates Willkie Farr & Gallagher
One Citicorp Center One Citicorp Center
153 East 53rd Street 153 East 53rd Street
New York, NY 10022 New York, NY 10022
L O G O
BZL
Listed
NYSE
The New York Stock Exchange
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