THE LATIN AMERICA INVESTMENT FUND, INC.
OFFER TO PURCHASE FOR CASH UP TO 3,125,120 OF ITS ISSUED
AND OUTSTANDING SHARES AT 95% OF NET ASSET VALUE PER SHARE
THE OFFER WILL EXPIRE AT 5:00 P.M. EASTERN TIME ON
OCTOBER 20, 2000, UNLESS THE OFFER IS EXTENDED.
TO THE SHAREHOLDERS OF THE LATIN AMERICA INVESTMENT FUND, INC.:
The Latin America Investment Fund, Inc., a non-diversified, closed-end
management investment company incorporated in Maryland (the "Fund"), is offering
to purchase up to 3,125,120 of its issued and outstanding shares of Common
Stock, par value $0.001 per share (the "Shares") prior to the merger transaction
in which The Latin America Equity Fund, Inc. ("LAQ") will merge with and into
the Fund. After the merger, the Fund, which technically will be the surviving
corporation in the merger, will change its name to "The Latin America Equity
Fund, Inc." and will adopt LAQ's investment objective and policies. The offer is
conditioned upon the approval of the merger by shareholders of both funds and
the satisfaction or waiver of all conditions to the consummation of the merger.
The offer is for cash at a price equal to 95% of the net asset value ("NAV") per
Share determined as of the close of the regular trading session of the New York
Stock Exchange, the principal market in which the Shares are traded (the
"NYSE"), on the date the offer expires, and is upon the terms and subject to the
conditions set forth in this Offer to Purchase and the related Letter of
Transmittal (which together with any amendments or supplements thereto
collectively constitute the "Offer"). The Offer will expire at 5:00 P.M. Eastern
Time on October 20, 2000, unless extended. The Shares are traded on the NYSE
under the symbol "LAM". The NAV as of the close of the regular trading session
of the NYSE on September 5, 2000 was $18.66 per Share. During the pendency of
the Offer, current NAV quotations can be obtained from Credit Suisse Asset
Management--Investor Relations, by calling (800) 293-1232, or at
www.cefsource.com, a website providing information for closed-end funds managed
by CSAM. Tendering shareholders will not be obliged to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Fund pursuant
to the Offer. The Fund will pay all charges and expenses of EquiServe Trust
Company, N.A. (the "Depositary") and Shareholders Communication Corporation (the
"Information Agent"). The Fund has mailed materials for the Offer to record
holders on or about September 8, 2000.
THIS OFFER IS SUBJECT TO CERTAIN CONDITIONS. SEE SECTION 4.
IMPORTANT INFORMATION
Shareholders who desire to tender their Shares should either: (1) properly
complete and sign the Letter of Transmittal (or a copy or facsimile thereof),
provide thereon the original of any required signature guarantee(s) and mail or
deliver it together with the Shares (in proper certificated or uncertificated
form) and any other documents required by the Letter of Transmittal; or
(2) request their broker, dealer, commercial bank, trust company or other
nominee to effect the transaction on their behalf. Shareholders who desire to
tender Shares registered in the name of such a firm must contact that firm to
effect a tender on their behalf. Tendering shareholders will not be obligated to
pay brokerage commissions in connection with their tender of Shares, but they
may be charged a fee by such a firm for processing the tender(s). The Fund
reserves the absolute right to reject tenders determined not to be in
appropriate form.
If you do not wish to tender your Shares, you need not take any action.
NEITHER THE FUND NOR ITS BOARD OF DIRECTORS NOR CREDIT SUISSE ASSET
MANAGEMENT, LLC, THE FUND'S INVESTMENT ADVISOR ("CSAM"), MAKES ANY
RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING SHARES. NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE FUND, ITS BOARD OF DIRECTORS OR CSAM AS TO WHETHER SHAREHOLDERS
SHOULD TENDER OR REFRAIN FROM TENDERING SHARES PURSUANT TO THE OFFER OR TO MAKE
ANY REPRESENTATION OR TO GIVE ANY INFORMATION IN CONNECTION WITH THE OFFER OTHER
THAN AS CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. IF MADE OR GIVEN, ANY
SUCH RECOMMENDATION, REPRESENTATION OR INFORMATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE FUND, ITS BOARD OF DIRECTORS OR CSAM. SHAREHOLDERS
ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN THE OFFER, CONSULT THEIR OWN
INVESTMENT AND TAX ADVISERS AND MAKE THEIR OWN DECISIONS WHETHER TO TENDER OR
REFRAIN FROM TENDERING THEIR SHARES.
EQUISERVE TRUST COMPANY, N.A.,
DEPOSITARY
TELEPHONE NUMBER: (800) 730-6001
BY FIRST CLASS MAIL: BY HAND:
Securities Transfer & Reporting
EquiServe Trust Company, N.A. Services, Inc.
Attn: Corporate Actions c/o EquiServe Trust Company, N.A.
P.O. Box 9573 100 William Street, Galleria
Boston, MA 02205-9573 New York, NY 10038
BY REGISTERED, CERTIFIED OR
EXPRESS MAIL OR OVERNIGHT COURIER:
EquiServe Trust Company, N.A.
Attn: Corporate Actions
40 Campanelli Drive
Braintree, MA 02184
SHAREHOLDER COMMUNICATIONS CORPORATION,
INFORMATION AGENT
TELEPHONE NUMBER: (800) 498-2621
2
TABLE OF CONTENTS
PAGE
----
SUMMARY TERM SHEET.......................................... 4
1. Price; Number of Shares........................... 7
2. Background to the Offer........................... 7
3. Purpose of the Offer; Plans or Proposals of the
Fund............................................. 8
4. Certain Conditions of the Offer................... 9
5. Procedures for Tendering Shares................... 10
a. Proper Tender of Shares........................ 10
b. Signature Guarantees and Method of Delivery.... 10
c. Book-Entry Delivery............................ 11
d. Guaranteed Delivery............................ 12
e. Determinations of Validity..................... 12
f. United States Federal Income Tax Withholding... 13
6. Withdrawal Rights................................. 13
7. Payment for Shares................................ 13
8. Source and Amount of Funds........................ 14
9. Price Range of Shares; Dividends/Distributions.... 15
10. Selected Financial Information.................... 15
11. Interest of Directors, Executive Officers and
Certain Related Persons.......................... 18
12. Certain Effects of the Offer and the Merger....... 18
13. Certain Information about the Fund................ 19
14. Additional Information............................ 19
15. Certain United States Federal Income Tax
Consequences..................................... 19
16. Amendments; Extension of Tender Period;
Termination...................................... 21
17. Miscellaneous..................................... 21
3
SUMMARY TERM SHEET
(Section references are to the Offer to Purchase)
This Summary Term Sheet highlights certain information concerning this tender
offer. To understand the offer fully and for a more complete discussion of the
terms and conditions of the offer, you should read carefully the entire Offer to
Purchase and the related Letter of Transmittal.
WHAT IS THE TENDER OFFER?
- - The Latin America Investment Fund, Inc. is offering to purchase up to
3,125,120 of its shares of Common Stock for cash at a price per share equal
to 95% of the per share net asset value as of the close of the regular
trading session of the NYSE on October 20, 2000 (or, if the offer is
extended, on the date to which the offer is extended) upon specified terms
and subject to conditions as set forth in the tender offer documents.
WHY IS THE FUND MAKING THIS TENDER OFFER?
- - In May 2000, the Board of Directors of the Fund, in recognition of the fact
that the Fund's shares have traded at a discount to their net asset value and
after considering analyses and advice from PaineWebber Incorporated, its
financial advisor, determined that it was in the best interests of the Fund
to initiate this tender offer prior to a merger transaction in which LAQ will
merge with and into the Fund. After the merger, the Fund, which technically
will be the surviving corporation in the merger, will change its name to "The
Latin America Equity Fund, Inc." and will adopt LAQ's investment objective
and policies. THE MERGER MUST BE APPROVED BY THE SHAREHOLDERS OF BOTH FUNDS
AND ALL CONDITIONS TO THE CONSUMMATION OF THE MERGER MUST BE SATISFIED OR
WAIVED; IN THE EVENT THAT THE MERGER IS NOT SO APPROVED AND THOSE CONDITIONS
ARE NOT SATISFIED OR WAIVED, THE FUND WILL NOT CONSUMMATE THIS TENDER OFFER.
SEE SECTION 3.
WHEN WILL THE TENDER OFFER EXPIRE, AND MAY THE OFFER BE EXTENDED?
- - The tender offer will expire at 5:00 P.M. Eastern Time on October 20, 2000,
unless extended. The Fund may extend the period of time the offer will be
open by issuing a press release or making some other public announcement by
no later than the next business day after the offer otherwise would have
expired. See Section 16.
WHAT IS THE NET ASSET VALUE PER FUND SHARE AS OF A RECENT DATE?
- - As of September 5, 2000, the net asset value per share was $18.66. See
Section 9 of the Offer to Purchase for details. During the pendency of the
tender offer, current net asset value quotations can be obtained from Credit
Suisse Asset Management--Investor Relations, by calling (800) 293-1232, or at
www.cefsource.com.
WILL THE NET ASSET VALUE BE HIGHER OR LOWER ON THE DATE THAT THE PRICE TO BE
PAID FOR TENDERED SHARES IS TO BE DETERMINED?
- - No one can accurately predict the net asset value at a future date.
HOW DO I TENDER MY SHARES?
- - If your shares are registered in your name, you should obtain the tender
offer materials, including the Offer to Purchase and the related Letter of
Transmittal, read them, and if you should decide to tender, complete a Letter
of Transmittal and submit any other documents required by the Letter of
Transmittal. These materials must be received by EquiServe Trust Company,
N.A., the Depositary, in proper form before 5:00 P.M. Eastern Time on
October 20, 2000 (unless the tender offer is extended by the Fund in which
case the new deadline will be as stated in the public announcement of the
extension). If your shares are held by a broker, dealer, commercial bank,
trust company or other nominee (E.G., in "street name"),
4
you should contact that firm to obtain the package of information necessary
to make your decision, and you can only tender your shares by directing that
firm to complete, compile and deliver the necessary documents for submission
to the Depositary. See Section 5.
MAY I WITHDRAW MY SHARES AFTER I HAVE TENDERED THEM AND, IF SO, BY WHEN?
- - Yes, you may withdraw your shares at any time prior to 5:00 P.M. Eastern Time
on October 20, 2000 (or if the offer is extended, at any time prior to
5:00 P.M. Eastern Time on the new expiration date). Withdrawn shares may be
re-tendered by following the tender procedures before the offer expires
(including any extension period). In addition, if shares tendered have not by
then been accepted for payment, you may withdraw your tendered shares at any
time after November 2, 2000. See Section 6.
HOW DO I WITHDRAW TENDERED SHARES?
- - A written notice of withdrawal of tendered shares must be timely received by
EquiServe Trust Company, N.A., which specifies the name of the shareholder
who tendered the shares, the number of shares being withdrawn (which must be
all of the shares tendered) and, as regards share certificates which
represent tendered shares that have been delivered or otherwise identified to
EquiServe Trust Company, N.A., the name of the registered owner of such
shares if different than the person who tendered the shares. See Section 6.
MAY I PLACE ANY CONDITIONS ON MY TENDER OF SHARES?
- - No.
WHAT IF MORE THAN 3,125,120 SHARES ARE TENDERED (AND NOT TIMELY WITHDRAWN)?
- - The Fund will purchase duly tendered shares from tendering shareholders
pursuant to the terms and conditions of the tender offer on a pro rata basis
(disregarding fractions) in accordance with the number of shares tendered by
each shareholder (and not timely withdrawn), unless the Fund determines not
to purchase any shares. The Fund's present intention, if the tender offer is
oversubscribed, is not to purchase more than 3,125,120 shares. See
Section 1.
IF I DECIDE NOT TO TENDER, HOW WILL THE TENDER OFFER AFFECT THE FUND SHARES I
HOLD?
- - Immediately following the tender offer, The Latin America Equity Fund will be
merged into the Fund. After the merger, the Fund, which technically will be
the surviving corporation in the merger, will change its name to "The Latin
America Equity Fund, Inc." and will adopt LAQ's investment objective and
policies.
DOES THE FUND INTEND TO CONDUCT ANOTHER SELF-TENDER OFFER?
- - The Board of Directors of the Fund has approved the overall terms of a
self-tender program that the Fund intends to launch in the calendar year
2001, which terms include the following: (i) the Fund will make a tender
offer to acquire at least 15% of its outstanding shares during each calendar
year of the program; and (ii) the per share purchase price will be at least
95% of the Fund's net asset value per share. The implementation of this
program is conditioned on approval of the merger.
DOES THE FUND HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
- - Yes. To finance the purchase of any tendered shares, the Fund anticipates
that funds will first be derived from any cash on hand and then from the
proceeds from the sale of portfolio securities held by the Fund. The Fund is
authorized to borrow money for temporary or emergency purposes, and to the
extent the Fund does not have sufficient resources through cash on hand and
the disposition of assets to purchase shares in the tender offer, it intends
to finance a portion of the offer through temporary borrowing. See
Section 8.
5
IF SHARES I TENDER ARE ACCEPTED BY THE FUND, WHEN WILL PAYMENT BE MADE?
- - It is contemplated, subject to change, that payment for tendered shares, if
accepted, will be made on or about October 25, 2000. See Section 7.
IS MY SALE OF SHARES IN THE TENDER OFFER A TAXABLE TRANSACTION?
- - For most shareholders, yes. All U.S. shareholders (other than tax-exempt
shareholders) who sell shares in the tender offer are expected to recognize
gain or loss for U.S. federal income tax purposes equal to the difference
between the cash they receive for the shares sold and their adjusted basis in
the shares. The sale date for tax purposes will be the date the Fund accepts
shares for purchase. See Section 15 for details, including the nature of the
income or loss and the differing rules for U.S. and non-U.S. shareholders.
Please consult your tax advisor as well.
IS THE FUND REQUIRED TO COMPLETE THE TENDER OFFER AND PURCHASE ALL SHARES
TENDERED UP TO THE NUMBER OF SHARES TENDERED FOR?
- - Yes, unless the merger between the Fund and The Latin America Equity Fund is
not approved by the shareholders of both funds and all of the conditions to
the merger are satisfied or waived, or unless certain other conditions
described in Section 4 are not satisfied.
IS THERE ANY REASON SHARES TENDERED WOULD NOT BE ACCEPTED?
- - In addition to those circumstances described in Section 4 in which the Fund
is not required to accept tendered shares, the Fund has reserved the right to
reject any and all tenders determined by it not to be in appropriate form.
Tenders will be rejected if they do not include original signature(s) or the
original of any required signature guarantee(s).
HOW WILL TENDERED SHARES BE ACCEPTED FOR PAYMENT?
- - Properly tendered shares, up to the number tendered for, will be accepted for
payment by a determination of the Fund's Board of Directors followed by
notice of acceptance to EquiServe Trust Company, N.A. which is thereafter to
make payment as directed by the Fund with funds to be deposited with it by
the Fund. See Section 7.
WHAT ACTION NEED I TAKE IF I DECIDE NOT TO TENDER MY SHARES?
- - None.
DOES MANAGEMENT ENCOURAGE SHAREHOLDERS TO PARTICIPATE IN THE TENDER OFFER, AND
WILL THEY PARTICIPATE IN THE TENDER OFFER?
- - No. Neither the Fund, its Board of Directors nor the Fund's investment
advisor is making any recommendation to tender or not to tender shares in the
tender offer. No director or officer of the Fund intends to tender shares.
See Section 11.
HOW DO I OBTAIN INFORMATION?
- - Questions and requests for assistance should be directed to Credit Suisse
Asset Management--Investor Relations by calling (800) 293-1232, or at
www.cefsource.com. Requests for additional copies of the Offer to Purchase,
the Letter of Transmittal and all other tender offer documents should be
directed to Shareholder Communications Corporation, the Information Agent for
the tender offer, toll free at (800) 498-2621. If you do not own shares
directly, you should obtain this information and the documents from your
broker, dealer, commercial bank, trust company or other nominee, as
appropriate.
6
1. PRICE; NUMBER OF SHARES. Upon the terms and subject to the conditions
of the Offer, the Fund will accept for payment and purchase for cash up to
3,125,120 of its issued and outstanding Shares that are properly tendered prior
to 5:00 P.M. Eastern Time on October 20, 2000 (and not withdrawn in accordance
with Section 6). The Fund reserves the right to amend, extend or terminate the
Offer. See Sections 4 and 16. The Fund will not be obligated to purchase Shares
pursuant to the Offer under certain circumstances. See Section 4. The later of
October 20, 2000 or the latest date to which the Offer is extended is
hereinafter called the "Expiration Date." The purchase price of the Shares will
be 95% of their NAV per Share determined as of the close of the regular trading
session of the NYSE on the Expiration Date. The Fund will not pay interest on
the purchase price under any circumstances. The NAV as of the close of the
regular trading session of the NYSE on September 5, 2000 was $18.66 per Share.
During the pendency of the Offer, current NAV quotations can be obtained from
Credit Suisse Asset Management--Investor Relations, by calling (800) 293-1232,
or at www.cefsource.com.
The Offer is being made to all shareholders and is not conditioned upon
shareholders tendering in the aggregate any minimum number of Shares.
If more than 3,125,120 Shares are duly tendered pursuant to the Offer (and
not withdrawn as provided in Section 6), unless the Fund determines not to
purchase any Shares, the Fund will purchase Shares from tendering shareholders,
in accordance with the terms and conditions specified in the Offer, on a pro
rata basis (disregarding fractions), in accordance with the number of Shares
duly tendered by or on behalf of each shareholder (and not so withdrawn). The
Fund does not contemplate extending the Offer and increasing the number of
Shares covered thereby by reason of more than 3,125,120 Shares having been
tendered.
On September 5, 2000, there were 6,250,239 Shares issued and outstanding,
and there were 463 holders of record of Shares. Certain of these holders of
record were brokers, dealers, commercial banks, trust companies and other
institutions that held Shares in nominee name on behalf of multiple beneficial
owners.
2. BACKGROUND TO THE OFFER. The Fund's shares have generally traded at a
discount to their net asset value per share since shortly after its commencement
of operations. The Board of Directors of the Fund (the "Board") has, over the
years, discussed the significance of the existence of the discount to net asset
value at which the Fund's shares have traded on the NYSE and the impact on
shareholders of the discount. The Board has discussed and considered various
alternative strategies to address the discount, including instituting share
repurchases, combining with other funds, converting to an open-end format, or
liquidating. The Board has, however, consistently concluded that it was in the
best interests of the Fund and its shareholders to maintain the current
closed-end format, because, in the view of the Board and of CSAM, the closed-end
format is the most appropriate investment vehicle for participating in the Latin
American equities markets. In CSAM's view, many attractive equity investment
opportunities in Latin America have been and continue to be found in the
small-capitalization and less liquid sectors of those markets. The Board
believes that the long-term performance of the Fund supports this view.
In October 1998, the Board engaged in a share repurchase program of up to
15% of the Fund's outstanding common stock. The Board authorized another share
repurchase program for up to an additional 15% of the Fund's outstanding common
stock in October 1999 after repurchasing the full amount of shares authorized
under the first share repurchase program. Both share repurchase programs were
intended to provide additional liquidity to those shareholders who elected to
sell their shares and to enhance the net asset value of the shares held by
shareholders who maintained their investment.
During the past few years, the Fund has received several shareholder
proposals expressing concern regarding the discount. In April 2000, the Fund and
The Latin America Equity Fund included the following shareholder proposal from
Walter S. Baer in their joint proxy statement in connection with the 2000 annual
meeting of their respective shareholders:
"RESOLVED: The shareholders request that, within sixty days, the Fund's
Board of Directors present for shareholder approval a program that will permit
shareholders to realize net asset value for their shares."
7
Mr. Baer stated that shareholders of each fund had suffered from mediocre
performance and the large discount from net asset value. Mr. Baer cited the
following four programs in which shareholders could redeem shares at net asset
value:
- commence an unlimited, one-time self tender offer at net asset value,
- convert the Fund to an open-end fund,
- merge the Fund with an open-end fund, or
- liquidate the Fund.
The joint proxy statement of the Fund and The Latin America Equity Fund
included each Board of Director's recommendation against Mr. Baer's proposal and
an explanation of each Board of Director's reasons for such recommendation. At
the meeting of each fund's shareholders on May 23, 2000, Mr. Baer's proposal was
approved by a wide margin.
On June 2, 2000, the Fund received the following proposal from Walter S.
Baer for inclusion in the Fund's proxy statement for its next meeting of
shareholders:
"RESOLVED: The investment advisory agreement between Credit Suisse Asset
Management (CSAM) and the Fund shall be promptly terminated unless, within 45
days after passage of this proposal, the Fund's Board of Directors presents for
shareholder approval and supports a proposal to open-end the Fund or otherwise
permit shareholders of the Fund to redeem their shares at Net Asset Value
(NAV)."
The Fund has included the foregoing proposal in its proxy statement in
connection with the special meeting of shareholders scheduled to be held on
October 10, 2000 at which the shareholders will be asked to vote on a proposed
merger transaction in which The Latin America Equity Fund will be merged with
and into the Fund (the "Merger"). After the merger, the Fund, which technically
will be the surviving corporation in the merger, will change its name to "The
Latin America Equity Fund, Inc." and will adopt LAQ's investment objective and
policies. Such proxy statement includes the Board's recommendation against
Mr. Baer's proposal and an explanation of the Board's reasons for such
recommendation. In summary, the Board believes that the combination of the Fund
with The Latin America Equity Fund pursuant to the proposed Merger and the
implementation by the Fund of a self-tender program (as further discussed in
Item 3 below) following the Merger achieves a proper balance between the ability
of the Fund to pursue its revised investment objective and the desire of certain
shareholders to sell their shares at a price approximating net asset value.
3. PURPOSE OF THE OFFER; PLANS OR PROPOSALS OF THE FUND. In the context of
the Board's ongoing consideration of the impact of the market price discount on
the Fund and its shareholders, the Board retained PaineWebber Incorporated to
assist in this process and requested that PaineWebber evaluate possible
alternatives that would address these concerns. The Board further requested
that, in evaluating the possible alternatives, PaineWebber take into
consideration the interests of all shareholders.
The alternatives available to the Fund, including the full range of
alternatives that has been reviewed in the past discussions of the discount
issue, were considered at meetings of the Board held on February 8, 2000,
April 6, 2000, May 8, 2000 and July 24, 2000. After consideration of these
alternatives, PaineWebber proposed, and the Board has approved, a two-step
transaction pursuant to which the Fund would first make a tender offer for up to
50% of its common stock and then, immediately following the tender offer, would
consummate the Merger. The full Board, after consideration of the potential
benefits of the Merger to the shareholders of the Fund and the expenses expected
to be incurred by the Fund in connection with the Merger, has unanimously
determined that:
- the interests of the existing shareholders of the Fund will not be
diluted as a result of the proposed Merger, and
- the proposed Merger is in the best interests of the Fund.
Following consummation of the Merger, the Fund, which technically will be
the surviving corporation in the merger, will change its name to "The Latin
America Equity Fund, Inc." and will adopt LAQ's investment
8
objective and policies. The Fund then intends to launch a self-tender program in
the calendar year 2001 under the following terms: (i) The Fund will make a
tender offer to acquire at least 15% of its outstanding shares during each
calendar year of the program; and (ii) the per share purchase price will be at
least 95% of The Fund's net asset value per share. While the precise terms of
any self-tender following the Merger have not been fixed, the current
expectation is that the self-tenders would not substantially exceed 15% of the
Fund's outstanding shares on an annual basis. Implementation of the program is
conditioned on approval and consummation of the Merger. The Board of Directors
of the Fund has reserved the right to decide on the timing and the terms of
specific tenders, subject to adherence to the terms described in the preceding
sentence, and intends to continue the self-tender program indefinitely, subject
to changes in economic or market conditions or other factors. For example, a
sustained reduction in the market discount at which the Fund's shares are
trading, a risk of material adverse tax consequences or a risk of the Fund
becoming subject to delisting may lead the Fund's Board of Directors to conclude
in the future that it is appropriate to suspend the self-tender program. In
addition, the self-tender program is likely to reduce the Fund's asset levels
over time. Absent substantial appreciation in the Fund's portfolio or
opportunities to raise additional funds, this could lead to higher expense
ratios, the absence of reasonable diversification of investment opportunities,
or other factors that adversely affect the Fund and, possibly, the continued
viability of the Fund as a closed-end fund. the Fund's Board of Directors will
re-evaluate the program from time to time in light of its effects on the Fund.
Except as set forth above and except as a consequence of the Merger with The
Latin America Equity Fund, the Fund does not have any present plans or proposals
and is not engaged in any negotiations that relate to or would result in
(a) any extraordinary transaction, such as a merger, reorganization or
liquidation, involving the Fund or any of its subsidiaries; (b) other than in
connection with transactions in the ordinary course of the Fund's operations and
for purposes of funding the Offer, any purchase, sale or transfer of a material
amount of assets of the Fund or any of its subsidiaries; (c) any material change
in the Fund's present dividend rate or policy, or indebtedness or capitalization
of the Fund; (d) any change in the composition of the Board or management of the
Fund, including, but not limited to, any plans or proposals to change the number
or the term of members of the Board, to fill any existing vacancies on the Board
or to change any material term of the employment contract of any executive
officer; (e) any other material change in the Fund's corporate structure or
business, including any plans or proposals to make any changes in the Fund's
investment policy for which a vote would be required by Section 13 of the
Investment Company Act of 1940, as amended (the "1940 Act"); (f) any class of
equity securities of the Fund to be delisted from a national securities exchange
or to cease to be authorized to be quoted in an automated quotations system
operated by a national securities association; (g) any class of equity
securities of the Fund becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Exchange Act; (h) the suspension of the
Fund's obligation to file reports pursuant to Section 15(d) of the Exchange Act;
(i) the acquisition by any person of additional securities of the Fund, or the
disposition of securities of the Fund; or (j) any changes in the Fund's charter,
bylaws or other governing instruments or other actions that could impede the
acquisition of control of the Fund.
4. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of
the Offer, the Fund will not purchase shares pursuant to the Offer if (a) the
Merger is not approved by the shareholders of both the Fund and The Latin
America Equity Fund; (b) any other condition to consummation of the Merger is
not satisfied or waived; (c) the Fund would not be able to liquidate portfolio
securities in an orderly manner and consistent with the Fund's investment
objective and policies in order to purchase Shares tendered pursuant to the
Offer; (d) there is any (i) material legal action or proceeding instituted or
threatened which challenges, in the Board's judgment, the Offer or otherwise
materially adversely affects the Fund, (ii) suspension of or limitation on
prices for trading securities generally on the NYSE or any foreign exchange on
which portfolio securities of the Fund are traded, (iii) declaration of a
banking moratorium by Federal, state or foreign authorities or any suspension of
payment by banks in the United States, New York State or in a foreign country
which is material to the Fund, (iv) limitation which affects the Fund or the
issuers of its portfolio securities imposed by Federal, state or foreign
authorities on the extension of credit by lending institutions or on the
exchange of foreign currencies, (v) commencement of war, armed hostilities or
other international or national calamity directly or indirectly involving the
United States or any foreign country
9
that is material to the Fund, or (vi) other event or condition which, in the
Board's judgment, would have a material adverse effect on the Fund or its
shareholders if Shares tendered pursuant to the Offer were purchased; or
(e) the Board determines that effecting the transaction would constitute a
breach of their fiduciary duty owed the Fund or its shareholders. The Board may
modify these conditions in light of experience.
The foregoing conditions are for the Fund's sole benefit and may be asserted
by the Fund regardless of the circumstances giving rise to any such condition
(including any action or inaction of the Fund), and any such condition may be
waived by the Fund, in whole or in part, at any time and from time to time in
its reasonable judgment. The Fund's failure at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right; the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts or circumstances; and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any determination by the Fund concerning the events described
in this Section 4 shall be final and binding.
The Fund reserves the right, at any time during the pendency of the Offer,
to amend, extend or terminate the Offer in any respect. See Section 16.
5. PROCEDURES FOR TENDERING SHARES.
A. PROPER TENDER OF SHARES. For Shares to be properly tendered pursuant
to the Offer, a shareholder must cause a properly completed and duly
executed Letter of Transmittal (or a copy or facsimile thereof) bearing
original signature(s) and the original of any required signature
guarantee(s), and any other documents required by the Letter of Transmittal,
to be received by the Depositary at the appropriate address set forth on the
cover page of the Letter of Transmittal and must either cause certificates
for tendered Shares to be received by the Depositary at such address or
cause such Shares to be delivered pursuant to the procedures for book-entry
delivery set forth below (and confirmation of receipt of such delivery to be
received by the Depositary), in each case before 5:00 P.M. Eastern Time on
the Expiration Date, or (in lieu of the foregoing) such shareholder must
comply with the guaranteed delivery procedures set forth below. Letters of
Transmittal and certificates representing tendered Shares should not be sent
or delivered to the Fund. Shareholders who desire to tender Shares
registered in the name of a broker, dealer, commercial bank, trust company
or other nominee must contact that firm to effect a tender on their behalf.
Section 14(e) of the Exchange Act and Rule 14e-4 promulgated thereunder
make it unlawful for any person, acting alone or in concert with others,
directly or indirectly, to tender Shares in a partial tender offer for such
person's own account unless at the time of tender, and at the time the
Shares are accepted for payment, the person tendering has a net long
position equal to or greater than the amount tendered in (a) Shares, and
will deliver or cause to be delivered such Shares for the purpose of tender
to the Fund within the period specified in the Offer, or (b) an equivalent
security and, upon the acceptance of his or her tender, will acquire Shares
by conversion, exchange or exercise of such equivalent security to the
extent required by the terms of the Offer, and will deliver or cause to be
delivered the Shares so acquired for the purpose of tender to the Fund prior
to or on the Expiration Date. Section 14(e) and Rule 14e-4 provide a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person.
The acceptance of Shares by the Fund for payment will constitute a
binding agreement between the tendering shareholder and the Fund upon the
terms and subject to the conditions of the Offer, including the tendering
shareholder's representation that the shareholder has a net long position in
the Shares being tendered within the meaning of Rule 14e-4 and that the
tender of such Shares complies with Rule 14e-4.
B. SIGNATURE GUARANTEES AND METHOD OF DELIVERY. No signature guarantee
is required if (a) the Letter of Transmittal is signed by the registered
holder(s) (including, for purposes of this document, any participant in The
Depository Trust Company ("DTC") book-entry transfer facility whose name
appears on DTC's security position listing as the owner of Shares) of the
Shares tendered thereby, unless
10
such holder(s) has completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" in the
Letter of Transmittal or (b) the Shares tendered are tendered for the
account of a firm (an "Eligible Institution") which is a broker, dealer,
commercial bank, credit union, savings association or other entity and which
is a member in good standing of a stock transfer association's approved
medallion program (such as STAMP, SEMP or MSP). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instruction 5 of the Letter of Transmittal.
If the Letter of Transmittal is signed by the registered holder(s) of
the Shares tendered thereby, the signature(s) must correspond with the
name(s) as written on the face of the certificate(s) for the Shares tendered
without alteration, enlargement or any change whatsoever.
If any of the Shares tendered thereby are owned of record by two or more
joint owners, all such owners must sign the Letter of Transmittal.
If any of the tendered Shares are registered in different names, it is
necessary to complete, sign and submit as many separate Letters of
Transmittal as there are different registrations.
If the Letter of Transmittal or any certificates for Shares tendered or
stock powers relating to Shares tendered are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should
so indicate when signing, and proper evidence satisfactory to the Fund of
their authority so to act must be submitted.
If the Letter of Transmittal is signed by the registered holder(s) of
the Shares transmitted therewith, no endorsements of certificates or
separate stock powers with respect to such Shares are required unless
payment is to be made to, or certificates for Shares not purchased are to be
issued in the name of, a person other than the registered holder(s).
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
If the Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed thereon, the
certificate(s) must be endorsed or accompanied by appropriate stock powers,
in either case signed exactly as the name(s) of the registered
holder(s) appear(s) on the certificate(s) for the Shares involved.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution. See Section 7.
C. BOOK-ENTRY DELIVERY. The Depositary has established an account with
respect to the Shares at DTC for purposes of the Offer. Any financial
institution that is a participant in the DTC system may make book-entry
delivery of tendered Shares by causing DTC to transfer such Shares into the
Depositary's account at DTC in accordance with DTC's procedures for such
transfers. However, although delivery of Shares may be effected through
book-entry transfer into the Depositary's account at DTC, a Letter of
Transmittal (or a copy or facsimile thereof) properly completed and bearing
original signature(s) and the original of any required signature
guarantee(s), or an Agent's Message (as defined below) in connection with a
book-entry transfer and any other documents required by the Letter of
Transmittal, must in any case be received by the Depositary prior to
5:00 P.M. Eastern Time on the Expiration Date at one of its addresses set
forth on page 2 of this Offer, or the tendering shareholder must comply with
the guaranteed delivery procedures described below.
The term "Agent's Message" means a message from DTC transmitted to, and
received by, the Depositary forming a part of a timely confirmation of a
book-entry transfer of Shares (a "Book-Entry Confirmation") which states
that (a) DTC has received an express acknowledgment from the DTC participant
tendering the Shares that are the subject of the Book-Entry Confirmation,
(b) the DTC participant has received and agrees to be bound by the terms of
the Letter of Transmittal, and (c) the Fund may enforce such agreement
against the DTC participant.
Delivery of documents to DTC in accordance with DTC's procedures does
not constitute delivery to the Depositary.
11
D. GUARANTEED DELIVERY. Notwithstanding the foregoing, if a shareholder
desires to tender Shares pursuant to the Offer and the certificates for the
Shares to be tendered are not immediately available, or time will not permit
the Letter of Transmittal and all documents required by the Letter of
Transmittal to reach the Depositary prior to 5:00 P.M. Eastern Time on the
Expiration Date, or a shareholder cannot complete the procedures for
delivery by book-entry transfer on a timely basis, then such shareholder's
Shares may nevertheless be tendered, provided that all of the following
conditions are satisfied:
(i) the tender is made by or through an Eligible Institution; and
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery in the form provided by the Fund is received by the Depositary
prior to 5:00 P.M. Eastern Time on the Expiration Date; and
(iii) the certificates for all such tendered Shares, in proper form for
transfer, or a Book-Entry Confirmation with respect to such Shares, as the
case may be, together with a Letter of Transmittal (or a copy or facsimile
thereof) properly completed and bearing original signature(s) and the
original of any required signature guarantee(s) (or, in the case of a
book-entry transfer, an Agent's Message) and any documents required by the
Letter of Transmittal, are received by the Depositary prior to 5:00 P.M.
Eastern Time on the second NYSE trading day after the date of execution of
the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by facsimile transmission to (781) 575-4826 or mail to the
Depositary and must include a guarantee by an Eligible Institution and a
representation that the shareholder owns the Shares tendered within the
meaning of, and that the tender of the Shares effected thereby complies
with, Rule 14e-4 under the Exchange Act, each in the form set forth in the
Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF ANY DOCUMENTS, INCLUDING SHARE CERTIFICATES,
THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE OPTION
AND SOLE RISK OF THE TENDERING SHAREHOLDER. IF DOCUMENTS ARE SENT BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. Shareholders have the responsibility to cause their Shares
tendered (in proper certificated or uncertificated form), the Letter of
Transmittal (or a copy or facsimile thereof) properly completed and bearing
original signature(s) and the original of any required signature
guarantee(s) and any other documents required by the Letter of Transmittal,
to be timely delivered. Timely delivery is a condition precedent to
acceptance of Shares for purchase pursuant to the Offer and to payment of
the purchase amount.
Notwithstanding any other provision hereof, payment for Shares accepted
for payment pursuant to the Offer will in all cases be made only after
timely receipt by the Depositary of Share certificates evidencing such
Shares or a Book-Entry Confirmation of the delivery of such Shares (if
available), a Letter of Transmittal (or a copy or facsimile thereof)
properly completed and bearing original signature(s) and the original of any
required signature guarantee(s) or, in the case of a book-entry transfer, an
Agent's Message and any other documents required by the Letter of
Transmittal.
E. DETERMINATIONS OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of tenders will be
determined by the Fund, in its sole discretion, which determination shall be
final and binding. The Fund reserves the absolute right to reject any or all
tenders determined not to be in appropriate form or to refuse to accept for
payment, purchase, or pay for, any Shares if, in the opinion of the Fund's
counsel, accepting, purchasing or paying for such Shares would be unlawful.
The Fund also reserves the absolute right to waive any of the conditions of
the Offer or any defect in any tender, whether generally or with respect to
any particular Share(s) or shareholder(s). The Fund's interpretations of the
terms and conditions of the Offer shall be final and binding.
NEITHER THE FUND, ITS BOARD OF DIRECTORS, CSAM, THE DEPOSITARY NOR ANY
OTHER PERSON IS OR WILL BE OBLIGATED TO GIVE ANY NOTICE OF ANY DEFECT OR
IRREGULARITY IN ANY TENDER, AND NONE OF THEM WILL INCUR ANY LIABILITY FOR
FAILURE TO GIVE ANY SUCH NOTICE.
12
F. UNITED STATES FEDERAL INCOME TAX WITHHOLDING. To prevent the
imposition of a U.S. federal backup withholding tax equal to 31% of the
gross payments made pursuant to the Offer, prior to such payments each
shareholder accepting the Offer who has not previously submitted to the Fund
a correct, completed and signed Form W-9 (for U.S. shareholders) or Form W-8
(for non-U.S. shareholders), or otherwise established an exemption from such
withholding, must submit the appropriate form to the Depositary. See
Section 15.
Under certain circumstances (see Section 15), the Depositary will
withhold a tax equal to 30% of the gross payments payable to a non-U.S.
shareholder unless the Depositary determines that a reduced rate of
withholding or an exemption from withholding is applicable. (Exemption from
backup withholding tax does not exempt a non-U.S. shareholder from the 30%
withholding tax.) For this purpose, a non-U.S. shareholder, is, in general,
a shareholder that is not (i) a citizen or resident of the United States,
(ii) a corporation, partnership or other entity created or organized in or
under the laws of the United States, any State thereof or the District of
Columbia, (iii) an estate the income of which is subject to United States
federal income taxation regardless of the source of such income, or (iv) a
trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more U.S.
persons have the authority to control all substantial decisions of the trust
(a "non-U.S. shareholder"). The Depositary will determine a shareholder's
status as a non-U.S. shareholder and the shareholder's eligibility for a
reduced rate of, or an exemption from, withholding by reference to any
outstanding certificates or statements concerning such eligibility, unless
facts and circumstances indicate that such reliance is not warranted. A
non-U.S. shareholder that has not previously submitted the appropriate
certificates or statements with respect to a reduced rate of, or exemption
from, withholding for which such shareholder may be eligible should consider
doing so in order to avoid over-withholding. See Section 15.
6. WITHDRAWAL RIGHTS. At any time prior to 5:00 P.M. Eastern Time on
October 20, 2000 (or if the offer is extended, at any time prior to 5:00 P.M.
Eastern Time on the new expiration date), and, if the Shares have not by then
been accepted for payment by the Fund, at any time after November 2, 2000, any
shareholder may withdraw all, but not less than all, of the Shares that the
shareholder has tendered.
To be effective, a written notice of withdrawal of Shares tendered must be
timely received by the Depositary at the appropriate address set forth on
page 2 of this Offer. Shareholders may also send a facsimile transmission notice
of withdrawal, which must be timely received by the Depositary at
(800) 730-6001, and the original notice of withdrawal must be delivered to the
Depositary by overnight courier or by hand the next day. Any notice of
withdrawal must specify the name(s) of the person having tendered the Shares to
be withdrawn, the number of Shares to be withdrawn (which may not be less than
all of the Shares tendered by the shareholder) and, if one or more certificates
representing such Shares have been delivered or otherwise identified to the
Depositary, the name(s) of the registered owner(s) of such Shares as set forth
in such certificate(s) if different from the name(s) of the person tendering the
Shares. If one or more certificates have been delivered to the Depositary, then,
prior to the release of such certificate(s), the certificate number(s) shown on
the particular certificate(s) evidencing such Shares must also be submitted and
the signature on the notice of withdrawal must be guaranteed by an Eligible
Institution.
All questions as to the validity, form and eligibility (including time of
receipt) of notices of withdrawal will be determined by the Fund in its sole
discretion, which determination shall be final and binding. Shares properly
withdrawn will not thereafter be deemed to be tendered for purposes of the
Offer. Withdrawn Shares, however, may be re-tendered by following the procedures
described in Section 5 prior to 5:00 P.M. Eastern Time on the Expiration Date.
Except as otherwise provided in this Section 6, tenders of Shares made pursuant
to the Offer will be irrevocable.
NEITHER THE FUND, ITS BOARD OF DIRECTORS, CSAM, THE DEPOSITARY NOR ANY OTHER
PERSON IS OR WILL BE OBLIGATED TO GIVE ANY NOTICE OF ANY DEFECT OR IRREGULARITY
IN ANY NOTICE OF WITHDRAWAL, NOR SHALL ANY OF THEM INCUR ANY LIABILITY FOR
FAILURE TO GIVE ANY SUCH NOTICE.
7. PAYMENT FOR SHARES. For purposes of the Offer, the Fund will be deemed
to have accepted for payment and purchased Shares that are tendered (and not
withdrawn in accordance with Section 6 pursuant to the Offer) when, as and if it
gives oral or written notice to the Depositary of its acceptance of such Shares
for payment pursuant to the Offer. Under the Exchange Act, the Fund is obligated
to pay for or return
13
tendered Shares promptly after the termination, expiration or withdrawal of the
Offer. Upon the terms and subject to the conditions of the Offer, the Fund will
pay for Shares properly tendered as soon as practicable after the Expiration
Date. The Fund will make payment for Shares purchased pursuant to the Offer by
depositing the aggregate purchase price therefor with the Depositary, which will
make payment to shareholders promptly as directed by the Fund. The Fund will not
pay interest on the purchase price under any circumstances. Shares purchased in
the Offer will be retired.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of: (a) a Letter of Transmittal
(or a copy thereof) properly completed and bearing original signature(s) and any
required signature guarantee(s), (b) such Shares (in proper certificated or
uncertificated form) and (c) any other documents required by the Letter of
Transmittal. Shareholders may be charged a fee by a broker, dealer or other
institution for processing the tender requested. Certificates representing
Shares tendered but not purchased will be returned promptly following the
termination, expiration or withdrawal of the Offer, without further expense to
the tendering shareholder. The Fund will pay any transfer taxes payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, tendered
Shares are registered in the name of any person other than the person signing
the Letter of Transmittal, the amount of any such transfer taxes (whether
imposed on the registered owner or such other person) payable on account of the
transfer to such person of such Shares will be deducted from the purchase price
unless satisfactory evidence of the payment of such taxes, or exemption
therefrom, is submitted. The Fund may not be obligated to purchase Shares
pursuant to the Offer under certain conditions. See Section 4.
Any tendering shareholder or other payee who has not previously submitted a
correct, completed and signed Form W-8 or Form W-9, as necessary, and who fails
to complete fully and sign either the Form W-8 or Substitute Form W-9 in the
Letter of Transmittal and provide that form to the Depositary, may be subject to
federal backup withholding tax of 31% of the gross proceeds paid to such
shareholder or other payee pursuant to the Offer. See Section 15 regarding this
tax as well as possible withholding at the rate of 30% (or lower applicable
treaty rate) on the gross proceeds payable to tendering non-U.S. shareholders.
8. SOURCE AND AMOUNT OF FUNDS. The total cost to the Fund of purchasing
3,125,120 of its issued and outstanding Shares pursuant to the Offer would be
$55,408,377 (based on a price per Share of $17.73, 95% of the NAV as of the
close of the regular trading session of the NYSE on September 5, 2000). On
September 5, 2000, the aggregate value of the Fund's net assets was
$116,659,614.
To pay the aggregate purchase price of Shares accepted for payment pursuant
to the Offer, the Fund anticipates that funds will first be derived from any
cash on hand and then from the proceeds from the sale of portfolio securities
held by the Fund. The selection of which portfolio securities to sell, if any,
will be made by CSAM, taking into account investment merit, relative liquidity
and applicable investment restrictions and legal requirements (including those
applicable to the Fund upon the consummation of the Merger with LAQ and the
adoption of LAQ's investment objective and policies). The Fund is authorized to
borrow money for temporary or emergency purposes, and to the extent the Fund
does not have sufficient resources through cash on hand and the disposition of
assets to purchase Shares in the Offer, it intends to finance a portion of the
Offer through temporary borrowing. The Fund and other investment companies or
portfolios thereof advised by CSAM are parties to a $350 million committed,
unsecured line of credit (the "Facility") with a syndicate of banks for which
Deutsche Bank AG, New York Branch acts as the administrative agent, The Bank of
Nova Scotia acts as syndication agent, BNP Paribas acts as documentation agent
and State Street Bank and Trust Company acts as operations agent. The Facility
is intended primarily to cover temporary or emergency needs of the Funds.
Amounts drawn under the Facility bear interest at the overnight Federal Funds
rate plus 50 basis points per annum. Any amounts drawn under the Facility will
be repaid from the sale of the Fund's portfolio securities. The Fund may specify
the term of the borrowing, up to 60 days, at the time the loan is drawn down.
The amounts available to be drawn down by the Fund under the Facility will
depend upon the level of borrowings by other funds that are parties to the
Facility, and accordingly it is possible that the Fund may not be able to borrow
under the Facility the amounts desired.
Because the Fund may sell portfolio securities to raise cash for the
purchase of Shares, during the pendency of the Offer, and possibly for a short
time thereafter, the Fund may hold a greater than normal percentage of its
assets in cash and cash equivalents. As of September 5, 2000, cash and cash
equivalents constituted approximately 0.94% of the Fund's total assets.
14
Under some market circumstances, it may be necessary for the Fund to raise
cash by liquidating portfolio securities in a manner that could reduce the
market value of such securities and, thus, reduce both the NAV of the Shares and
the proceeds from the sale of such securities. Liquidating portfolio securities,
if necessary, may also lead to the premature disposition of portfolio
investments and additional transaction costs. Depending upon the timing of such
sales, any such decline in NAV may adversely affect any tendering shareholders
whose Shares are accepted for purchase by the Fund, as well as those
shareholders who do not sell Shares pursuant to the Offer. Shareholders who
retain their Shares may be subject to certain other effects of the Offer. See
Section 12.
9. PRICE RANGE OF SHARES; DIVIDENDS/DISTRIBUTIONS. The following table
sets forth, for the periods indicated, the high and low NAVs per Share and the
high and low closing sale prices per Share as reported on the NYSE Composite
Tape, and the amounts of cash dividends/distributions per Share paid during such
periods.
NET ASSET VALUE MARKET PRICE
----------------- ---------------- DIVIDENDS/
FISCAL YEAR (ENDING DECEMBER 31) HIGH LOW HIGH LOW DISTRIBUTIONS
- -------------------------------- ------- ------- ------ ------- -------------
1998
1st Quarter.............................. $18.37 $16.43 $15.00 $12.81 -$-
2nd Quarter.............................. 18.27 14.54 14.56 11.06 --
3rd Quarter.............................. 16.02 8.87 12.50 6.13 --
4th Quarter.............................. 13.13 10.53 10.06 7.25 0.45
1999
1st Quarter.............................. 13.00 9.62 10.13 7.13 --
2nd Quarter.............................. 15.52 13.06 13.00 10.13 --
3rd Quarter.............................. 14.81 13.31 11.44 9.81 --
4th Quarter.............................. 17.55 13.31 13.06 9.56 0.50
2000
1st Quarter.............................. 19.44 16.53 14.31 12.31 --
2nd Quarter.............................. 18.43 15.19 14.86 11.94 --
3rd Quarter (through September 5,
2000)................................... 18.88 17.58 16.00 15.81 --
As of the close of business on September 5, 2000, the Fund's NAV was $18.66
per Share, and the high, low and closing prices per Share on the NYSE on that
date were $15.81, $15.81 and $15.81, respectively. During the pendency of the
Offer, current NAV quotations can be obtained by contacting Credit Suisse Asset
Management--Investor Relations at (800) 293-1232, or at www.cefsource.com.
The tendering of Shares, unless and until shares tendered are accepted for
payment and purchase, will not affect the record ownership of any such tendered
Shares for purposes of entitlement to any dividends payable by the Fund. The
Fund did not have distribution requirements for 1999 earnings. Prior to the
consummation of the merger with The Latin America Equity Fund, the Fund intends
to declare and pay a dividend equal to the Fund's undistributed net investment
income earned in 2000, unless such amounts are immaterial.
10. SELECTED FINANCIAL INFORMATION. The table below is intended to help
you understand the financial performance of the Fund. This information is
derived from financial and accounting records of the Fund.
This information has been audited by PricewaterhouseCoopers LLP, the Fund's
independent auditors, whose reports, along with the Fund's financial statements,
are incorporated herein by reference and included in the Fund's Annual Reports
to Shareholders. The Annual Reports may be obtained without charge, by writing
to Shareholder Communications Corporation, 17 State Street, New York, New York
10004, or by calling (800) 403-7916.
15
- --------------------------------------------------------------------------------
THE LATIN AMERICA INVESTMENT FUND, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table includes 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.
- --------------------------------------------------------------------------------
For the Fiscal Years Ended November 30,
------------------------------------------------------
1999 1998 1997 1996 1995
--------- -------- -------- --------- ------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.... $11.49 $18.21 $19.07 $17.09 $20.18
-------- -------- -------- -------- --------
Net investment income................... 0.59 0.43 0.11 0.28 0.19
Net realized and unrealized gain/(loss)
on investments and foreign currency
related transactions.................. 5.44 (6.71)++ 1.66 1.93 (3.09)
-------- -------- -------- -------- --------
Net increase/(decrease) in net assets
resulting from operations............. 6.03 (6.28) 1.77 2.21 (2.90)
-------- -------- -------- -------- --------
Dividends and distributions to
shareholders:
Net investment income................. (0.50) (0.45) (0.21) (0.23) --
Net realized gain on investments and
foreign currency related
transactions........................ -- -- (2.42) -- (0.19)
In excess of net realized gains....... -- -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions to
shareholders.......................... (0.50) (0.45) (2.63) (0.23) (0.19)
-------- -------- -------- -------- --------
Anti-dilutive impact due to capital
shares repurchased.................... 0.53 0.01 -- -- --
Dilutive impact due to capital share
rights offering....................... -- -- -- -- --
Net asset value, end of period.......... $17.55 $11.49 $18.21 $19.07 $17.09
======== ======== ======== ======== ========
Market value, end of period............. $13.063 $8.188 $14.313 $15.750 $14.750
======== ======== ======== ======== ========
Total investment return(a).............. 65.69% (39.56)% 8.21% 8.26% (20.34)%
======== ======== ======== ======== ========
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000
omitted).............................. $115,584 $ 91,099 $143,358 $150,007 $134,290
Ratio of expenses to average net
assets(c)............................. 1.89% 2.39% 2.46% 1.70% 2.00%
Ratio of expenses to average net assets,
excluding fee waivers................. 2.01% 2.51% 2.58% 1.82% 2.12%
Ratio of expenses to average net assets,
excluding taxes....................... 1.85% 1.80% 1.68% -- 1.78%
Ratio of net investment income to
average net assets.................... 4.33% 2.91% 0.53% 1.47% 1.10%
Portfolio turnover rate................. 115.42% 172.62% 124.98% 50.21% 38.71%
- ------------------------------------------------------------------------------------------------
16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
For the Period
For the Fiscal Years Ended November 30, August 1, 1990*
----------------------------------------- through
1994 1993 1992 1991 December 31, 1990
--------- --------- -------- --------- -----------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.... $25.73 $25.36 $26.05 $14.24 $13.64**
-------- -------- -------- -------- -------
Net investment income................... 0.09+ 0.08 0.24 0.61 0.29
Net realized and unrealized gain/(loss)
on investments and foreign currency
related transactions.................. 1.29 10.18 1.51 14.66 0.58
-------- -------- -------- -------- -------
Net increase/(decrease) in net assets
resulting from operations............. 1.38 10.26 1.75 15.27 0.87
-------- -------- -------- -------- -------
Dividends and distributions to
shareholders:
Net investment income................. (0.07) (0.22) -- (0.63) (0.27)
Net realized gain on investments and
foreign currency related
transactions........................ (4.33) (8.61) (2.44) (2.83) --
In excess of net realized gains....... -- (0.04) -- -- --
-------- -------- -------- -------- -------
Total dividends and distributions to
shareholders.......................... (4.40) (8.87) (2.44) (3.46) (0.27)
-------- -------- -------- -------- -------
Anti-dilutive impact due to capital
shares repurchased.................... -- -- -- -- --
Dilutive impact due to capital share
rights offering....................... (2.53) (1.02) -- -- --
-------- -------- -------- -------- -------
Net asset value, end of period.......... $20.18 $25.73 $25.36 $26.05 $14.24
======== ======== ======== ======== =======
Market value, end of period............. $18.750 $31.500 $24.375 $26.500 $11.125
======== ======== ======== ======== =======
Total investment return(a).............. (26.63)% 89.45% 2.35% 167.96% (18.35)%
======== ======== ======== ======== =======
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period (000
omitted).............................. $156,673 $140,458 $102,259 $104,435 $57,081
Ratio of expenses to average net
assets(c)............................. 2.02% 2.06% 2.61% 2.30% 3.27%(b)
Ratio of expenses to average net assets,
excluding fee waivers................. -- -- -- -- --
Ratio of expenses to average net assets,
excluding taxes....................... 1.72% -- 2.31% -- --
Ratio of net investment income to
average net assets.................... 0.63% 1.45% 1.15% 2.85% 5.10%(b)
Portfolio turnover rate................. 77.81% 70.17% 55.40% 82.39% 52.49%
- ------------------------------------------------------------------------------------------------------
* 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 $0.31 per share.
+ Based on average shares outstanding.
++ Includes a $0.05 per share decrease to the Fund's net asset value per share
resulting from the dilutive impact of shares issued pursuant to the Fund's
automatic dividend reinvestment program.
(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) Annualized.
(c) Ratios reflect actual expenses incurred by the Fund. Amounts are net of fee
waivers and inclusive of taxes.
- --------------------------------------------------------------------------------
17
11. INTEREST OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN RELATED
PERSONS. Information, as of particular dates, concerning the Fund's directors
and executive officers, their remuneration, any material interest of such
persons in transactions with the Fund and other matters is required to be
disclosed in proxy statements distributed to the Fund's shareholders in proxy
statements distributed to the Fund's shareholders and filed with the Securities
and Exchange Commission (the "SEC"). As of June 7, 2000, the Fund's only
associate, President and Fellows of Harvard College, c/o Harvard Management
Company, Inc., 600 Atlantic Avenue, Boston MA 02210, beneficially owned
1,694,600 Shares, which represented a beneficial ownership of 25.7% of the
Fund's shares. Neither the Fund nor, to the best of the Fund's knowledge, any of
the Fund's directors or executive officers, has effected any transaction in
Shares during the 60 days before the date hereof.
On May 8, 2000, the Board unanimously approved a proposal by the directors
who are not "interested persons" (as defined in the Investment Company Act of
1940) ('Non-interested Directors') to partially compensate Non-interested
Directors in shares of the Fund. Under this new policy, the Non-interested
Directors will receive 50% of their annual retainer in the form of shares
purchased by the Fund in the open market. Paying directors' fees in shares is
intended to align the interests of the Non-interested Directors with those of
the Fund's shareholders.
Except as set forth in this Offer, neither the Fund, nor, to the best of the
Fund's knowledge, any of the Fund's directors or executive officers, is a party
to any contract, arrangement, understanding or relationship with any other
person relating, directly or indirectly to the Offer with respect to any
securities of the Fund, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any such securities, joint ventures, loan or option arrangements, puts or
calls, guaranties of loans, guaranties against loss or the giving or withholding
of proxies, consents or authorizations. Based upon information provided or
available to the Fund, no director or officer of the Fund intends to tender
Shares pursuant to the Offer. The Offer does not, however, restrict the purchase
of shares pursuant to the Offer from any such person.
12. CERTAIN EFFECTS OF THE OFFER AND THE MERGER. As a result of the
consummation of the Offer and the Merger:
- each share of common stock of LAQ will convert into an equivalent dollar
amount (to the nearest one ten-thousandth of one cent) of full shares of
common stock of the Fund, based on the net asset value per share of each
Fund calculated at 4:00 pm on the Business Day (defined as any day on
which the NYSE is open for trading) preceding the Effective Date,
- each shareholder of LAQ will become a shareholder of the Fund and will
receive, on the Effective Date, that number of full shares of common stock
of the Fund having an aggregate net asset value (disregarding fractional
shares) equal to the aggregate net asset value of such shareholder's
shares held in LAQ as of the close of business on the Business Day
preceding the Effective Date,
- the Fund will not issue any fractional shares to LAQ shareholders. The
Fund will purchase all fractional shares at the current net asset value of
the shares and remit the cash proceeds to former LAQ shareholders, and
- the Fund will change its name to "The Latin America Equity Fund, Inc."
and, as described in greater detail below, will adopt LAQ's investment
objective and policies.
Each Fund seeks long-term capital appreciation as its objective. LAQ seeks
its objective by investing primarily in Latin American equity securities.
Currently, the Fund seeks its objective by investing primarily in Latin American
debt and equity securities. Under normal conditions, LAQ invests substantially
all, and at least 80%, of its total assets in Latin American equity securities,
while the Fund invests substantially all, and at least 65%, of its total assets
in Latin American debt and equity securities. Each of the foregoing investment
objectives and investment policies is fundamental, and can only be changed with
the approval of the holders of a majority of each Fund's outstanding voting
securities as defined under the Investment Company Act. Although both Funds
intend to focus their investments in marketable securities, LAQ may
18
invest up to 10% of its assets in, and the Fund may invest up to 25% of its
assets in, unlisted equity securities, including investments in new and early
stage companies. LAQ may also invest up to 20% of its assets in corporate and
government debt securities of Latin American issuers, including up to 15% of its
assets in Sovereign Debt. The Fund may invest up to 30% of its assets in
Sovereign Debt, which, like LAQ, it may hold and trade or convert into equity or
other investments under the debt conversion programs of certain Latin American
countries. Both Funds may also hold local currency-denominated debt securities
of corporate and governmental issuers and securities deemed to be Temporary
Investments.
On July 24, 2000, the Fund's Board of Directors approved the adoption of
LAQ's investment objective and investment policies subject to the consummation
of the Merger and approval by the Fund's shareholders. The Merger is conditional
on shareholder approval of this proposal.
13. CERTAIN INFORMATION ABOUT THE FUND. The Fund is a Maryland corporation
with its principal executive offices located at 466 Lexington Avenue, 16th
Floor, New York, New York 10017 (telephone number (212) 875-3500). The Fund is a
closed-end, non-diversified, management investment company organized as a
Maryland corporation. As a closed-end investment company the Fund differs from
an open-end investment company (I.E., a mutual fund) in that it does not redeem
its Shares at the election of a shareholder and does not continuously offer its
Shares for sale to the public. The Fund's investment objective is long-term
capital appreciation through investments primarily in Latin American debt and
equity securities. The Fund has been managed since its inception by CSAM, which
was formerly known as BEA Associates, except that Salomon Brothers Asset
Management Inc., or SBAM, manages the debt securities portfolio of the Fund.
CSAM is a registered investment adviser under the Investment Advisers Act of
1940 with offices located at 466 Lexington Avenue, 16th Floor, New York, New
York 10017 (telephone number (212) 875-3500). CSAM handles 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, endowments and
other charitable institutions and private individuals. CSAM--Americas currently
manages approximately $68 billion in assets.
SBAM is a registered investment adviser under the Investment Advisers Act of
1940 with offices located at Seven World Trade Center, New York, New York 10048.
SBAM provides a broad range of fixed income and equity investment advisory
services for its individual and institutional clients located around the world,
and provides investment advisory services for registered investment companies.
As of December 31, 1999, SBAM managed approximately $25.3 billion in assets.
14. ADDITIONAL INFORMATION. An Issuer Tender Offer Statement on Schedule
TO (the "Schedule TO") including the exhibits thereto, filed with the SEC,
provides certain additional information relating to the Offer, and may be
inspected and copied at the prescribed rates at the SEC's public reference
facilities at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, 7 World
Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 W.
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of the Schedule
TO and the exhibits may also be obtained by mail at the prescribed rates from
the Public Reference Branch of the SEC at 450 Fifth Street, N.W., Washington,
D.C. 20549.
15. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. The following
discussion is a general summary of the U.S. federal income tax consequences of a
sale of Shares pursuant to the Offer based on current U.S. federal income tax
law, including applicable Treasury regulations and Internal Revenue Service
rulings. Each shareholder should consult the shareholder's tax advisor for a
full understanding of the tax consequences of such a sale, including potential
state, local and foreign taxation by jurisdictions of which the shareholder is a
citizen, resident or domiciliary.
U.S. shareholders. It is anticipated that shareholders (other than
tax-exempt persons) who are citizens and/or residents of the U.S., corporations,
partnerships or other entities created or organized in or under the
19
laws of the U.S. or any State thereof or the District of Columbia, estates the
income of which is subject to U.S. federal income taxation regardless of the
source of such income, and trusts if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more U.S. persons have the authority to control all substantial decisions of the
trust (collectively, "U.S. shareholders"), and who sell Shares pursuant to the
Offer will recognize gain or loss for U.S. federal income tax purposes equal to
the difference between the amount of cash they receive pursuant to the Offer and
their adjusted tax basis in the Shares sold. The sale date for tax purposes will
be the date the Fund accepts Shares for purchase. This gain or loss will be
capital gain or loss if the Shares sold are held by the tendering U.S.
shareholder at the time of sale as a capital asset and will be treated as either
long-term or short-term if the Shares have been held at that time for more than
one year or one year or less, respectively. Any such long-term capital gain
realized by a non-corporate U.S. shareholder will be taxed at a maximum rate of
20% if the Shares have been held for more than one year at the time of their
sale. This U.S. federal income tax treatment, however, is based on the
expectation that not all shareholders will tender their Shares pursuant to the
Offer and that the continuing ownership interest in the Fund of tendering
shareholders will be sufficiently reduced to qualify the sale as a sale rather
than a distribution for U.S. federal income tax purposes. It is therefore
possible that the cash received for the Shares purchased would be taxable as a
distribution by the Fund, rather than as a gain from the sale of the Shares. In
that event, the cash received by a U.S. shareholder will be taxable as a
dividend (i.e., as ordinary income) to the extent of the U.S. shareholder's
allocable share of the Fund's current or accumulated earnings and profits, with
the excess of the cash received over the portion so taxable constituting a
non-taxable return of capital to the extent of the U.S. shareholder's tax basis
in the Shares sold and with any remaining excess of such cash being treated as
either long-term or short-term capital gain from the sale of the Shares
depending on how long they were held by the U.S. shareholder. If cash received
by a U.S. shareholder is taxable as a dividend, the shareholder's tax basis in
the purchased Shares will be considered transferred to the remaining Shares held
by the shareholder. In the case of a tendering U.S. shareholder that is a
corporation treated as receiving a distribution from the Fund pursuant to the
Offer, special basis adjustments may also be applicable with respect to any
Shares of such a U.S. shareholder not purchased pursuant to the Offer.
Under the "wash sale" rules under the Internal Revenue Code of 1986, as
amended, loss recognized on Shares sold pursuant to the Offer will ordinarily be
disallowed to the extent the U.S. shareholder acquires Shares within 30 days
before or after the date the Shares are purchased pursuant to the Offer and, in
that event, the basis and holding period of the Shares acquired will be adjusted
to reflect the disallowed loss.
The Depositary may be required to withhold 31% of the gross proceeds paid to
a U.S. shareholder or other payee pursuant to the Offer unless either: (a) the
U.S. shareholder has completed and submitted to the Depositary an IRS Form W-9
(or Substitute Form W-9), providing the U.S. shareholder's employer
identification number or social security number as applicable, and certifying
under penalties of perjury that: (a) such number is correct; (b) either (i) the
U.S. shareholder is exempt from backup withholding, (ii) the U.S. shareholder
has not been notified by the Internal Revenue Service that the U.S. shareholder
is subject to backup withholding as a result of an under-reporting of interest
or dividends, or (iii) the Internal Revenue Service has notified the U.S.
shareholder that the U.S. shareholder is no longer subject to backup
withholding; or (c) an exception applies under applicable law. A Substitute Form
W-9 is included as part of the Letter of Transmittal for U.S. shareholders.
NON-U.S. SHAREHOLDERS. The U.S. federal income taxation of a non-U.S.
shareholder on a sale of Shares pursuant to the Offer depends on whether this
transaction is "effectively connected" with a trade or business carried on in
the U.S. by the non-U.S. shareholder as well as the tax characterization of the
transaction as either a sale of the Shares or a distribution by the Fund, as
discussed above for U.S. shareholders. If the sale of Shares pursuant to the
Offer is not so effectively connected and if, as anticipated for U.S.
shareholders, it gives rise to gain or loss, any gain realized by a non-U.S.
shareholder upon the tender of Shares pursuant to the Offer will not be subject
to U.S. federal income tax or to any U.S. tax withholding, provided, however,
that such a gain will be subject to U.S. federal income tax at the rate of 30%
(or such lower rate as may be
20
applicable under a tax treaty) if the non-U.S. shareholder is a non-resident
alien individual who is physically present in the United States for more than
182 days during the taxable year of the sale. If, however, U.S. shareholders are
deemed to receive a distribution from the Fund with respect to Shares they
tender, the cash received by a tendering non-U.S. shareholder will also be
treated for U.S. tax purposes as a distribution by the Fund, with the cash then
being characterized in the same manner as described above for U.S. shareholders.
In such an event, the portion of the distribution treated as a dividend to the
non-U.S. shareholder would be subject to a U.S. withholding tax at the rate of
30% (or such lower rate as may be applicable under a tax treaty) if the dividend
does not constitute effectively connected income. If the amount realized on the
tender of Shares by a non-U.S. shareholder is effectively connected income,
regardless of whether the tender is characterized as a sale or as giving rise to
a distribution from the Fund for U.S. federal income tax purposes, the
transaction will be treated and taxed in the same manner as if the Shares
involved were tendered by a U.S. shareholder.
Non-U.S. shareholders should provide the Depositary with a completed Form
W-8 in order to avoid 31% backup withholding on the cash they receive from the
Fund regardless of how they are taxed with respect to their tender of the Shares
involved. A copy of Form W-8 is provided with the Letter of Transmittal for
non-U.S. shareholders.
16. AMENDMENTS; EXTENSION OF TENDER PERIOD; TERMINATION. The Fund reserves
the right, at any time during the pendency of the Offer, to amend, extend or
terminate the Offer in any respect. Without limiting the manner in which the
Fund may choose to make a public announcement of such an amendment, extension or
termination, the Fund shall have no obligation to publish, advertise or
otherwise communicate any such public announcement, except as provided by
applicable law (including Rule 14e-1(d) promulgated under the Exchange Act) and
by the requirements of the NYSE (including the listing agreement with respect to
the Shares).
Except to the extent required by applicable law (including
Rule 13e-4(f)(1) promulgated under the Exchange Act), the Fund will have no
obligation to extend the Offer. In the event that the Fund is obligated to, or
elects to, extend the Offer, the purchase price for each Share purchased
pursuant to the Offer will be equal to 95% of the per Share NAV determined as of
the close of the regular trading session of the NYSE on the Expiration Date as
extended. No Shares will be accepted for payment until on or after the new
Expiration Date.
17. MISCELLANEOUS. The Offer is not being made to, nor will the Fund
accept tenders from, or on behalf of, owners of Shares in any jurisdiction in
which the making of the Offer or its acceptance would not comply with the
securities or "blue sky" laws of that jurisdiction. The Fund is not aware of any
jurisdiction in which the making of the Offer or the acceptance of tenders of,
purchase of, or payment for, Shares in accordance with the Offer would not be in
compliance with the laws of such jurisdiction. The Fund, however, reserves the
right to exclude shareholders in any jurisdiction in which it is asserted that
the Offer cannot lawfully be made or tendered Shares cannot lawfully be
accepted, purchased or paid for. So long as the Fund makes a good-faith effort
to comply with any state law deemed applicable to the Offer, the Fund believes
that the exclusion of holders residing in any such jurisdiction is permitted
under Rule 13e-4(f)(9) promulgated under the Exchange Act. In any jurisdiction
where the securities, blue sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on the Fund's
behalf by one or more brokers or dealers licensed under the laws of such
jurisdiction.
September 8, 2000 THE LATIN AMERICA INVESTMENT FUND, INC.
21