LATIN AMERICA
GROWTH FUND, INC.
OCTOBER 31, 1995
ANNUAL REPORT
IDS INTERNATIONAL INC.
MEMBER OF IMRO
OFFICES IN LONDON, MINNEAPOLIS,
HONG KONG, SINGAPORE
DESCRIPTION OF ARTWORK ON COVER
Graphic image showing Central America and South America.
LATIN AMERICA GROWTH FUND, INC.
<TABLE>
<CAPTION>
Page
<S> <C>
From the President 1
From the Portfolio Manager 2
Portfolio Highlights 7
Portfolio 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
Quarterly Results of Operations 17
Report of Independent Auditors 18
Additional Information 19
Results of Shareholder Meeting 20
</TABLE>
--------
This report is sent to the shareholders of the Latin America Growth Fund,
Inc. for their information. It is not a Prospectus, circular or represen-
tation intended for use in the purchase or sale of shares of the Fund or
of any securities mentioned in the report.
LATIN AMERICA GROWTH FUND, INC.
FROM THE PRESIDENT NOVEMBER, 1995
To Shareholders,
It is with pleasure that I present the first annual report for the
Latin America Growth Fund, Inc. (the "Fund"). As the President and CEO of
IDS International, Inc. ("IDSI"), I am excited that we have the opportu-
nity to be the investment advisor of this regional fund. The investment
advisory agreement was transferred to IDSI following shareholder approval
on September 28, 1995. IDSI is a subsidiary of American Express Financial
Corporation in Minneapolis, which, with its subsidiaries, owns and manages
over $100 billion of assets. Headquartered in London, IDSI also has of-
fices in Hong Kong and Singapore.
The transfer of investment management was executed smoothly. I have
highlighted below significant factors that have or have not changed as a
result. First, the aspects that have not changed:
* The Fund is benefited by the continuation of Ian King as portfolio
manager. Ian King joined the investment management team at IDSI in
June of 1995. His market update follows this letter.
* The investment objective and policies remain as originally described
in the prospectus.
* Informational updates are still available by calling 1-800-310-8239.
* Philip H. Didriksen, Jr., Rodman L. Drake, Kathleen C. Holmes-
McClave and Peer Pedersen have continued their roles as Directors of
the Fund.
* First Data Investor Services Group, Inc. (formerly known as The
Shareholders Services Group, Inc.) maintains the roles of adminis-
trator as well as the transfer and dividend paying agent.
* Boston Safe Deposit and Trust Company is the custodian of Fund as-
sets.
* The ticker symbol for The New York Stock Exchange remains as LLF.
* As the Fund is also listed on the Osaka Exchange, information can be
found utilizing the code 8690.
ASPECTS THAT HAVE CHANGED INCLUDE:
* The Fund name has changed to the Latin America Growth Fund, Inc.
* Andrew Gordon and Kirk Hartman of Lehman Brothers Inc. have resigned
as Chairman of the Board, President and Directors of the Fund.
* I have been elected to serve as the Chairman of the Board and Presi-
dent of the Fund.
* The principal address of the Fund has changed to One Exchange Place,
53 State Street, Boston, MA 02109.
IDSI is committed to providing quality service to the shareholders of
the Fund. If you have requests or comments, please contact us by writing
to the address above or calling 612-671-2334.
Sincerely,
Peter L. Lamaison
PETER L. LAMAISON
Chairman of the Board and President
LATIN AMERICA GROWTH FUND, INC.
FROM THE PORTFOLIO MANAGER NOVEMBER, 1995
Dear Shareholder:
The last year has been one of dramatic events throughout the Latin
American region, which have led to very volatile markets. These were re-
flected in the fall in net asset value of the Fund during the fiscal year
by 17.1%. This compares very favorably with all the regional Latin Ameri-
can indices, although the comparison is slightly unfair, given the Fund's
bias to smaller companies that are not well represented in the indices.
For the record, larger Latin American companies as represented by the Bar-
ing Securities Latin America Index fell by 34.5% in dollar terms. Another
factor which clearly preserved the Fund's value in falling markets was the
retention of a significant portion of the Fund's assets in cash and short
term, dollar-denominated investments.
Without doubt the event that has dominated the last twelve-months in
Latin America took place on December 20, 1994, the date of devaluation of
the Mexican peso.
MEXICO
Five days before Christmas the Mexican government was forced to break
the crawling currency peg, the arrangement whereby the peso was devalued
by a fixed, yet modest, amount every day against the U.S. dollar. The ini-
tial 15% devaluation proved insufficient to stem the flow of funds out of
the country, and the currency was allowed to float on December 22, 1994.
MEXICAN PESO VS. U.S. DOLLAR
DESCRIPTION OF CHART
Line graph showing value of the Mexican Peso compared to the U.S. Dollar
for the period from December 2, 1994 to December 1, 1995 using the plot
points shown below:
<TABLE>
<CAPTION>
MEXICAN PESO
<S> <C>
02/12/94 3.4385
09/12/94 3.4485
16/12/94 3.4635
23/12/94 4.7
30/12/94 5.075
06/01/95 5.35
13/01/95 5.495
20/01/95 5.585
27/01/95 5.735
03/02/95 5.455
10/02/95 5.505
17/02/95 5.725
24/02/95 5.875
03/03/95 6.305
10/03/95 6.3
17/03/95 6.95
24/03/95 6.815
31/03/95 6.755
07/04/95 6.315
14/04/95 6.295
21/04/95 6.055
28/04/95 5.925
05/05/95 5.835
12/05/95 5.925
19/05/95 5.91
26/05/95 6.165
02/06/95 6.185
09/06/95 6.255
16/06/95 6.19
23/06/95 6.24
30/06/95 6.24
07/07/95 6.15
14/07/95 6.011
21/07/95 6.105
28/07/95 6.115
04/08/95 6.145
11/08/95 6.15
18/08/95 6.235
25/08/95 6.32
01/09/95 6.265
08/09/95 6.29
15/09/95 6.28
22/09/95 6.355
29/09/95 6.385
06/10/95 6.535
13/10/95 6.775
20/10/95 6.655
27/10/95 7.065
03/11/95 7.365
10/11/95 7.55
17/11/95 7.63
24/11/95 7.665
01/12/95 7.565
</TABLE>
Source -- Bloomberg Financial Markets
While foreigners were initially blamed for the overwhelming pressure
on the peso in December, recent theories suggest that the pressure came
more from local investors. The combination of poor political news, the
perception that the peso was overvalued, and a large deficit on the cur-
rent account -- the balance of trade including services -- meant that the
government had to continually draw down foreign currency reserves to sup-
port the currency. The critical point came when reserves had reputedly
fallen below $3 billion, as the government attempted to substitute the
capital account flows that had then offset the current account deficit.
Once the peso was allowed to float, questions were immediately raised
about Mexico's ability to finance its external debt.
As President Zedillo and President Clinton, with the help of the In-
ternational Monetary Fund, put together a package of international aid to
enable Mexico to reschedule and lengthen the maturity of its foreign debt,
the domestic economy collapsed. The trough probably came in the second
quarter, when gross domestic product ("GDP") contracted by 10.5%, but
against this background inflation continues to be a problem. To hold down
prices and support the peso, interest rates have had to remain high, but
this is delaying economic recovery. There has been some good news in the
form of the renegotiation of the pacto, the agreement between government
and unions on prices and public expenditure. This at least provides a
framework for economic planning, although the government's fiscal collec-
tion and GDP growth forecasts for next year may be a little optimistic.
Inflation will be the important economic issue in the coming year. It
will be the key determinant of the government's ability to ease monetary
policy and promote the return to growth. With the peso still subject to
sporadic attacks, the Mexican government will have little option but to
maintain a tight grip on the economy, and although this may be painful in
the short term, it could be beneficial as price pressures are squeezed
out.
MEXICO -- MONTH ON MONTH INFLATION (CPI)
DESCRIPTION OF CHART
Bar graph showing Mexico's Month on Month Inflation for the period from
February 1990 to September 1995 using the plot points shown below:
<TABLE>
<S> <C>
Feb-90 2.27%
Mar-90 1.77%
Apr-90 1.51%
May-90 1.75%
Jun-90 2.21%
Jul-90 1.81%
Aug-90 1.70%
Sep-90 1.43%
Oct-90 1.44%
Nov-90 2.65%
Dec-90 3.16%
Jan-91 2.55%
Feb-91 1.74%
Mar-91 1.43%
Apr-91 1.04%
May-91 0.99%
Jun-91 1.05%
Jul-91 0.87%
Aug-91 0.70%
Sep-91 0.99%
Oct-91 1.17%
Nov-91 2.47%
Dec-91 2.36%
Jan-92 1.82%
Feb-92 1.18%
Mar-92 1.02%
Apr-92 0.89%
May-92 0.66%
Jun-92 0.68%
Jul-92 0.64%
Aug-92 0.61%
Sep-92 0.87%
Oct-92 0.72%
Nov-92 0.84%
Dec-92 1.42%
Jan-93 1.25%
Feb-93 0.82%
Mar-93 0.58%
Apr-93 0.58%
May-93 0.57%
Jun-93 0.56%
Jul-93 0.48%
Aug-93 0.53%
Sep-93 0.75%
Oct-93 0.39%
Nov-93 0.45%
Dec-93 0.75%
Jan-94 0.78%
Feb-94 0.51%
Mar-94 0.51%
Apr-94 0.50%
May-94 0.48%
Jun-94 0.50%
Jul-94 0.44%
Aug-94 0.47%
Sep-94 0.71%
Oct-94 0.52%
Nov-94 0.54%
Dec-94 0.88%
Jan-95 3.76%
Feb-95 4.24%
Mar-95 5.90%
Apr-95 7.96%
May-95 4.18%
Jun-95 3.17%
Jul-95 2.04%
Aug-95 1.66%
Sep-95 2.07%
</TABLE>
Source -- Bloomberg Financial Markets
The Mexican devaluation gave rise to what is now referred to as the
"Tequila Effect." All the other Latin American markets followed Mexico
down, with some of the most severe pressure being placed on Argentina.
ARGENTINA
An overvalued currency and a deficit on the current account were seen
as sure signs that Argentina would follow Mexico. Although the current ac-
count deficit was relatively small, as a percentage of GDP, the Argentine
peso was perceived as even more expensive than the Mexican peso. Having
been pegged to the dollar since March 1991, during which time Argentine
inflation had outstripped U.S. inflation by almost 60%, devaluation seemed
inevitable when money started leaving Latin America as a whole.
However, one tenet of the 1991 Convertibility Plan enabled Economy
Minister Cavallo to avoid devaluation: the stipulation that every peso in
the Argentine economy must be backed by one dollar of reserves. This has
enabled the peg to persist, and government commitment to it remains as
solid as ever. With foreign sources of capital having dried up, however,
the economy has followed Mexico into recession, and the government is now
looking to ways to promote a return to growth next year. Against this
backdrop, and with continuing political rumors about the relationship be-
tween President Menem and his Economy Minister, the market has been char-
acterized by a downward drift in both prices and volume.
BRAZIL
Economically, Brazil was the least affected of the principal Latin
American economies by the Mexican devaluation. Indeed, in the quarter fol-
lowing the move, the Brazilian economy showed distinct signs of overheat-
ing, with growth of 8.9%. In these circumstances inflation remained around
2% a month -- a long way from the levels of last year, but still a source
of concern. This in turn gave rise to higher interest rates, and a subse-
quent drop in economic activity, but promoted currency stability.
In spite of the changing economic conditions over the last year, Bra-
zil remains the one major economy in Latin America yet to undergo liberal-
ization of the state sector in the form of privatization. The equity mar-
ket remains dominated by companies in which the government is the major
shareholder. The transfer of ownership of these companies to private hands
will take some time yet, but as this process evolves it should provide
some impetus to the market as a swathe of Brazilian industry becomes more
efficient.
CHILE
It is a reflection of the good condition of the Chilean economy that
the principal problem the central bank has had to deal with has been the
strength of the Chilean peso. Such has been the demand for Chilean assets
that the peso's rise had to be halted by government measures to reduce
foreign inflows, which had been attracted by the country's consistent high
growth and relatively benign inflation.
CHILEAN PESO VS. U.S. DOLLAR
DESCRIPTION OF CHART
Line graph showing value of the Chilean Peso compared to the U.S. Dollar
for the period from November 4, 1994 to October 26, 1995 using the plot
points shown below:
<TABLE>
<CAPTION>
CHILEAN PESO
<S> <C>
04-Nov 411.06
11-Nov 416
18-Nov 414.27
25-Nov 415.45
02-Dec 400.65
09-Dec 398.38
16-Dec 402.57
23-Dec 402.65
30-Dec 402.92
06-Jan 404.4
13-Jan 407.48
20-Jan 406.15
27-Jan 407.03
03-Feb 409.06
10-Feb 409.56
17-Feb 410
24-Feb 411.29
02-Mar 411.94
09-Mar 415.41
16-Mar 410.78
23-Mar 408.16
30-Mar 405.22
06-Apr 395.67
13-Apr 395
20-Apr 391.1
27-Apr 388.2
04-May 381.97
11-May 374.96
18-May 377.61
25-May 375.73
01-Jun 377.15
08-Jun 372.75
15-Jun 371.04
22-Jun 373.27
29-Jun 374.48
06-Jul 376.14
13-Jul 375.47
20-Jul 377.35
27-Jul 378
03-Aug 379.83
10-Aug 383.69
17-Aug 385
24-Aug 389.66
31-Aug 393.53
07-Sep 393.08
14-Sep 395.56
21-Sep 392.14
28-Sep 396.74
05-Oct 402.31
12-Oct 403.4
19-Oct 408.28
26-Oct 415.04
</TABLE>
Source -- Bloomberg Financial Markets
(The above chart shows U.S. dollars per Chilean peso, indicating a
strengthening peso when the line is rising, and weakening when the line is
falling.)
Such has been the relatively rapid weakening of the peso that the gov-
ernment may in the future be faced with the problem of slightly higher in-
flation than expected. This is based on a greater competitiveness for
Chilean exporters. Once again, it is a measure of Chile's success that the
problem might manifest itself in only a one or two percentage point in-
crease in inflation over the course of the year. Other Latin American gov-
ernments would no doubt be delighted if this were their problem.
PERU
Having been the fastest growing economy in the world in 1994, Peru has
slowed to a more manageable pace, although growth remains above 5%. At the
same time inflation is under control, and the commitment of President Fu-
jimori to reform continues to draw praise. The only problem that has
arisen, and the one that has attracted unfair comparisons with other Latin
American countries, is that of growing current account deficits. Once this
statistic has stabilized, the equity market should see a return of the op-
timistic mood that has prevailed for most of the last two years.
PERU -- CURRENT ACCOUNT (5M)
DESCRIPTION OF CHART
Bar graph showing Peru's Current Account deficits for the four quarters of
1993, the four quarters of 1994 and the first two quarters of 1995 using
the plot points shown below:
<TABLE>
<CAPTION>
PERU CURRENT ACCOUNT
<S> <C>
93q1 -172
93q2 -555
93q3 -354
93q4 -597
94q1 -346
94q2 -573
94q3 -398
94q4 -870
95q1 -794
95q2 -1,041
</TABLE>
Source -- Bloomberg Financial Markets
COLOMBIA
Colombia has been beset by rumors concerning the financing of Presi-
dent Samper's election campaign. While the economy has remained vibrant,
the President's position has become increasingly threatened, with a number
of high profile resignations in his administration. The allegations sur-
rounding the President's election campaign concerns the payments made
which purportedly originated from the Cali drug cartel. There is a growing
tide of public opinion that he should resign, and this has weighted down
the equity market.
OUTLOOK
In our view, 1996 should see the three largest economies in Latin
America begin to recover. Following very severe recessions in the second
half of 1995, we expect a return to growth and to see improving fortunes
for Latin American companies. Against this background the current very low
valuation levels of these companies' stocks, and particularly the stocks
of small and medium sized companies, may once again appear attractive.
However, until there are clearer signs of recovery, with greater stability
in currencies particularly, stocks may continue to mark time.
The equity portfolio of the Fund consists of a broadly diversified
portfolio of well-managed small and medium sized companies. The majority
of the Fund's holdings are characterized by relatively low levels of debt,
and low valuations. We anticipate these companies may be well positioned
to benefit from the recovery and continued development of the Latin Ameri-
can region in the coming years.
MEXICO -- INDUSTRIAL PRODUCTION
YEAR ON YEAR CHANGE
DESCRIPTION OF CHART
Bar graph showing Mexico's Industrial Production for the period from Janu-
ary 1994 to July 1995 using the plot points shown below:
<TABLE>
<S> <C>
Jan-94 -0.16%
Feb-94 0.65%
Mar-94 -1.59%
Apr-94 6.48%
May-94 3.38%
Jun-94 4.94%
Jul-94 5.04%
Aug-94 10.42%
Sep-94 6.74%
Oct-94 7.16%
Nov-94 6.25%
Dec-94 0.08%
Jan-95 3.76%
Feb-95 -1.13%
Mar-95 -4.10%
Apr-95 -13.97%
May-95 -8.92%
Jun-95 -11.76%
Jul-95 -11.91%
</TABLE>
ARGENTINA -- INDUSTRIAL PRODUCTION
YEAR ON YEAR CHANGE
DESCRIPTION OF CHART
Bar graph showing Argentina's Industrial Production for the period from
January 1994 to July 1995 using the plot points shown below:
<TABLE>
<S> <C>
Jan-94 10.95%
Feb-94 6.75%
Mar-94 5.48%
Apr-94 3.07%
May-94 8.09%
Jun-94 1.41%
Jul-94 -0.26%
Aug-94 5.31%
Sep-94 4.73%
Oct-94 4.87%
Nov-94 4.09%
Dec-94 2.25%
Jan-95 -6.77%
Feb-95 21.08%
Mar-95 2.64%
Apr-95 -4.88%
May-95 -3.32%
Jun-95 -3.57%
Jul-95 -3.72%
</TABLE>
BRAZIL -- INDUSTRIAL PRODUCTION
YEAR ON YEAR CHANGE
DESCRIPTION OF CHART
Bar graph showing Brazil's Industrial Production for the period from Janu-
ary 1994 to July 1995 using the plot points shown below:
<TABLE>
<S> <C>
Jan-94 1.26%
Feb-94 1.81%
Mar-94 -2.08%
Apr-94 -3.90%
May-94 -4.79%
Jun-94 -4.96%
Jul-94 -5.43%
Aug-94 -4.84%
Sep-94 -3.94%
Oct-94 -3.14%
Nov-94 -2.54%
Dec-94 -1.82%
Jan-95 7.57%
Feb-95 10.15%
Mar-95 9.16%
Apr-95 9.36%
May-95 5.68%
Jun-95 4.46%
Jul-95 3.71%
</TABLE>
ARGENTINA -- INDUSTRIAL PRODUCTION
YEAR ON YEAR CHANGE
DESCRIPTION OF CHART
Bar graph showing Chile's Industrial Production for the period from Janu-
ary 1994 to July 1995 using the plot points shown below:
<TABLE>
<S> <C>
Jan-94 4.50%
Feb-94 1.39%
Mar-94 1.83%
Apr-94 1.62%
May-94 9.14%
Jun-94 1.82%
Jul-94 -2.19%
Aug-94 2.81%
Sep-94 1.50%
Oct-94 1.22%
Nov-94 2.20%
Dec-94 -0.90%
Jan-95 3.97%
Feb-95 2.01%
Mar-95 3.97%
Apr-95 3.66%
May-95 5.02%
Jun-95 5.35%
Jul-95 5.77%
Aug-95 1.52%
</TABLE>
Source -- Bloomberg Financial Markets
STRATEGY
Well-managed small and medium sized companies will remain the focus of
the Fund. Emphasis will continue to be placed on creating a broadly diver-
sified portfolio of investments that will benefit from the long term evo-
lution of the Latin American economies. Low debt and attractive valuations
are just two of the characteristics that we will continue to seek in new
investment opportunities as they present themselves. These features have
served the Fund well, and this should continue to be the case.
Sincerely,
Ian King
IAN KING
Portfolio Manager
LATIN AMERICA GROWTH FUND, INC.
PORTFOLIO HIGHLIGHTS OCTOBER 31, 1995
ASSET DISTRIBUTION (BY COUNTRY)
Percentages based on total investments
DESCRIPTION OF CHART
Pie chart broken into pieces using the figures below:
<TABLE>
<S> <C>
Brazil 25.3%
Argentina 23.2%
Peru 14.3%
Mexico 9.6%
Colombia 2.7%
United States 19.3%
Chili 5.6%
</TABLE>
ASSET DISTRIBUTION (BY INSTRUMENT)
Percentages based on total investments
DESCRIPTION OF CHART
Pie chart broken into pieces using the figures below:
<TABLE>
<S> <C>
Common Stocks 55.4%
Preferred Stocks 25.3%
U.S. Government Agency Obligation 16.9%
Commercial Paper 2.4%
</TABLE>
INDUSTRY BREAKDOWN
Percentages based on total investments
DESCRIPTION OF CHART
Pie chart broken into pieces using the figures below:
<TABLE>
<S> <C>
Commercial Paper 2.4%
U.S. Government Agency Obligation 16.9%
Food and Beverages 11.2%
Utility 9.1%
Transportation 8.0%
Banking/Finance 6.9%
Cement 6.9%
Metals and Mining 5.9%
Household Appliances 5.6%
Capital Goods 5.0%
Other Stocks 22.1%
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE OF
TOP TEN HOLDINGS NET ASSETS
<S> <C>
1. Federal Home Loan Bank, Discount Note 17.3%
2. Cementos Lima Common 3.4
3. Astra Compania Argentina de Petroleo 3.2
4. Corporacion Cementaria Argentina (CORCEMAR) 3.1
5. Marcopolo, Series B 3.0
6. Credicorp Ltd. 2.9
7. Randon Participacoes 2.8
8. Refrigeracao Parana 2.7
9. Molinos Rio de la Plata 2.7
10. Enrique Ferreyros 2.6
43.7%
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
LATIN AMERICA GROWTH FUND, INC.
PORTFOLIO OF INVESTMENTS OCTOBER 31, 1995
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
COMMON STOCKS -- 56.6%
ARGENTINA -- 23.7%
1,000,000 Astra Compania Argentina de Petroleo $ 1,479,926
230,000 Bagley, Series B 464,577
150,000 Capex 967,452
300,000 Central Costanera 830,958
300,000 Central Puerto, Series B 914,954
205,733 Compania Interamericana de Automoviles (CIADEA) 750,887
335,000 Corporacion Cementaria Argentina (CORCEMAR)+ 1,440,428
220,000 Fiplasto+ 494,975
50,000 Grimoldi, Series B 212,489
2,000,000 Indupa 999,950
300,000 Inversiones y Representaciones (IRSA) 629,969
96,000 Juan Minetti 235,188
136,450 Longvie+ 83,913
200,000 Molinos Rio de la Plata+ 1,249,938
56,720 Nobleza Piccardo 218,361
10,973,965
CHILE -- 5.7%
40,000 Chilquinta, ADR 700,000
74,000 Laboratorios de Chile, ADR 888,000
60,000 Maderas y Sinteticas, ADR (MASISA) 1,072,500
2,660,500
COLOMBIA -- 2.7%
72,000 Carulla 465,716
36,981 Corporacion Financiera del Valle, Series B, ADR (CORFIVALLE) 457,825
300,000 Gran Cadena de Almacenes Colombianos (CADENALCO) 339,960
1,263,501
MEXICO -- 9.8%
600,000 Grupo Financiero del Norte, Series B 613,875
500,000 Grupo Posadas, Series L+ 146,461
60,000 Grupo Radio Centro, ADR 427,500
469,000 Industrias Campos Hermanos, Series B+ 696,762
200,000 Jugos del Valle, Series B 329,643
520,000 Sistema Argos, Series B 246,335
150,000 Transportacion Maritima Mexicana, ADR (TMM) 1,068,750
148,600 Tubos de Acero de Mexico, ADR (TAMSA)+ 1,003,050
4,532,376
PERU -- 14.7%
132,476 Banco Wiese, ADR 877,654
105,175 Cementos Lima Common 1,560,931
267,482 Cerveceria San Juan 271,256
80,088 Credicorp Ltd. 1,321,452
1,063,000 Enrique Ferreyros 1,218,607
368,994 Indeco Peruana+ 183,846
1,091,254 Industrias Pacocha 817,959
76,808 Minsur Trabajo 534,405
6,786,110
TOTAL COMMON STOCKS (COST $30,763,954) 26,216,452
PREFERRED STOCKS -- 25.8%
BRAZIL -- 25.8%
35,000,000 Bombril 582,272
8,000,000 Casa Anglo 499,090
1,200,000 Celesc, Series B+ 910,840
80,000,000 Ceval 1,039,771
32,300,000 Continental 2001 722,069
20,000,000 Cosigua 172,602
1,200,000 Frigobras 898,362
3,750,000 Iochpe-Maxion 1,169,704
8,000,000 Marcopolo, Series B 1,398,368
14,000,000 Metal Leve 247,465
60,000,000 Organizacao Sisternas Aplicas, (OSA) 654,432
1,637,500,000 Randon Participacoes 1,311,022
537,900,000 Refrigeracao Parana 1,269,595
202,000 Renner Herrmann 333,954
10,000,000 Riograndense 176,761
4,160,000 Sao Paulo Alpargatas 568,796
TOTAL PREFERRED STOCKS (COST $16,040,196) 11,955,103
FACE VALUE
SHORT-TERM INSTRUMENTS -- 19.8%
COMMERCIAL PAPER -- 2.5% (COST $1,150,000)
$ 1,150,000 Ford Motor Credit Company, 5.900% due 11/01/1995 1,150,000
U.S. GOVERNMENT AGENCY OBLIGATION -- 17.3% (COST $7,997,502)
8,000,000 Federal Home Loan Bank, Discount Note, 5.620%++ due
11/03/1995 7,997,502
TOTAL SHORT-TERM INSTRUMENTS (COST $9,147,502) 9,147,502
TOTAL INVESTMENTS (COST $55,951,652*) 102.2% 47,319,057
OTHER ASSETS AND LIABILITIES (NET) (2.2) (1,005,532)
NET ASSETS 100.0% $46,313,525
* Aggregate cost for Federal tax purposes.
+ Non-income producing securities.
++ Interest rate represents annualized yield at date of purchase.
ADR -- American Depositary Receipt.
</TABLE>
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
<TABLE>
<CAPTION>
CONTRACT VALUE
VALUE DATE (NOTE 1)
<S> <C> <C> <C>
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS TO BUY
(CONTRACT AMOUNT $8,081)
7,750 Brazilian Cruzeiro 11/01/1995 $8,058
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
LATIN AMERICA GROWTH FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES OCTOBER 31, 1995
<TABLE>
<S> <C> <C>
ASSETS:
Investments, at value (Cost $55,951,652) (Note 1)
See accompanying schedule $47,319,057
Cash and foreign currency (Cost $109,067) 109,066
Unamortized organization costs (Note 5) 127,352
Dividends and interest receivable 43,832
TOTAL ASSETS 47,599,307
LIABILITIES:
Payable for investment securities purchased $958,924
Offering costs payable (Note 4) 64,575
Custodian fees payable (Note 2) 56,500
Investment advisory fee payable (Note 2) 50,912
Administration fee payable (Note 2) 8,448
Accrued Directors' fees and expenses (Note 2) 6,187
Transfer agent fees payable (Note 2) 5,943
Net unrealized depreciation of forward foreign currency contracts 23
Accrued expenses and other payables 134,270
TOTAL LIABILITIES 1,285,782
NET ASSETS $46,313,525
NET ASSETS consist of:
Undistributed net investment income $ 710,807
Accumulated net realized loss on securities, forward foreign currency
contracts and foreign currencies (719,352)
Net unrealized depreciation of securities, forward foreign currency
contracts, foreign currencies and net other assets (8,634,224)
Par value of common stock 4,007
Paid-in capital in excess of par value of common stock 54,952,287
TOTAL NET ASSETS $46,313,525
NET ASSET VALUE:
Net asset value per share
($46,313,525 / 4,007,169 shares of common stock outstanding) $ 11.56
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
LATIN AMERICA GROWTH FUND, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED OCTOBER 31, 1995*
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 1,402,633
Dividends (net of foreign withholding taxes of $59,424) 650,760
TOTAL INVESTMENT INCOME 2,053,393
EXPENSES:
Investment advisory fee (Note 2) $624,310
Custodian fees (Note 2) 181,119
Administration fee (Note 2) 98,082
Legal and audit fees 95,959
Directors' fees and expenses (Note 2) 50,577
Transfer agent fees (Note 2) 40,790
Amortization of organization costs (Note 5) 31,078
Other 90,548
TOTAL EXPENSES 1,212,463
NET INVESTMENT INCOME 840,930
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
(Notes 1 and 3):
Net realized gain/(loss) on:
Securities (719,352)
Forward foreign currency contracts (170,081)
Foreign currencies 32,743
Net realized loss on investments during the period (856,690)
Net change in unrealized depreciation of:
Securities (8,632,595)
Forward foreign currency contracts (23)
Foreign currencies and net other assets (1,606)
Net unrealized depreciation of investments during the period (8,634,224)
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS (9,490,914)
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(8,649,984)
</TABLE>
* The Fund commenced operations on November 7, 1994.
SEE NOTES TO FINANCIAL STATEMENTS.
LATIN AMERICA GROWTH FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PERIOD
ENDED
10/31/95*
<S> <C>
Net investment income $ 840,930
Net realized loss on securities, forward foreign currency contracts
and foreign currencies during the period (856,690)
Net unrealized depreciation of securities, forward foreign currency
contracts, foreign currencies and net other assets during the
period (8,634,224)
Net decrease in net assets resulting from operations (8,649,984)
Net increase in net assets from Fund share transacations (Note 4) 55,799,992
Offering costs charged to paid-in capital (Note 4) (936,491)
Net increase in net assets 46,213,517
NET ASSETS:
Beginning of period 100,008
End of period (including undistributed net investment of $710,807
at October 31, 1995) $ 46,313,525
</TABLE>
* The Fund commenced operations on November 7, 1994.
SEE NOTES TO FINANCIAL STATEMENTS.
LATIN AMERICA GROWTH FUND, INC.
FINANCIAL HIGHLIGHTS
FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD.
<TABLE>
<CAPTION>
PERIOD
ENDED
10/31/95*
<S> <C>
Net Asset Value, beginning of period $ 13.95
Income from investment operations:
Net investment income 0.21
Net realized and unrealized loss on investments (2.37)
Total from investment operations (2.16)
Offering costs charged to paid-in capital (0.23)
Net Asset Value, end of period $ 11.56
Market Value, end of period $ 9.50
Total return+ (36.67)%
Ratios to average net assets/supplemental data:
Net assets, end of period (in 000's) $ 46,314
Ratio of operating expenses to average net assets 2.43%**
Ratio of net investment income to average net assets 1.68%**
Portfolio turnover rate 7%
</TABLE>
* The Fund commenced operations on November 7, 1994. Beginning Net Asset
Value results from initial offering price of $15.00 per share less com-
missions and offering expenses of $1.05 per share.
** Annualized.
+ Total return represents aggregate total return for the period indicated
based on initial market value per share of $15.00 and ending market
value per share of $9.50.
SEE NOTES TO FINANCIAL STATEMENTS.
LATIN AMERICA GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Latin America Growth Fund, Inc. (the "Fund") was incorporated as a
Maryland corporation on June 27, 1994. It is a diversified, closed-end
management investment company registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended. Prior to
September 29, 1995, the Fund was known as Lehman Brothers Latin America
Growth Fund, Inc. The following is a summary of significant accounting
policies consistently followed by the Fund in the preparation of its fi-
nancial statements.
Portfolio Valuation: In valuing the Fund's assets, all securities for
which market quotations are readily available are valued (i) at the last
sale price prior to the time of determination if there was a sale on the
date of determination, (ii) at the mean between the last current bid and
asked prices if there was no sales price on such date and bid and asked
quotations are available, and (iii) at the bid price if there was no sales
price on such date and only bid quotations are available. Publicly traded
government debt securities are typically traded internationally on the
over-the-counter market, and are valued at the mean between the last cur-
rent bid and asked price at the close of business of that market. In in-
stances where a price determined above is deemed not to represent fair
market value, the price is determined in such manner as the Board of Di-
rectors may prescribe. Securities may be valued by independent pricing
services which use prices provided by market-makers or estimates of market
values obtained from yield data relating to instruments or securities with
similar characteristics. Short-term investments having a maturity of 60
days or less are valued at amortized cost, unless the Board of Directors
determines that such valuation does not constitute fair value. In valuing
assets, prices denominated in foreign currencies are converted to U.S.
dollar equivalents at the current exchange rate. Securities for which re-
liable quotations or pricing services are not readily available and all
other securities and assets are valued at fair value in good faith by, or
under procedures established by, the Fund's Board of Directors.
Repurchase Agreements: The Fund may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, the Fund
takes possession of an underlying debt obligation subject to an obligation
of the seller to repurchase, and the Fund to resell, the obligation at an
agreed-upon price and time, thereby determining the yield during the
Fund's holding period. This agreement results in a fixed rate of return
that is not subject to market fluctuations during the Fund's holding pe-
riod. The value of the collateral is at least equal at all times to the
total amount of the repurchase obligations, including interest. In the
event of counterparty default, the Fund has the right to use the collat-
eral to offset losses incurred. There is potential loss to the Fund in the
event the Fund is delayed or prevented from exercising its rights to dis-
pose of the collateral securities, including the risk of a possible de-
cline in the value of the underlying securities during the period while
the Fund seeks to assert its rights. The Fund's investment adviser, acting
under the supervision of the Fund's Board of Directors, reviews the value
of the collateral and the creditworthiness of those banks and dealers with
which the Fund enters into repurchase agreements to evaluate potential
risks.
Foreign Currency: The books and records of the Fund are maintained in
U.S. dollars. Foreign currencies, investments and other assets and liabil-
ities are translated into U.S. dollars at the exchange rates prevailing at
the end of the period, and purchases and sales of investment securities,
income and expenses are translated on the respective dates of such trans-
actions. Unrealized gains and losses which result from changes in foreign
currency exchange rates have been included in the unrealized appreciation/
(depreciation) of currencies and net other assets. Net foreign currency
gains and losses resulting from changes in exchange rates include foreign
currency gains and losses between trade date and settlement date on in-
vestment securities transactions, foreign currency transactions and the
difference between the amounts of interest and dividends recorded on the
books of the Fund and the amounts actually received. The portion of for-
eign currency gains and losses related to fluctuation in the exchange
rates between the initial purchase trade date and subsequent sale trade
date is included in realized gains and losses on investment securities
sold.
Forward Foreign Currency Contracts: The Fund has entered into forward
foreign currency contracts for purposes other than trading in order to re-
duce its exposure to fluctuations in foreign currency exchange on its
portfolio holdings. Forward foreign currency contracts are valued at the
forward rate and are marked-to- market daily. The change in market value
is recorded by the Fund as an unrealized gain or loss. When the contract
is closed, the Fund records a realized gain or loss equal to the differ-
ence between the value of the contract at the time it was opened and the
value at the time it was closed.
The use of forward foreign currency contracts does not eliminate fluc-
tuations in the underlying prices of the Fund's investment securities, but
it does establish a rate of exchange that can be achieved in the future.
Although forward foreign currency contracts limit the risk of loss due to
a decline in the value of the hedged currency, they also limit any poten-
tial gain that might result should the value of the currency increase. In
addition, the Fund could be exposed to risks if the counterparties to the
contracts are unable to meet the terms of their contracts.
Securities Transactions and Investment Income: Securities transactions
are recorded as of the trade date. Realized gains and losses from securi-
ties transactions are recorded on the identified cost basis. Dividend in-
come is recorded on the ex-dividend date. Interest income is recorded on
the accrual basis. Dividend income and interest income may be subject to
foreign withholding taxes.
Dividends and Distributions to Shareholders: The Fund intends to dis-
tribute annually to shareholders substantially all of its net investment
income and to distribute any realized capital gains at least annually. In-
come distributions and capital gain distributions are determined in accor-
dance with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments of income and gains on various investment securities held by
the Fund, timing differences and differing characterization of distribu-
tions made by the Fund.
Federal Income Taxes: The Fund intends to qualify as a regulated in-
vestment company, if such qualification is in the best interest of its
shareholders, by complying with the requirements of the Internal Revenue
Code of 1986, as amended, applicable to regulated investment companies and
by distributing substantially all of its taxable income to its sharehold-
ers. Therefore, no Federal income tax provision is required.
For the period ended October 31, 1995, permanent differences resulting
from book and tax accounting for forward foreign currency contracts and
currency transactions were reclassified from accumulated net realized loss
to undistributed net investment income.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND OTHER RELATED
PARTY TRANSACTIONS
Prior to September 29, 1995, Lehman Brothers Global Asset Management
Limited ("LBGAM"), a wholly-owned subsidiary of Lehman Brothers Holdings
Inc. ("Holdings"), served as the Fund's investment adviser pursuant to an
investment advisory agreement (the "Advisory Agreement"). LBGAM provided
investment advisory services to the Fund and was responsible for the man-
agement of the Fund's portfolio of investments in accordance with the
Fund's investment objectives and policies. Under the Advisory Agreement,
LBGAM was entitled to receive a monthly fee at an annual rate of 1.25% of
the value of the Fund's average weekly net assets.
On June 16, 1995, LBGAM entered into a sub-investment advisory agree-
ment with IDS International Inc. ("IDSI"). Under the sub-investment advi-
sory agreement, LBGAM paid IDSI a monthly fee at an annual rate of 1.125%
of the value of the Fund's average weekly net assets.
As of the close of business on September 28, 1995, IDSI completed the
acquisition of the investment management business related to the Fund. On
September 29, 1995, IDSI succeeded LBGAM as the Fund's investment adviser.
The new investment advisory agreement with IDSI contains substantially all
the same terms and conditions as the investment advisory agreement with LBGAM.
The Fund will pay IDSI on the first business day of each month a fee for the
previous month at the annual rate of 1.25% of the value of the Fund's average
daily net assets.
The Shareholder Services Group, Inc. ("TSSG"), a wholly-owned subsid-
iary of First Data Corporation, serves as the Fund's U.S. Administrator
(the "U.S. Administrator") pursuant to an administration agreement (the
"Administration Agreement"). Under the Administration Agreement, TSSG is
entitled to receive a monthly fee at an annual rate of 0.10% of the value
of the Fund's average weekly net assets, subject to a minimum annual fee
of $100,000. TSSG also acts as the Fund's transfer agent, dividend paying
agent and registrar.
The Fund is required under the laws of Brazil, Chile and Colombia to
appoint a local administrator in connection with the Fund's investments in
each such country. Banco Geral, Boston Inversiones Servicios, and Fiducom-
erico act as local administrators for the Fund in Brazil, Chile and Colom-
bia, respectively, pursuant to arrangements established by Boston Safe De-
posit and Trust Company ("Boston Safe"), the Fund's custodian.
Boston Safe, an indirect wholly-owned subsidiary of Mellon Bank Corpo-
ration, serves as the Fund's custodian and may employ sub-custodians out-
side of the United States.
The Toyo Trust and Banking Company, Limited 4-3, Marunouchi 1-chome,
Chiyoda-ku, Tokyo, Japan, serves as the Fund's dividend paying agent and
shareholder servicing agent for the Fund's common stock that is benefi-
cially owned by investors in Japan.
No officer, director, or employee of IDSI, TSSG or any parent or sub-
sidiary of those corporations receives any compensation from the Fund for
serving as a director or officer of the Fund. The Fund pays each director
who is not a director, an officer or employee of IDSI, TSSG or any of
their affiliates $7,000 per annum plus $1,000 for each Regular or Special
Board Meeting attended in person or by telephone, plus related travel and
out-of-pocket expenses.
3. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of securities, excluding
short-term investments, for the period ended October 31, 1995 aggregated
$49,106,633 and $1,726,782, respectively.
At October 31, 1995, aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost was
$1,876,754 and aggregate gross unrealized depreciation for all securities
in which there is an excess of tax cost over value was $10,509,349.
4. SHARES OF CAPITAL STOCK
The authorized capital stock of the Fund is 100,000,000 shares of Com-
mon Stock ($0.001 par value). Changes in shares outstanding for the Fund
were as follows:
<TABLE>
<CAPTION>
PERIOD ENDED
10/31/95*
SHARES AMOUNT
<S> <C> <C>
Initial issuance of shares** 4,000,000 $55,799,992
Total increase 4,000,000 $55,799,992
</TABLE>
* The Fund commenced operations on November 7, 1994.
** On October 26, 1994, the Fund sold a total of 7,169 shares to Lehman
Brothers Inc. and proceeds to the Fund amounted to $100,008. Proceeds
to the Fund on the public offering of 4,000,000 shares of its Common
Stock amounted to $55,799,992 before offering costs of $936,491. Under-
writing discounts and commissions paid directly to Lehman Brothers Inc.
and other underwriters amounted to $4,200,000.
5. ORGANIZATION COSTS
The Fund bears all costs in connection with its organization and of-
fering, including fees and expenses of registering and qualifying its
shares for distribution under Federal and state securities regulations.
All such costs are being amortized on the straight-line method over a pe-
riod of five years from the commencement of operations of the Fund. In the
event that any of the initial shares of the Funds are redeemed during such
amortization period, the Fund will be reimbursed for any unamortized orga-
nization costs in the same proportion as the number of shares redeemed
bears to the number of initial shares held at the time of redemption.
6. ANTIDISCOUNT MEASURES
If, at any time after the second year following the initial offering
of the Fund's shares of Common Stock, shares of the Fund's Common Stock
publicly trade for a substantial period of time at a significant discount
from the Fund's then current net asset value per share, the Fund's Board
of Directors will consider, at its next regularly scheduled meeting, au-
thorizing various actions designed to reduce the discount. These actions
may include periodic repurchases of shares, tender offers to purchase
shares from all stockholders at net asset value or recommending to share-
holders conversion to an open-end investment company. No assurance can be
given that the Fund's Board of Directors will convert to an open-end in-
vestment company or that repurchases or tender offers will be made or that
if made, they will reduce or eliminate market discount.
7. NON-U.S. SECURITIES
At October 31, 1995, 82.4% of the Fund's net assets were invested in
Latin American securities. There are significant differences between Latin
American and U.S. securities markets, including, among others, greater
price volatility, less liquidity, smaller market capitalization and less
government supervision and regulation in the Latin American securities
markets. Consequently, acquisitions and dispositions by the Fund of secu-
rities in these markets may be inhibited.
8. CAPITAL LOSS CARRYFORWARD
At October 31, 1995, the Fund had for Federal tax purposes unused cap-
ital losses of $719,352 expiring on October 31, 2003, which can be used to
offset future net capital gains.
9. SUBSEQUENT EVENT
As of November 1, 1995, The Shareholder Services Group, Inc. will be
known as First Data Investor Services Group, Inc.
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
NET REALIZED AND UNREALIZED NET DECREASE IN NET ASSETS
NET INVESTMENT INCOME LOSS ON INVESTMENTS RESULTING FROM OPERATIONS
TOTAL TOTAL TOTAL
QUARTER ENDED (000) PER SHARE (000) PER SHARE (000) PER SHARE
<S> <C> <C> <C> <C> <C> <C>
January 31, 1995* $264 $0.07 $(3,381) $(0.85) $(3,117) $(0.78)
April 30, 1995 379 0.09 (824) (0.20) (445) (0.11)
July 31, 1995 170 0.04 (523) (0.13) (353) (0.09)
October 31, 1995 28 0.01 (4,763) (1.19) (4,735) (1.18)
</TABLE>
* For the period November 7, 1994 through January 31, 1995.
LATIN AMERICA GROWTH FUND, INC.
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders and Directors of Latin America Growth Fund, Inc.:
We have audited the accompanying statement of assets and liabilities
of Latin America Growth Fund, Inc., including the schedule of portfolio
investments, as of October 31, 1995 and the related statements of opera-
tions and changes in net assets and financial highlights for the period
from November 7, 1994 (commencement of operations) to October 31, 1995.
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 audit.
We conducted our audit 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 fi-
nancial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclo-
sures in the financial statements. Our procedures included confirmation of
securities owned as of October 31, 1995, by correspondence with the custo-
dian and brokers, or other appropriate auditing procedures where replies
from brokers were not received. An audit also includes assessing the ac-
counting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We be-
lieve that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights re-
ferred to above present fairly, in all material respects, the financial
position of Latin America Growth Fund, Inc., at October 31, 1995, the re-
sults of its operations, the changes in its net assets and financial high-
lights for the period from November 7, 1994 (commencement of operations)
to October 31, 1995, in conformity with generally accepted accounting
principles.
Ernst & Young LLP
Boston, Massachusetts
December 4, 1995
LATIN AMERICA GROWTH FUND, INC.
ADDITIONAL INFORMATION (unaudited)
DIVIDEND REINVESTMENT PLAN
The Fund intends to distribute annually to shareholders substantially
all of its net investment income, and to distribute any net realized capi-
tal gains at least annually. Net investment income for this purpose is in-
come other than net realized long and short-term capital gains net of ex-
penses. Pursuant to the Dividend Reinvestment Plan (the "Plan"), share-
holders whose shares of Common Stock are registered in their own names
will be deemed to have elected to have all distributions automatically re-
invested by First Data Investor Services Group, Inc. ("FDISG") (formerly
known as The Shareholder Services Group, Inc.) (the "Plan Agent") in Fund
shares pursuant to the Plan unless such shareholders elect to receive dis-
tributions in cash. Shareholders who elect to receive distributions in
cash will receive all distributions in cash paid by check in U.S. dollars
mailed directly to the shareholder by FDISG, as dividend paying agent. In
the case of shareholders, such as banks, brokers or nominees, that hold
shares for others who are beneficial owners, the Plan Agent will adminis-
ter the Plan on the basis of the number of shares certified from time to
time by the shareholders as representing the total amount registered in
such shareholders' names and held for the account of beneficial owners
that have not elected to receive distributions in cash. Investors that own
shares registered in the name of a bank, broker or other nominee should
consult with such nominee as to participation in the Plan through such
nominee, and may be required to have their shares registered in their own
names in order to participate in the Plan.
The Plan Agent serves as agent for the shareholders in administering
the Plan. If the Directors of the Fund declare an income dividend or a
capital gains distribution payable either in the Fund's Common Stock or in
cash, non-participants in the Plan will receive cash and participants in
the Plan will receive Common Stock, to be issued by the Fund or purchased
by the Plan Agent in the open market, as provided below. If the market
price per share on the valuation date equals or exceeds net assets per
share on that date, the Fund will issue new shares to participants at net
asset value, provided, however, if the net asset value is less than 95% of
the market price on the valuation date, then such shares will be issued at
95% of the market price. The valuation date will be the dividend or dis-
tribution payment date or, if that date is not a trading day on the ex-
change on which the Fund's shares are listed, the next preceding trading
day. If net asset value exceeds the market price of Fund shares at such
time, or if the Fund should declare an income dividend or capital gains
distribution payable only in cash, the Plan Agent will, as agent for the
participants, buy Fund shares in the open market, for the participant's
accounts on, or shortly after, the payment date. If, before the Plan Agent
has completed its purchases, the market price exceeds the net asset value
of a Fund share, the average per share purchase price paid by the Plan
Agent may exceed the net asset value of the Fund's shares, resulting in
the acquisition of fewer shares than if the distribution had been paid in
shares issued by the Fund on the dividend payment date. Because of the
foregoing difficulty with respect to open-market purchases, the Plan pro-
vides that if the Plan Agent is unable to invest the full dividend amount
in open-market purchases during the purchase period or if the market dis-
count shifts to a market premium during the purchase period, the Plan
Agent will cease making open-market purchases and will receive the unin-
vested portion of the dividend amount in newly issued shares at the close
of business on the last purchase date.
The Plan Agent maintains all shareholder accounts in the Plan and fur-
nishes written confirmations of all transactions in the account, including
information needed by shareholders for personal and U.S. Federal 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.
There is no charge to participants for reinvesting dividends or capi-
tal gains distributions. The Plan Agent's fees for the handling of the re-
investment of 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 distribu-
tions payable either in stock or in cash. However, each participant will
pay a pro rata share of brokerage commissions incurred with respect to the
Plan Agent's open market purchases in connection with the reinvestment of
dividends and capital gains distributions made by the participant. Broker-
age 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 pro-rating the lower commission thus at-
tainable.
The receipt of dividends and distributions under the Plan will not re-
lieve participants of any U.S. Federal income tax which may be payable on
such dividends or distributions.
Experience under the Plan may indicate that changes in the Plan are
desirable. Accordingly, the Fund and the Plan Agent reserve the right to
terminate the Plan as applied to any dividend or distribution paid subse-
quent to notice of the termination sent to members of the Plan at least
thirty days before the record date for such dividend or distribution. The
Plan also may be amended by the Fund or Plan Agent, but (except when nec-
essary or appropriate to comply with applicable law, rules of policies of
a regulatory authority) only by at least thirty days' written notice to
participants in the Plan. All correspondence concerning the Plan should be
directed to the Plan Agent at P.O. Box 1376, Boston, Massachusetts 02104.
RESULTS OF SHAREHOLDER MEETING
On September 28, 1995, the Fund held a Special Meeting of Stockholders
to consider (1) the approval of a new investment advisory agreement be-
tween the Fund and IDSI containing the same terms and conditions, includ-
ing the fee charged to the Fund, as the Fund's previous investment advi-
sory agreement with LBGAM and ratification of the sub-investment advisory
agreement among LBGAM, IDSI and the Fund pursuant to which IDSI acted as
sub-investment adviser to the Fund since June 16, 1995, and (2) the ap-
proval of an amendment to the Fund's charter to change the name of the
Fund. Both proposals were approved by the Fund's shareholders. The results
of each proposal are as follows:
PROPOSAL 1: APPROVAL OF NEW INVESTMENT ADVISORY AGREEMENT.
<TABLE>
<CAPTION>
% OF SHARES % OF SHARES
VOTED OUTSTANDING
<S> <C> <C> <C>
Voted:
For 2,015,087 95.19% 50.29%
Against 41,865 1.98% 1.04%
Abstain 59,998 2.83% 1.50%
</TABLE>
PROPOSAL 2: APPROVAL OF AMENDMENT TO THE FUND'S CHARTER CHANGING THE
NAME OF THE FUND.
<TABLE>
<CAPTION>
% OF SHARES % OF SHARES
VOTED OUTSTANDING
<S> <C> <C> <C>
Voted:
For 3,526,926 97.81% 88.01%
Against 26,887 .75% .67%
Abstain 52,003 1.44% 1.30%
</TABLE>
LATIN AMERICA GROWTH FUND, INC.
One Exchange Place
Boston, MA 02109
DIRECTORS AND OFFICERS INVESTMENT ADVISER
Peter L. Lamaison IDS International Inc.
Chairman of the Board 11th Floor Dashwood House
and President 69 Old Broad Street
London EC2M 1QS
Philip H. Didriksen, Jr. United Kingdom
Director
INFORMATION NUMBERS
Rodman L. Drake
Director 1-800-310-8239
1-612-671-2334
Kathleen C. Holmes-McClave
Director ADMINISTRATOR AND
TRANSFER AGENT
Peer Pedersen
Director First Data Investor Services Group, Inc.
One Exchange Place
Ian King Boston, MA 02109-2873
Vice President
and Investment Officer SHAREHOLDER SERVICE NUMBER
Patricia L. Bickimer, Esq. 1-800-331-1710
Secretary
INDEPENDENT AUDITORS
Michael Kardok
Treasurer Ernst & Young LLP
200 Clarendon Street
FUND COUNSEL Boston, MA 02116
Shereff, Friedman, Hoffman & Goodman CUSTODIAN
919 Third Avenue
New York, NY 10022 Boston Safe Deposit & Trust Company
One Boston Place
Boston, MA 02108
