<PAGE>
The Brazilian
Equity Fund, Inc.
.......................................
SEMI-ANNUAL REPORT
SEPTEMBER 30, 1999
<PAGE>
CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders.................................... 1
Portfolio Summary......................................... 7
Schedule of Investments................................... 8
Statement of Assets and Liabilities.......................10
Statement of Operations...................................11
Statement of Changes in Net Assets........................12
Financial Highlights......................................13
Notes to Financial Statements.............................14
Results of Annual Meeting of Shareholders.................18
Description of InvestLink-SM- Program.....................19
Recent Developments.......................................22
</TABLE>
PICTURED ON THE COVER IS A SCENIC VIEW OF RIO DE JANEIRO, BRAZIL.
- --------------------------------------------------------------------------------
<PAGE>
LETTER TO SHAREHOLDERS
November 5, 1999
DEAR SHAREHOLDER:
I am writing to report on the activities of The Brazilian Equity Fund, Inc. (the
"Fund") for the six months ended September 30, 1999.
The Fund successfully completed its initial offering on April 10, 1992 and began
operations with a net asset value ("NAV") of $13.79 per share. At September 30,
1999, total net assets were $30,407,924.
According to its charter, the Fund's investment objective is to achieve
long-term capital appreciation via investment in equity securities of Brazilian
issuers. These securities may be listed on stock exchanges either in Brazil or
elsewhere, notably New York.
PERFORMANCE
The Fund's NAV at September 30, 1999 was $4.91 per share, compared to $4.98 per
share at March 31, 1999. As a result, the Fund's total return (based on NAV)
during the six months ended September 30, 1999 was -1.41%. By contrast, the
Morgan Stanley Capital International Brazil Index (the "Index")+ returned 2.57%
in the same period.
The Fund underperformed its Index benchmark primarily due to exposure to two
industry sectors:
FOREST PRODUCTS/PAPER. We generally chose to underweight (I.E., relative to the
Index) economically sensitive sectors like forest products/paper because we saw
greater opportunities available among the shares of growth-oriented companies.
This proved unsuccessful, as forest products/paper was the strongest sector in
the Brazilian market during the fiscal six-month period.
TELECOMMUNICATIONS. One of the largest holdings in the Fund was
Telecomunicacoes de Sao Paulo S.A. ("Telesp"), the telecommunications service
provider for the Sao Paulo region, whose fundamentals we have long considered
especially positive. Telesp shares significantly underperformed the overall
Brazilian telecom sector due to widespread perceptions that its major investor,
Telefonica de Espana ("Telefonica"), was mistreating minority shareholders.
In recent weeks, we have meaningfully reduced the Fund's position in Telesp and
diversified telecom exposure by raising positions in other companies not
affiliated with Telefonica.
On the positive side, our sector allocation decisions were most effective in
electric utilities, which underperformed and we chose to underweight; and
merchandising, which performed well and benefited both from our overweight and
good stock selection.
- --------------------------------------------------------------------------------
1
<PAGE>
LETTER TO SHAREHOLDERS
BRAZILIAN EQUITIES: A BULL IN 2000?
Observing Brazil's mostly successful struggle toward economic recovery since my
last report has been much like watching two highly motivated boxers step into
the ring and take each other's measure.
In one corner stands the champion of the status quo, seconded by anti-reform
elements within the government, the judiciary and the general population. In the
other awaits the champion of moderate economic recovery, seconded most visibly
by President Cardoso and Finance Minister Pedro Malan. Refereeing the match, and
ever-ready to separate the combatants should things get out of hand is, of
course, the International Monetary Fund ("IMF").
As the bout progressed through the April-June period, it looked like moderate
economic recovery had little chance. Low commodity prices and generally
unavailable export financing were undermining the possibility of achieving the
key trade surplus targeted by the IMF for 1999. Loose fiscal policy made it
appear that the government was returning to its free-spending ways of years
past. And President Cardoso's popularity was very much on the ropes, driven
there by high unemployment, widespread recession, a bit of scandal and wholesale
economic uncertainty.
As the bell rang for the July-September period, however, moderate economic
recovery got a much-needed second wind and came roaring back. President Cardoso
fired a cabinet minister--and close personal friend, incidentally--who had
verbally and very visibly attacked Malan, thereby sending an unambiguous message
that dissent within the ranks would not be tolerated. Furthermore, in the face
of considerable public opposition, the President reiterated his commitment to
fiscal reform. Largely as a result, Brazil's perceived country risk among
investors began to decline.
The Central Bank did its part as well, slashing interest rates from 45% in March
to 19% as of the end of September. The government confounded its numerous
critics when preliminary numbers indicated that the nation was on track to reach
its third-quarter target of a primary fiscal surplus of R$23.8 billion. The
proposed new budget was thought to be "reasonable" (or at least better than
expected) with regard to cutting costs and increasing revenues. Perhaps most
important for the Fund, attractively low valuations among Brazilian equities
began to entice domestic and international investors back into the country's
liquidity-starved equity market.
All was not rosy, to be sure. At the end of September, the Federal Supreme Court
dealt a low blow to the government's efforts to reform the bloated pension
system when it ruled that legislation that essentially would have taxed certain
public-sector retiree benefits was unconstitutional. Had the legislation stood,
it would have been a good start at lessening a major fiscal burden. As a result,
the government now must step into unpopular waters as it seeks to further cut
public spending, raise taxes, or perform some particularly tricky fiscal
footwork in order to meet the IMF's fiscal targets for the year.
On the whole, however, there are ample signs that the champion of moderate
economic recovery will carry the day as we move into the year 2000, so much so
that I think there is the possibility of--dare I say it?--a bull market in
Brazil next year.
- --------------------------------------------------------------------------------
2
<PAGE>
LETTER TO SHAREHOLDERS
THE PORTFOLIO: STRATEGY AND STRUCTURE
TOP 10 HOLDINGS, BY ISSUER*
<TABLE>
<CAPTION>
% OF
HOLDING SECTOR NET ASSETS
------- ------ ----------
<S> <C> <C> <C>
1. Petrobras Oil & Natural Gas 17.2
2. Telesp Telecommunications 11.9
3. Eletrobras Utilities 6.9
4. CVRD Mining 6.6
5. Banco Itau Banking 6.3
6. Telebras Telecommunications 4.8
7. Brahma Food & Beverages 4.7
8. Bradesco Banking 4.3
9. CBD Food & Beverages 4.2
10. Caemi Mining 3.7
----
Total 70.6
====
</TABLE>
- ------------------
* Company names are abbreviations of those found in the chart on page 7.
SECTOR ALLOCATION
(% of net assets)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SECTOR ALLOCATION (% OF NET ASSETS)
<S> <C>
Cash & Other Assets 3.44%
Other* 8.02%
Banking 12.45%
Electric Distribution 6.10%
Food & Beverages 8.92%
Mining 10.29%
Oil & Natural Gas 17.17%
Telecommunications 22.48%
Utilities 8.73%
Retail 2.40%
</TABLE>
- --------------
* "Other" includes sectors below 2% of net assets.
In recent months, I have reconfigured the portfolio as follows:
- - I reduced the extent of the Fund's overweight exposure to metals and mining
shares, which tend to perform well when the REAL is weak, but less well when
it strengthens (as I expect it will shortly). In particular, I reduced
exposure to Companhia Vale do Rio Doce ("CVRD"). Although I still like the
company, I also think that it would be more productive at this time to
redeploy some of the assets previously invested in it elsewhere.
- - The same sentiment led me to shift from an overweight stance to an
underweight in electric utilities.
- - I raised exposure to banks, which should benefit both if reserve requirements
continue to fall and as loan activity picks up.
- - I increased exposure (albeit belatedly) to the forest products/paper sector,
which stands to gain from the imminent recovery in the world's major export
markets.
- - I shifted from an underweight to an overweight in the telecommunications
sector, which has demonstrated markedly positive earnings momentum in recent
months. Here, I especially like fixed-line companies.
I intend to remain fully invested in Brazil as year-end approaches, as it will
be difficult to time the bottom of the market. Current valuations are very
attractive, and I believe that downside potential is limited. If--as I
anticipate--economic growth picks up, corporate earnings improve and interest
rates continue to decline, then equity prices should rise accordingly.
- --------------------------------------------------------------------------------
3
<PAGE>
LETTER TO SHAREHOLDERS
OUTLOOK: GROWTH ON THE HORIZON
Metaphorically speaking, Brazil is much like a garden that has lain fallow since
the emerging markets crisis of 1997 and 1998. Now, having been harrowed by
adversity and fertilized by the IMF, it requires only a bit of sunlight and
warmth to burst into bloom. That such encouragement will be forthcoming as we
move toward a new year is, if not certain, increasingly likely.
There is much to suggest that good times are just around the corner for
Brazilian equities:
ECONOMIC GROWTH. Driven by lower real interest rates and a recovery in exports,
I expect to see positive economic growth in Brazil during this year's fourth
quarter and 3.5% growth in 2000 (vs. estimates of --0.3% growth in 1999).
Monthly consumer interest rates have fallen to 5% from 7% over the past two
months, the lowest such levels since early 1997. As rates fall, the probable
result will be higher demand for durable goods and increased lending activity by
banks that had all but abandoned local markets.
PROBABLE CURRENCY REBOUND. At present, the Brazilian REAL is undervalued by
about 30%, with very limited downside potential from this depressed level. Most
economists are expecting the currency to appreciate in the year 2000 as the
overall economy begins to heat up.
IMPROVING INVESTOR SENTIMENT. Sentiment both among local and international
investors has been--and still is--very negative for the most part with regard to
emerging markets, particularly Latin America. I expect this to change shortly.
Domestic interest rates should continue to fall in 2000, which should encourage
local investors to remain invested in (and, perhaps, to increase their exposure
to) their equity market. Moreover, over the next six to 12 months, I am
confident that international fund flows will be positive and that global funds
will increase their exposure to emerging markets generally, and Mexico and
Brazil specifically.
CARDOSO'S POPULARITY. President Cardoso is currently displaying the strong
leadership that is required if difficult fiscal policies are to be implemented.
Perhaps because of this, his popular support, which had fallen to record lows
this year, has recently stabilized. It should pick up significantly as the
economy improves, perhaps enough to enable him to force through additional
needed reforms.
As always, one must be cautious when approaching Brazilian equities. Should the
recent U.S. market decline persist, there undoubtedly will be trouble south of
the border and elsewhere in the developing world. The proposed Fiscal
Responsibility Law may fail to pass, Brazil's judiciary could continue to
paralyze the reform process, Y2K could cause unexpected disruptions, and so on.
There are a number of such scenarios available to the negatively inclined. I,
for one, am not among the latter group.
- --------------------------------------------------------------------------------
4
<PAGE>
LETTER TO SHAREHOLDERS
As we head into the final months of this year and this century, I am optimistic
about Brazil's investment potential and look forward to seeing its return as one
of the leading lights of the emerging markets universe.
Respectfully,
/s/ Richard W. Watt
Richard W. Watt
President and Chief Investment Officer*
- --------------------------------------------------------------------------------
+ The Morgan Stanley Capital International Brazil Index is an unmanaged index
(with no defined investment objective) of Brazilian equities that includes
reinvestment of dividends, and is the exclusive property of Morgan Stanley
Capital International Inc.
* Richard W. Watt, who is a Managing Director of Credit Suisse Asset Management,
LLC ("CSAM"), is primarily responsible for management of the Fund's assets. He
joined CSAM on August 2, 1995. Mr. Watt formerly was 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 fund focusing on smaller Latin American companies.
Before joining Gartmore Investment Limited in 1992, Mr. Watt was a Director of
Kleinwort Benson International Investments in London, where he was responsible
for research, analysis and trading of equities in Latin America and other
regions. Mr. Watt is President, Chief Investment Officer and a Director of the
Fund. He also is President, Chief Investment Officer and a Director of The Chile
Fund, Inc., The Emerging Markets Infrastructure Fund, Inc., The Emerging Markets
Telecommunications Fund, Inc., The First Israel Fund, Inc., The Latin America
Equity Fund, Inc., The Latin America Investment Fund, Inc. and The Portugal
Fund, Inc. Effective November 9, 1999, Emily Alejos replaced Richard W. Watt as
Chief Investment Officer of The Brazilian Equity Fund, Inc., The Latin America
Equity Fund, Inc. and The Latin America Investment Fund, Inc. Effective
October 15, 1999, Richard W. Watt no longer serves as a Director to The Portugal
Fund, Inc.
- --------------------------------------------------------------------------------
5
<PAGE>
LETTER TO SHAREHOLDERS
FROM CREDIT SUISSE ASSET MANAGEMENT, LLC:
I. Effective January 12, 1999, the Fund's investment adviser, BEA Associates,
changed its name to Credit Suisse Asset Management, LLC ("CSAM"). In making
the announcement, the firm said that it expected the new name to enhance its
recognition as a global asset manager. CSAM is the investment division of
Credit Suisse Group, one of the world's largest financial organizations,
with $600 billion in assets under management.
II. We wish to remind shareholders whose shares are registered in their own
name that they automatically participate in the Fund's dividend
reinvestment program known as the InvestLink-SM- Program ("the Program").
The Program can be of value to shareholders in maintaining their
proportional ownership interest in the Fund in an easy and convenient way.
A shareholder whose shares are held in the name of a broker/dealer or
nominee should contact the Fund's Transfer Agent for details about
participating in the Program. The Program is described on pages 19 through
21 of this report.
III. Many services provided to the Fund and its shareholders by CSAM and the
Fund's service providers rely on the functioning of their respective
computer systems. Many computer systems cannot distinguish the year 2000
from the year 1900, with resulting potential difficulty in performing
various calculations (the "Year 2000 Issue"). The Year 2000 Issue could
potentially have an adverse impact on the handling of security trades, the
payment of interest and dividends, pricing, account services and other
Fund operations.
CSAM recognizes the importance of the Year 2000 Issue and is taking
appropriate steps necessary in preparation for the year 2000. At this time,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on the Fund, nor can there be any assurance that the Year
2000 Issue will not have an adverse effect on the Fund's investments or on
global markets or economies, generally.
CSAM anticipates that its systems will be adapted in time for the year 2000.
CSAM is seeking assurances that comparable steps are being taken by the
Fund's other major service providers. CSAM will be monitoring the Year 2000
Issue in an effort to ensure appropriate preparation.
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
PORTFOLIO SUMMARY - AS OF SEPTEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
SECTOR ALLOCATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS A PERCENT OF NET ASSETS
<S> <C> <C> <C>
SEPTEMBER 30, 1999 MARCH 31, 1999
Banking 12.45 7.84
Electric Distribution 6.10 6.62
Electric Generation 0 3.07
Food & Beverages 8.92 8.24
Mining 10.29 10.52
Oil & Natural Gas 17.17 7.16
Retail 2.40 5.47
Telecommunications 22.48 21.18
Utilities 8.73 14.28
Other 8.02 2.46
Cash and Other Assets 3.44 13.16
</TABLE>
TOP 10 HOLDINGS, BY ISSUER
<TABLE>
<CAPTION>
Percent of
Holding Sector Net Assets
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
1. Petroleo Brasileiro S.A. Oil & Natural Gas 17.2
- ---------------------------------------------------------------------------------------------------------------
2. Telecomunicacoes de Sao Paulo S.A. Telecommunications 11.9
- ---------------------------------------------------------------------------------------------------------------
3. Centrais Eletricas Brasileiras S.A. Utilities 6.9
- ---------------------------------------------------------------------------------------------------------------
4. Companhia Vale do Rio Doce Mining 6.6
- ---------------------------------------------------------------------------------------------------------------
5. Banco Itau S.A. Banking 6.3
- ---------------------------------------------------------------------------------------------------------------
6. Telecomunicacoes Brasileiras S.A. Telecommunications 4.8
- ---------------------------------------------------------------------------------------------------------------
7. Companhia Cervejaria Brahma Food & Beverages 4.7
- ---------------------------------------------------------------------------------------------------------------
8. Banco Bradesco S.A. Banking 4.3
- ---------------------------------------------------------------------------------------------------------------
9. Companhia Brasileira de Distribuicao Grupo Pao de Acucar Food & Beverages 4.2
- ---------------------------------------------------------------------------------------------------------------
10. Caemi Mineracao e Metalurgia S.A. Mining 3.7
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
<S> <C> <C>
- --------------------------------------------------------------------
EQUITY OR EQUITY-LINKED SECURITIES-96.56%
BANKING-12.45%
Banco Bradesco S.A. PN.................. 272,841,000 $ 1,305,602
Banco Itau S.A. PN...................... 36,718,420 1,911,920
Uniao de Bancos Brasileiros S.A. GDR.... 32,200 569,538
-----------
3,787,060
-----------
CHEMICALS-1.42%
S.A. White Martins ON................... 1,078,000 432,210
-----------
CONSUMER GOODS-1.06%
Dixie Toga S.A. PN*..................... 1,768,539 322,306
-----------
ELECTRIC DISTRIBUTION-6.10%
Companhia Energetica de Minas Gerais
PN..................................... 73,300,372 1,106,853
Companhia Paulista de Forca e Luz PN,
Pro Rata Receipts*+.................... 58,876 3,624
Espirito Santo Centrais Eletricas
S.A.*.................................. 16,800 743,556
-----------
1,854,033
-----------
FOOD & BEVERAGES-8.92%
Brazil Fast Food Corp., Warrants
(expiring 9/30/01)+.................... 250,000 7,500
Companhia Brasileira de Distribuicao
Grupo Pao de Acucar GDR................ 64,309 1,274,122
Companhia Cervejaria Brahma PN.......... 2,369,220 1,429,797
-----------
2,711,419
-----------
MINING-10.29%
Caemi Mineracao e Metalurgica S. A.
PN..................................... 30,320,000 1,120,916
Companhia Vale do Rio Doce ADR.......... 26,220 553,087
Companhia Vale do Rio Doce PNA.......... 68,340 1,455,405
-----------
3,129,408
-----------
<CAPTION>
No. of Value
Description Shares (Note A)
- --------------------------------------------------------------------
<S> <C> <C>
OIL & NATURAL GAS-17.17%
Petroleo Brasileiro S.A................. 101,300 $ 1,552,662
Petroleo Brasileiro S.A. PN............. 24,543,791 3,667,830
-----------
5,220,492
-----------
PAPER PRODUCTS-1.04%
Aracruz Celulose S.A. ADR............... 15,200 317,300
-----------
RETAIL-2.40%
Lojas Americanas S.A. PN................ 252,827,227 315,952
Sao Carlos Empreendimentos PN........... 252,827,227 414,687
-----------
730,639
-----------
STEEL-1.51%
Companhia Siderurgica Nacional ON....... 18,240,000 460,630
-----------
TELECOMMUNICATIONS-22.48%
Celular Crt. Participacoes PN........... 4,849,014 530,223
Companhia Riograndense de
Telecomunicacoes PNA................... 4,849,014 1,085,745
Embratel Participacoes S.A. ADR......... 9,500 108,656
Telecomunicacoes Brasileiras S.A. ADR... 19,600 1,468,775
Telecomunicacoes de Minas Gerais S.A.
PNB.................................... 56,352 1,256
Telecomunicacoes de Sao Paulo S.A. PN... 27,832,167 2,465,839
Tele Nordeste Celular Participacoes
S.A.................................... 14,900,000 16,681
Telemig Celular S.A. PNC+............... 56,352 531
Telesp Celular Participacoes S.A........ 1,100,000 6,174
Telesp Participacoes S.A................ 9,200,000 95,808
Telesp Participacoes S.A. ADR........... 67,000 1,055,250
-----------
6,834,938
-----------
TEXTILES-1.18%
Wembley Sociedade Anonima S.A. PN*...... 172,000,000 358,240
-----------
TOBACCO-1.81%
Souza Cruz S.A. ON...................... 90,000 549,232
-----------
</TABLE>
- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
- --------------------------------------------------------------------
<S> <C> <C>
UTILITIES-8.73%
Centrais Eletricas Brasileiras S.A...... 68,200 $ 577,224
Centrais Eletricas Brasileiras S.A.
PNB.................................... 90,103,117 1,529,478
Companhia Paranaense de Energia ADR..... 83,600 548,625
-----------
2,655,327
-----------
TOTAL INVESTMENTS-96.56%
(Cost $38,905,990) (Notes A,D)........................ 29,363,234
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES-3.44%...
1,044,690
-----------
NET ASSETS-100.00%..................................... $30,407,924
===========
</TABLE>
<TABLE>
<S> <C>
- ----------------------------------------------------------
* Not a readily marketable security.
+ Security is non-income producing.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
ON Ordinary Shares.
PN Preferred Shares.
PNA Preferred Shares, Class A.
PNB Preferred Shares, Class B.
PNC Preferred Shares, Class C.
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
9
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - SEPTEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost $38,905,990)
(Note A)............................... $29,363,234
Cash (including $630,404 of foreign
currency with a cost of $630,285) (Note
A)..................................... 1,456,073
Receivables:
Investments sold...................... 1,237,273
Dividends............................. 512,900
Prepaid expenses........................ 10,653
-----------
Total Assets............................ 32,580,133
-----------
LIABILITIES
Payables:
Investments purchased................. 1,875,050
Investment advisory fee (Note B)...... 76,232
Administration fees (Note B).......... 10,574
Other accrued expenses................ 210,353
-----------
Total Liabilities....................... 2,172,209
-----------
NET ASSETS (applicable to 6,190,441
shares of common stock outstanding)
(Note C)............................... $30,407,924
===========
NET ASSET VALUE PER SHARE
($30,407,924 DIVIDED BY 6,190,441)..... $4.91
===========
NET ASSETS CONSIST OF
Capital stock, $0.001 par value;
6,190,441 shares issued and outstanding
(100,000,000 shares authorized)........ $ 6,190
Paid-in capital......................... 81,636,497
Undistributed net investment income..... 97,516
Accumulated net realized loss on
investments and foreign currency
transactions........................... (41,634,491)
Net unrealized depreciation in value of
investments and translation of other
assets and liabilities denominated in
foreign currency....................... (9,697,788)
-----------
Net assets applicable to shares
outstanding............................ $30,407,924
===========
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
STATEMENT OF OPERATIONS - FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Income (Note A):
Dividends............................. $ 603,494
Interest.............................. 42,052
Less: Foreign taxes withheld.......... (79,247)
---------
Total Investment Income............... 566,299
---------
Expenses:
Investment advisory fees (Note B)..... 216,296
Audit and legal fees.................. 71,919
Custodian fees (Note B)............... 40,783
Accounting fees....................... 38,104
Printing.............................. 35,136
Directors' fees....................... 25,620
Administration fees (Note B).......... 21,145
Transfer agent fees................... 14,640
NYSE listing fee...................... 8,107
Insurance............................. 4,359
Other................................. 12,810
Brazilian taxes (Note A).............. 35,936
---------
Total Expenses........................ 524,855
Less: Fee waivers (Note B)............ (56,072)
---------
Net Expenses........................ 468,783
---------
Net Investment Income................. 97,516
---------
NET REALIZED AND UNREALIZED LOSS ON
INVESTMENTS AND FOREIGN CURRENCY
RELATED TRANSACTIONS
Net realized gain/(loss) from:
Investments........................... 333,119
Foreign currency related
transactions......................... (196,860)
Net change in unrealized depreciation in
value of investments and translation of
other assets and liabilities
denominated in foreign currency........ (686,047)
---------
Net realized and unrealized loss on
investments and foreign currency
related transactions................... (549,788)
---------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS........................ $(452,272)
=========
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
11
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months
Ended For the Fiscal
September 30, 1999 Year Ended
(unaudited) March 31, 1999
-------------------------------------
<S> <C> <C>
DECREASE IN NET ASSETS
Operations:
Net investment income................. $ 97,516 $ 276,569
Net realized gain/(loss) on
investments and foreign currency
related transactions................. 136,259 (33,508,285)
Net change in unrealized depreciation
in value of investments and
translation of other assets and
liabilities denominated in foreign
currency............................. (686,047) (1,015,846)
----------- ------------
Net decrease in net assets resulting
from operations.................... (452,272) (34,247,562)
----------- ------------
Dividends and distributions to
shareholders:
Net investment income................. -- (276,569)
In excess of net investment income.... -- (509,484)
----------- ------------
Total dividends and distributions to
shareholders....................... -- (786,053)
----------- ------------
Capital share transactions:
Cost of 36,900 and 337,500 shares
repurchased, respectively
(Note G)............................. (158,116) (1,308,366)
----------- ------------
Total decrease in net assets........ (610,388) (36,341,981)
----------- ------------
NET ASSETS
Beginning of period..................... 31,018,312 67,360,293
----------- ------------
End of period........................... $30,407,924* $ 31,018,312
=========== ============
- ------------------
* Includes undistributed net investment income of $97,516.
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
12
<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 Six For the Period
Months Ended April 10, 1992*
September 30, For the Fiscal Years Ended March 31, through
1999 ---------------------------------------------------------------- March 31,
(unaudited) 1999 1998 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning of
period..................... $4.98 $10.26 $17.96 $14.18 $13.02 $20.80 $11.83 $13.79**
------- ------- ------- -------- ------- ------- ------- -------
Net investment
income/(loss).............. 0.02++ 0.04++ 0.03 0.10+ 0.06 (0.12) (0.04) 0.06
Net realized and unrealized
gain/(loss) on investments
and foreign currency
related transactions....... (0.09)++ (5.23)++ (2.76) 5.69+ 3.32++ (3.80) 9.09 (1.99)
------- ------- ------- -------- ------- ------- ------- -------
Net increase/(decrease) in
net assets resulting from
operations................. (0.07) (5.19) (2.73) 5.79 3.38 (3.92) 9.05 (1.93)
------- ------- ------- -------- ------- ------- ------- -------
Dividends and distributions
to shareholders:
Net investment income...... -- (0.04) (0.02) (0.02) -- -- (0.08) (0.03)
In excess of net investment
income................... -- (0.08) -- -- -- (0.03) -- --
Net realized gains on
investments.............. -- -- (4.91) -- (2.22) (3.83) -- --
In excess of net realized
gains on investments..... -- -- (0.04) -- -- -- -- --
------- ------- ------- -------- ------- ------- ------- -------
Total dividends and
distributions to
shareholders............... -- (0.12) (4.97) (0.02) (2.22) (3.86) (0.08) (0.03)
------- ------- ------- -------- ------- ------- ------- -------
Anti-dilutive impact due to
shares of beneficial
interest repurchased....... -- 0.03 -- -- -- -- -- --
Dilution due to capital share
rights offering............ -- -- -- (1.99) -- -- -- --
------- ------- ------- -------- ------- ------- ------- -------
Net asset value, end of
period..................... $4.91 $4.98 $10.26 $17.96 $14.18 $13.02 $20.80 $11.83
======= ======= ======= ======== ======= ======= ======= =======
Market value, end of
period..................... $4.125 $4.313 $8.375 $14.50 $13.875 $14.75 $19.00 $11.25
======= ======= ======= ======== ======= ======= ======= =======
Total investment return(a)... (4.35)% (46.87)% (5.55)% 4.67%(b) 8.85% (6.79)% 69.55% (19.16)%
======= ======= ======= ======== ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000 omitted).............. $30,408 $31,018 $67,360 $117,887 $65,696 $60,156 $95,820 $54,493
Ratio of expenses to average
net assets, net of fee
waivers#................... 2.91%(c) 5.17% 2.07% 1.76% 1.76% 1.86% 2.05% 2.45%(c)
Ratio of expenses to average
net assets, excluding fee
waivers.................... 3.26%(c) 5.52% 2.42% 2.11% 2.11% 2.13% 2.05% 2.45%(c)
Ratio of expenses to average
net assets, net of fee
waivers and excluding
taxes...................... 2.69%(c) 4.82% 1.72% 1.69% 1.76% 1.73% 2.02% 2.45%(c)
Ratio of net investment
income/(loss) to average
net assets................. 0.61%(c) 0.66% 0.17% 0.39% 0.39% (0.62)% (0.28)% 0.61%(c)
Portfolio turnover rate...... 54% 137% 123% 74% 55% 69% 73% 50%
</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.
++ Based on average shares outstanding.
+ Based on average shares outstanding from April 1, 1996 through August 16,
1996, the pricing date of the rights offering, and from August 17, 1996
through March 31, 1997.
++ 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.
# Ratios shown are inclusive of Brazilian transaction taxes, if any.
(a) Total investment return at market value is based on the changes in market
price of a share during the period and assumes reinvestment of dividends
and distributions, if any, at actual prices pursuant to the Fund's dividend
reinvestment program. Total investment return does not reflect brokerage
commissions or initial underwriting discounts and has not been annualized.
(b) Assumes shareholder did not participate in the rights offering. The total
investment return would have been 10.19% assuming the shareholder did
participate in the rights offering.
(c) Annualized.
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
13
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
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:
MANAGEMENT ESTIMATES: The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make certain
estimates and assumptions that may affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
PORTFOLIO VALUATION: Investments are stated at value in the accompanying
financial statements. All 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. At September 30, 1999, the Fund held 4.70% of its net assets in
securities valued in good faith by the Board of Directors with an aggregate cost
of $6,089,753 and a fair value of $1,427,726. The net asset value per share of
the Fund is calculated on each business day, with the exception of those days on
which the New York Stock Exchange is closed.
CASH: Deposits held at Brown Brothers Harriman & Co., the Fund's custodian, in a
variable rate account are classified as cash. At September 30, 1999, the
interest rate was 4.70% which resets on a daily basis. Amounts on deposit are
generally available on the same business day.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and U.S.
federal 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.
For U.S. federal income tax purposes, realized foreign currency losses and net
realized capital losses from investments incurred after October 31, 1998, within
the Fund's prior fiscal year, are deemed to arise on the first day of the
current fiscal year. The Fund incurred and elected to defer such losses of
$803,036 and $8,017,385, respectively.
At March 31, 1999, the Fund had a capital loss carryforward for U.S. federal
income tax purposes of $31,370,209 which expires in 2007.
From January 23, 1997 through January 22, 1999, Brazil imposed a 0.20%
CONTRIBUCAO PROVISORIA SOBRE MOVIMENTACAO FINANCIERA ("CPMF") tax that applied
to most debit transactions carried out by financial institutions. Effective
January 23, 1999, the CPMF tax expired and was reinstated on June 17, 1999 for a
period of three years. The tax is assessed at a rate of 0.38% for the initial
year and will drop to 0.30% for the remaining two years. There is no withholding
tax on dividend
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
income except for dividends paid from a company's pre-1996 profits which are
taxed at 15%. However, if a company pays a cash distribution termed as a "net
worth value payment", such amounts are taxed at 15%.
FOREIGN CURRENCY TRANSLATIONS: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(I) market value of investment securities, assets and liabilities at the
current rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at
the relevant rates of exchange prevailing on the respective dates of
such transactions.
The Fund does not isolate that portion of gains and losses in investments in
equity securities which is due to changes in the foreign exchange rates from
that which is due to changes in market prices of equity securities. Accordingly,
realized and unrealized foreign currency gains and losses with respect to such
securities are included in the reported net realized and unrealized gains and
losses on investment transactions balances.
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 or losses from valuing foreign currency denominated assets
and liabilities at period end exchange rates are reflected as a component of net
unrealized appreciation/depreciation in value of investments and translation of
other assets and liabilities denominated in foreign currency.
Net realized foreign exchange losses represent foreign exchange gains and losses
from sales and maturities of debt securities, transactions in foreign currencies
and forward foreign currency contracts, exchange gains or losses realized
between the trade date and settlement 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: 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
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
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 possibility of
future political and economic developments and the level of Brazilian
governmental supervision and regulation of its securities markets.
NOTE B. AGREEMENTS
Credit Suisse Asset Management, LLC ("CSAM"), formerly known as BEA Associates,
serves as the Fund's investment adviser with respect to all investments. As
compensation for its advisory services, CSAM 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. CSAM has agreed to waive its
portion of the advisory fee previously payable to former sub-advisers, equal to
an annual rate of 0.35% of the Fund's average weekly net assets. For the six
months ended September 30, 1999, CSAM earned $216,296 for advisory services, of
which CSAM waived $56,072. CSAM also provides certain administrative services to
the Fund and is reimbursed by the Fund for costs incurred on behalf of the Fund.
For the six months ended September 30, 1999, CSAM was reimbursed $5,124 for
administrative services rendered to the Fund.
BankBoston, N.A., Sao Paulo ("BBNA") serves as the Fund's Brazilian
administrator. BBNA 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 six months ended September 30, 1999, BBNA
earned $20,328 for administrative services.
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 six months ended
September 30, 1999, BSFM earned $16,021 for administrative services.
NOTE C. CAPITAL STOCK
The authorized capital stock of the Fund is 100,000,000 shares of common stock,
$0.001 par value. Of the 6,190,441 shares outstanding at September 30, 1999,
CSAM owned 7,169 shares.
NOTE D. INVESTMENT IN SECURITIES
For U.S. federal income tax purposes, the cost of securities owned at
September 30, 1999 was $39,757,422. Accordingly, the net unrealized depreciation
of investments (including investments denominated in foreign currency) of
$10,394,188, was composed of gross appreciation of $2,054,392 for those
investments having an excess of value over cost and gross depreciation of
$12,448,580 for those investments having an excess of cost over value.
For the six months ended September 30, 1999, purchases and sales of securities,
other than short-term obligations, were $18,546,493 and $15,726,881,
respectively.
NOTE E. CREDIT AGREEMENT
The Fund, along with 10 other U.S. regulated investment companies for which CSAM
serves as investment adviser, had a credit agreement with BankBoston, N.A. The
agreement provided that each fund was permitted to borrow an amount equal to the
lesser of $25,000,000 or 25% of the net assets of the fund. However, at no time
shall the aggregate
- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
THE BRAZILIAN EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
outstanding principal amount of all loans to any of the 11 funds exceed
$25,000,000. The line of credit bore interest at (i) the greater of the bank's
prime rate or the Federal Funds Effective Rate plus 0.50% or (ii) the Adjusted
Eurodollar Rate plus 1.50%. The Fund had no amounts outstanding under the credit
agreement for the six months ended September 30, 1999. The above credit
agreement was terminated as of June 30, 1999.
NOTE F. CONTINGENCIES
Currently, the Fund is a nominal defendant in a shareholder derivative and
purported class action which alleges violations of the Federal securities laws
and breach of fiduciary duty by the Fund's directors and investment adviser in
connection with the Fund's July 1996 rights offering. By Opinion and Order dated
April 6, 1998, the District Court granted a motion to dismiss the complaint in
its entirety as to the class action claims and denied the motion to dismiss as
to all other claims. On May 22, 1998, the directors created a special litigation
committee of the Board composed of two newly-appointed disinterested directors
who are not named parties in the Strougo Litigation for the purpose of
considering the allegations raised in the Strougo Litigation. In December, 1998,
the special litigation committee issued a report concluding that the claims had
no merits and filed a motion to dismiss or, in the alternative, for summary
judgement. In April 1999, the District Court adjourned the motion by the special
litigation committee, pending further limited discovery by Mr. Strougo's
attorneys. The District Court ordered that discovery be completed within 60 days
from April 26, 1999 at which point the committee's motion to dismiss or, in the
alternative, for summary judgement will be renewed. That period was subsequently
extended without date, and the parties are in the process of concluding
discovery. The costs of defending the directors in this matter are being
advanced by the Fund pursuant to rights of indemnity set forth in the Fund's
charter documents and are reflected in the Fund's operating expenses. The
investment adviser may be entitled to similar advancement of expenses and rights
of indemnity. Management believes that neither the outcome of this litigation
nor the Fund's related indemnification obligations will have a material adverse
effect on the financial position or future operating results of the Fund,
although there can be no assurance to that effect.
NOTE G. SHARE REPURCHASE PROGRAM
On October 21, 1998, the Board of Directors authorized the repurchase by the
Fund of up to 15% of the Fund's outstanding common stock, for the purposes of
enhancing shareholder value. The Fund's Board has authorized management of the
Fund to repurchase such shares in open market transactions at prevailing market
prices from time to time and in a manner consistent with the Fund continuing to
seek to achieve its investment objectives. The Board's actions were taken in
light of the significant discounts at which the Fund's shares were trading. It
is intended both to provide additional liquidity to those shareholders that
elect to sell their shares and to enhance the net asset value of the shares held
by those shareholders that maintain their investment. The repurchase program is
subject to review by the Board of Directors of the Fund. From October 21, 1998
through March 31, 1999, the Fund repurchased 337,500 of its shares for a total
cost of $1,308,366 at a weighted average discount of 13.08% from net asset
value. The premium/(discount) of individual repurchases ranged from 1.04% -
(23.37%). For the six months ended September 30, 1999, the Fund repurchased
36,900 of its shares for a total cost of $158,116 at a weighted average discount
of 14.14% from net asset value. The discount of individual repurchases ranged
from 13.62% - 16.01%.
- --------------------------------------------------------------------------------
17
<PAGE>
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
On July 27, 1999, 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 four directors to the Board of Directors of the Fund.
<TABLE>
<CAPTION>
NAME OF DIRECTOR FOR WITHHELD NON-VOTES
- ---------------- --------- -------- ---------
<S> <C> <C> <C>
James J. Cattano (three-year term) 4,280,569 120,810 1,825,962
Robert J. McGuire (three-year term) 4,256,624 144,755 1,825,962
William W. Priest, Jr. (three-year term) 4,281,607 119,772 1,825,962
Miklos A. Vasarhelyi (two-year term) 4,255,424 145,955 1,825,962
</TABLE>
In addition to the directors re-elected at the meeting, Enrique R. Arzac,
Peter A. Gordon, George W. Landau, Martin M. Torino and Richard W. Watt continue
to serve as directors of the Fund.
(2) To ratify the selection of PricewaterhouseCoopers LLP as independent public
accountants for the fiscal year ending March 31, 2000.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN NON-VOTES
--- ------- ------- ---------
<S> <C> <C> <C>
4,329,541 44,643 27,195 1,825,962
</TABLE>
- --------------------------------------------------------------------------------
18
<PAGE>
DESCRIPTION OF INVESTLINK-SM-* PROGRAM
The InvestLink-SM- Program is sponsored and administered by BankBoston, N.A.,
not by The Brazilian Equity Fund, Inc. (the "Fund"). BankBoston, N.A. will act
as program administrator (the "Program Administrator") of the InvestLink-SM-
Program (the "Program"). The purpose of the Program is to provide interested
investors with a simple and convenient way to invest funds and reinvest
dividends in shares of the Fund's common stock ("Shares") at prevailing prices,
with reduced brokerage commissions and fees.
An interested investor may join the Program at any time. Purchases of Shares
with funds from a participant's cash payment or automatic account deduction will
begin on the next day on which funds are invested. If a participant selects the
dividend reinvestment option, automatic investment of dividends generally will
begin with the next dividend payable after the Program Administrator receives
his enrollment form. Once in the Program, a person will remain a participant
until he terminates his participation or sells all Shares held in his Program
account, or his account is terminated by the Program Administrator. A
participant may change his investment options at any time by requesting a new
enrollment form and returning it to the Program Administrator.
A participant will be assessed certain charges in connection with his
participation in the Program. First-time investors will be subject to an initial
service charge which will be deducted from their initial cash deposit. All
optional cash deposit investments will be subject to a service charge. Sales
processed through the Program will have a service fee deducted from the net
proceeds, after brokerage commissions. In addition to the transaction charges
outlined above, participants will be assessed per share processing fees (which
include brokerage commissions.) Participants will not be charged any fee for
reinvesting dividends.
The number of Shares to be purchased for a participant depends on the amount of
his dividends, cash payments or bank account or payroll deductions, less
applicable fees and commissions, and the purchase price of the Shares. The
Program Administrator uses dividends and funds of participants to purchase
Shares of Company Common Stock in the open market. Such purchases will be made
by participating brokers as agent for the participants using normal cash
settlement practices. All Shares purchased through the Program will be allocated
to participants as of the settlement date, which is usually three business days
from the purchase date. In all cases, transaction processing will occur within
30 days of the receipt of funds, except where temporary curtailment or
suspension of purchases is necessary to comply with applicable provisions of the
Federal Securities laws or when unusual market conditions make prudent
investment impracticable. In the event the Program Administrator is unable to
purchase Shares within 30 days of the receipt of funds, such funds will be
returned to the participants.
The average price of all Shares purchased by the Program Administrator with all
funds received during the time period from two business days preceding any
investment date up to the second business day preceding the next investment date
shall be the price per share allocable to a participant in connection with the
Shares purchased for his account with his funds or dividends received by the
Program Administrator during such time period. The average price of all Shares
sold by the Program Administrator pursuant to sell orders received during such
time period shall be the price per share allocable to a participant in
connection with the Shares sold for his account pursuant to his sell orders
received by the Program Administrator during such time period.
BankBoston, N.A., as Program Administrator, administers the Program for
participants, keeps records, sends statements of account to participants and
performs other duties relating to the Program. Each participant in the Program
will receive a statement of his account following each purchase of Shares. The
statements will also show the amount of dividends credited to such participant's
account (if applicable), as well as the fees paid by the participant. In
addition, each participant
- --------------------------------------------------------------------------------
19
<PAGE>
DESCRIPTION OF INVESTLINK-SM-* PROGRAM (CONTINUED)
will receive copies of the Fund's annual and semi-annual reports to
shareholders, proxy statements and, if applicable, dividend income information
for tax reporting purposes.
If the Fund is paying dividends on the Shares, a participant will receive
dividends through the Program for all Shares held on the dividend record date on
the basis of full and fractional Shares held in his account, and for all other
Shares of the Fund registered in his name. The Program Administrator will send
checks to the participants for the amounts of their dividends that are not
to be automatically reinvested at no cost to the participants.
Shares of the Fund purchased under the Program will be registered in the name of
the accounts of the respective participants. Unless requested, the Fund will not
issue to participants certificates for Shares of the Fund purchased under the
Program. The Program Administrator will hold the Shares in book-entry form until
a Program participant chooses to withdraw his Shares or terminate his
participation in the Program. The number of Shares purchased for a participant's
account under the Program will be shown on his statement of account. This
feature protects against loss, theft or destruction of stock certificates.
A participant may withdraw all or a portion of the Shares from his Program
account by notifying the Program Administrator. After receipt of a participant's
request, the Program Administrator will issue to such participant certificates
for the whole Shares of the Fund so withdrawn or, if requested by the
participant, sell the Shares for him and send him the proceeds, less applicable
brokerage commissions, fees, and transfer taxes, if any. If a participant
withdraws all full and fractional Shares in his Program account, his
participation in the Program will be terminated by the Program Administrator. In
no case will certificates for fractional Shares be issued. The Program
Administrator will convert any fractional Shares held by a participant at the
time of his withdrawal to cash.
Participation in any rights offering, dividend distribution or stock split will
be based upon both the Shares of the Fund registered in participants' names and
the Shares (including fractional Shares) credited to participants' Program
accounts. Any stock dividend or Shares resulting from stock splits with respect
to Shares of the Fund, both full and fractional, which participants hold in
their Program accounts and with respect to all Shares registered in their names
will be automatically credited to their accounts.
All Shares of the Fund (including any fractional Shares) credited to his account
under the Program will be voted as the participant directs. The participants
will be sent the proxy materials for the annual meetings of shareholders. When a
participant returns an executed proxy, all of such Shares will be voted as
indicated. A participant may also elect to vote his Shares in person at the
Shareholders' meeting.
A participant will receive tax information annually for his personal records and
to help him prepare his U.S. federal income tax return. The automatic
reinvestment of dividends does not relieve him of any income tax which may be
payable on dividends. For further information as to tax consequences of
participation in the Program, participants should consult with their own tax
advisors.
The Program Administrator in administering the Program will not be liable for
any act done in good faith or for any good faith omission to act. However, the
Program Administrator will be liable for loss or damage due to error caused by
its negligence, bad faith or willful misconduct. Shares held in custody by the
Program Administrator are not subject to protection under the Securities
Investors Protection Act of 1970.
- --------------------------------------------------------------------------------
20
<PAGE>
DESCRIPTION OF INVESTLINK-SM-* PROGRAM (CONTINUED)
The participant should recognize that neither the Fund nor the Program
Administrator can provide any assurance of a profit or protection against loss
on any Shares purchased under the Program. A participant's investment in Shares
held in his Program account is no different than his investment in directly held
Shares in this regard. The participant bears the risk of loss and the benefits
of gain from market price changes with respect to all of his Shares. Neither the
Fund nor the Program Administrator can guarantee that Shares purchased under the
Program will, at any particular time, be worth more or less than their purchase
price. Each participant must make an independent investment decision based on
his own judgment and research.
While the Program Administrator hopes to continue the Program indefinitely, the
Program Administrator reserves the right to suspend or terminate the Program at
any time. It also reserves the right to make modifications to the Program.
Participants will be notified of any such suspension, termination or
modification in accordance with the terms and conditions of the Program. The
Program Administrator also reserves the right to terminate any participant's
participation in the Program at any time. Any question of interpretation arising
under the Program will be determined in good faith by the Program Administrator
and any such good faith determination will be final.
Any interested investor may participate in the Program. To participate in the
Program, an investor who is not already a registered owner of the Shares must
make an initial investment of at least $250.00. All other cash payments or bank
account deductions must be at least $100.00, up to a maximum of $100,000.00
annually. An interested investor may join the Program by reading the Program
description, completing and signing the enrollment form and returning it to the
Program Administrator. The enrollment form and information relating to the
Program (including the terms and conditions) may be obtained by calling the
Program Administrator at one of the following telephone numbers: First Time
Investors--(800) 969-3306; Current Shareholders--(800) 730-6001. All
correspondence regarding the Program should be directed to: BankBoston, N.A.,
InvestLink Program, P.O. Box 8040, Boston, MA 02266-8040.
- ------------------------
*InvestLink is a service mark of Boston EquiServe Limited Partnership.
- --------------------------------------------------------------------------------
21
<PAGE>
RECENT DEVELOPMENTS (UNAUDITED)
Recently, the Securities and Exchange Commission (the "SEC") amended
Rule 14a-4(c) under the Securities Exchange Act of 1934, as amended (the "1934
Act") which governs The Brazilian Equity Fund, Inc.'s (the "Fund") use of
discretionary proxy voting authority with respect to shareholder proposals that
are not being included in the Fund's proxy solicitation material pursuant to
Rule 14a-8 of the 1934 Act. Partly in connection thereto, the Fund's Board of
Directors reviewed the By-laws of the Fund and made the following material
changes: 1) the percentage of ownership needed for stockholders to request a
special meeting has been increased from 25% to a majority of the outstanding
capital stock of the Fund entitled to vote at such meeting; 2) the advance
notice requirements applicable to stockholder proposals at annual meetings and
for nominations by stockholders for election to the Board of Directors have been
revised to reflect changes in Rule 14a-4(c); 3) the Board's ultimate authority
concerning the reimbursement of the expenses of solicitation of proxies for the
election of Directors has been clarified; and 4) the power to amend the By-laws
is reserved to the Board of Directors. The Fund's By-laws are on file with the
SEC and are accessible through the SEC web site (www.sec.gov) or may be obtained
from the Secretary of the Fund upon request.
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22
<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
Credit Suisse Asset Management, LLC ("CSAM"), formerly known as BEA Associates.
CSAM is a diversified asset manager, handling equity, balanced, fixed income,
international and derivative based accounts. Portfolios include international
and emerging market investments, common stocks, taxable and non-taxable bonds,
options, futures and venture capital. CSAM manages money for corporate pension
and profit-sharing funds, public pension funds, union funds, endowments and
other charitable institutions and private individuals. As of September 30, 1999,
CSAM-Americas managed approximately $58.6 billion in assets.
SHAREHOLDER INFORMATION
The market price is published in: THE NEW YORK TIMES (daily) under the
designation "BrazilEF" and THE WALL STREET JOURNAL (daily) and BARRON'S (each
Monday) 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.'s shares are published each
Sunday in THE NEW YORK TIMES and each Monday in THE WALL STREET JOURNAL and
BARRON'S, as well as other newspapers, in a table called "Closed-End Funds."
THE CSAM GROUP OF FUNDS
LITERATURE REQUEST--Call today for free descriptive information on the
closed-end funds listed below at 1-800-293-1232 or visit our website on the
Internet: http://www.cefsource.com.
CLOSED-END FUNDS
SINGLE COUNTRY
The Chile Fund, Inc. (CH)
The First Israel Fund, Inc. (ISL)
The Indonesia Fund, Inc. (IF)
The Portugal Fund, Inc. (PGF)
MULTIPLE COUNTRY
The Emerging Markets Infrastructure Fund, Inc. (EMG)
The Emerging Markets Telecommunications Fund, Inc. (ETF)
The Latin America Equity Fund, Inc. (LAQ)
The Latin America Investment Fund, Inc. (LAM)
FIXED INCOME
Credit Suisse Asset Management Income Fund, Inc. (CIK)
Credit Suisse Asset Management Strategic Global Income Fund, Inc. (CGF)
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Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that The Brazilian Equity Fund, Inc. may from
time to time purchase shares of its capital stock in the open market.
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<PAGE>
DIRECTORS AND CORPORATE OFFICERS
<TABLE>
<S> <C>
Dr. Enrique R. Arzac Director
James J. Cattano Director
Peter A. Gordon Director
George W. Landau Director
Robert J. McGuire Director
Martin M. Torino Director
Miklos A. Vasarhelyi Director
William W. Priest, Jr. Chairman of the Board of
Directors
Richard W. Watt Director, President and
Chief Investment Officer
Emily Alejos Investment Officer
Hal Liebes Senior Vice President
Michael A. Pignataro Chief Financial Officer
and Secretary
Rocco A. Del Guercio Vice President
Robert M. Rizza Treasurer
</TABLE>
INVESTMENT ADVISER
Credit Suisse Asset Management, LLC
One Citicorp Center
153 East 53rd Street
New York, NY 10022
ADMINISTRATOR
Bear Stearns Funds Management Inc.
575 Lexington Avenue
New York, NY 10022
CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
SHAREHOLDER SERVICING AGENT
BankBoston, N.A.
P.O. Box 1865
Mail Stop 45-02-62
Boston, MA 02105-1865
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, PA 19103
LEGAL COUNSEL
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
This report, including the financial statements herein, is sent
to the shareholders of the Fund for their information. The
financial information included herein is taken from the records
of the Fund without examination by independent accountants who
do not express an opinion thereon. It is not a prospectus,
circular or representation intended for use in the purchase or
sale of shares of the Fund or of any securities mentioned in
this report. [LOGO]
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3910-SAR-9/99
