<Page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File No. 811-06094
-----------------------------------------------
THE LATIN AMERICA EQUITY FUND, INC.
---------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
466 Lexington Avenue, New York, New York 10017-3140
---------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Hal Liebes, Esq.
The Latin America Equity Fund, Inc.
466 Lexington Avenue
New York, New York 10017-3140
Registrant's telephone number, including area code:(212) 875-3500
Date of fiscal year end: December 31, 2003
Date of reporting period: January 1, 2003 to December 31, 2003
<Page>
ITEM 1. REPORTS TO STOCKHOLDERS.
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
ANNUAL REPORT
DECEMBER 31, 2003
[LAQ LISTED NYSE(R) LOGO]
3019-AR-03
<Page>
CONTENTS
<Table>
Letter to Shareholders 1
Portfolio Summary 3
Schedule of Investments 5
Statement of Assets and Liabilities 8
Statement of Operations 9
Statement of Changes in Net Assets 10
Financial Highlights 12
Notes to Financial Statements 14
Report of Independent Auditors 20
Results of Annual Meeting of Shareholders 21
Tax Information 21
Description of InvestLink(SM) Program 22
Information Concerning Directors and Officers 25
</Table>
<Page>
LETTER TO SHAREHOLDERS
February 17, 2004
DEAR SHAREHOLDER:
For the year ended December 31, 2003, The Latin America Equity Fund, Inc. (the
"Fund") had a gain of 54.90%, based on net asset value, assuming reinvestment of
dividends. By comparison, the Morgan Stanley Capital International EMF (Emerging
Markets Free) Latin America Index* had an increase of 73.52% for the period.
Latin American markets rallied strongly in the year, performing well in both
absolute and relative terms (Latin America was the top-performing region
globally in 2003). A confluence of positive forces aided emerging markets and
Latin America in particular: optimism regarding the U.S. and global economies;
rising commodity prices and strengthening currencies; the prospects for real
financial reforms in specific countries; and a generally elevated appetite for
risk in the wake of easy monetary policy (and low interest rates) globally.
Virtually all of the region's markets rose in the year in local terms, and had
generally better results in dollar terms due to appreciation in most of the
region's currencies. Brazil and Argentina were the best performers. Brazil
continued to benefit from progress on fiscal reforms, evidenced by an extension
of an IMF package agreement and an upgrade of its credit rating by a major
credit rating agency. In addition, Brazilian assets benefited from a supportive
interest-rate backdrop: the country's central bank lowered short-term rates by
10 percentage points in the year, with the first reduction occurring in June.
Argentina, meanwhile, was aided by encouraging news on the tax collection,
inflation and economic fronts. Mexico had a more modest gain, due in part to
less enthusiasm regarding its reform efforts.
The Fund benefited from the general rise in Latin American equities in the year,
though it trailed its benchmark. This was due in part to a decline in value in
the Fund's private equity holdings, mostly as a result of the decline in value
of one holding that was subsequently liquidated mid-year. While the performance
of this holding was weak in 2003 (due mostly to general weakness in its local
stock market), it produced a positive return for the Fund over the six-year
holding period. In addition, the Fund's relative return was hindered by its
underweighting or avoidance of certain volatile, higher risk stocks (mostly
within Brazil) that surged upward in the period.
In terms of regional allocation, we continued to concentrate primarily on Mexico
and Brazil. Noteworthy recent moves we made in these markets include reducing
our exposure to the consumer-staples area (most specifically, beverage and
tobacco companies), while adding some electric utilities stocks. Within Mexico,
we pared our exposure to certain stocks that were strong performers in 2003
(e.g., a cement company), and purchased a few market laggards that we believe
represent better values. In anticipation of an improving Mexican economy over
the next year, we also raised our weighting in the media sector. Elsewhere, we
marginally increased our exposure to certain smaller markets in the latter part
of the period, for example by adding an Argentine energy company.
Looking ahead, we believe that Latin American stock markets could be more
volatile in 2004, with investors likely to take profits on any disappointing
developments. However, we also see grounds for optimism that the region has
upside potential, given the positive forces still largely in place. Valuations
in these markets, meanwhile, continue to be compelling in our judgment compared
with valuations in developed equity markets. Barring an aggressive upward spike
in U.S. interest rates, we think the generally positive backdrop of economic
growth, high and/or rising commodity prices, and strengthening currencies in
many emerging markets should outweigh interest-rate worries.
One key local factor we are monitoring is local politics in Brazil. The new
administration made progress on reform in 2003, and generally regained
credibility from the international financial community. However, much is
expected
1
<Page>
locally in the way of social results this year. Lula supporters have thus far
seemed patient, but the consumer has suffered in terms of real wage reductions
and increased unemployment. Lula has the enormous challenge of trying to live up
to his campaign promises during an electoral year (local elections are scheduled
for the end of 2004). Fortunately for now, the global environment appears
supportive but we expect social issues and the extent of economic recovery to
dominate sentiment in Brazil for the remainder of the year.
Respectfully,
/s/ Emily Alejos /s/ Matthew J.K. Hickman
Emily Alejos Matthew J.K. Hickman
Co-Chief Investment Officer** Co-Chief Investment Officer***
INTERNATIONAL INVESTING ENTAILS SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY
FLUCTUATIONS, LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENCES IN
ACCOUNTING METHODS; THESE RISKS ARE GENERALLY HEIGHTENED FOR EMERGING-MARKET
INVESTMENTS.
IN ADDITION TO HISTORICAL INFORMATION, THIS REPORT CONTAINS FORWARD-LOOKING
STATEMENTS, WHICH MAY CONCERN, AMONG OTHER THINGS, DOMESTIC AND FOREIGN MARKET,
INDUSTRY AND ECONOMIC TRENDS AND DEVELOPMENTS AND GOVERNMENT REGULATION AND
THEIR POTENTIAL IMPACT ON THE FUND'S INVESTMENT PORTFOLIO. THESE STATEMENTS ARE
SUBJECT TO RISKS AND UNCERTAINTIES AND ACTUAL TRENDS, DEVELOPMENTS AND
REGULATIONS IN THE FUTURE AND THEIR IMPACT ON THE FUND COULD BE MATERIALLY
DIFFERENT FROM THOSE PROJECTED, ANTICIPATED OR IMPLIED. THE FUND HAS NO
OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS.
* The Morgan Stanley Capital International EMF (Emerging Markets Free) Latin
America Index is a free float-adjusted market capitalization index that is
designed to measure equity-market performance in Latin America. It is the
exclusive property of Morgan Stanley Capital International Inc. Investors cannot
invest directly in an index.
** Emily Alejos, who is a Director of Credit Suisse Asset Management, LLC
("CSAM") shares primary responsibility for management of the Fund's assets. She
has served the Fund in such capacity since November 9, 1999. Ms. Alejos joined
CSAM in 1997 from Bankers Trust, where she was an emerging markets portfolio
manager. Previously, she focused on Latin American equities at G.T. Capital
Management in San Francisco. Ms. Alejos is Co-Chief Investment Officer of the
Fund. She is also the Chief Investment Officer of The Brazilian Equity Fund,
Inc. and The Emerging Markets Telecommunications Fund, Inc. and an Investment
Officer of The Chile Fund, Inc.
*** Matthew J.K. Hickman, who is a Vice President of Credit Suisse Asset
Management, LLC ("CSAM") shares primary responsibility for management of the
Fund's assets. He has served the Fund in such capacity since February 2004. He
is a portfolio manager specializing in emerging equity markets. Mr. Hickman
joined CSAM in 2003 from Compass Group Investment Advisors, where he was general
manager of the private wealth management division based in Santiago, Chile.
Previously, he was a financial advisor in Credit Suisse First Boston's Private
Client Services channel; an equity analyst focusing on Latin American
telecommunications companies and several Latin American country markets at ABN
AMRO, Lehman Brothers, Bear, Stearns & Co. Inc. and James Capel; and an equity
analyst and member of the management team for the Five Arrows Chile Fund at
Rothschild Asset Management. Mr. Hickman holds a B.A. in modern languages from
Cambridge University and a diploma in corporate finance from London Business
School. He is fluent in Spanish, Portuguese and French, and is a candidate for
Level II of the Chartered Financial Analyst Examination in 2004. He is also the
Chief Investment Officer of The Chile Fund, Inc.
2
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
PORTFOLIO SUMMARY - AS OF DECEMBER 31, 2003 (UNAUDITED)
[CHART]
GEOGRAPHIC ASSET BREAKDOWN
AS A PERCENT OF NET ASSETS
<Table>
<Caption>
12/31/2003 12/31/2002
Argentina 0.58% 1.13%
Brazil 49.09% 35.44%
Chile 9.58% 9.85%
Jamaica 0.00% 6.01%
Latin America 1.07% 1.59%
Mexico 36.14% 43.98%
Peru 0.88% 2.05%
Venezuela 1.12% 1.13%
Global 1.29% 1.90%
Cash & Other Assets 0.25% -3.08%
</Table>
[CHART]
SECTOR ALLOCATION
AS A PERCENT OF NET ASSETS
<Table>
<Caption>
12/31/2003 12/31/2002
Banking 7.12% 2.21%
Bottling 5.56% 4.04%
Broadcast, Radio & Television 3.77% 2.72%
Cellular Telecommunications 9.21% 6.55%
Cement 3.75% 6.50%
Electric-Integrated 5.06% 3.02%
Food-Retail 3.97% 0.67%
Mining 9.17% 10.50%
Oil & Natural Gas 12.73% 10.86%
Retail-Major Department Stores 3.76% 5.91%
Telephone-Integrated 16.17% 21.39%
Other 19.73% 25.63%
</Table>
3
<Page>
TOP 10 HOLDINGS, BY ISSUER
<Table>
<Caption>
PERCENT OF
HOLDING SECTOR COUNTRY NET ASSETS
- ---------------------------------------------------------------------------------------------------------
1. Petroleo Brasileiro S.A. Oil & Natural Gas Brazil 12.7
2. Telefonos de Mexico, S.A. de C.V. Telephone-Integrated Mexico 8.3
3. Companhia Vale do Rio Doce Mining Brazil 8.3
4. America Movil, S.A. de C.V. Cellular Telecommunications Mexico 8.0
5. Companhia de Bebidas das Americas Bottling Brazil 5.6
6. Cemex, S.A. de C.V. Cement Mexico 3.8
7. Grupo Televisa, S.A. Broadcast, Radio & Television Mexico 3.3
8. Banco Itau Holding Financeira S.A. Banking Brazil 3.3
9. Wal-Mart de Mexico, S.A. de C.V. Retail-Major Department Stores Mexico 3.3
10. Gerdau S.A. Steel Brazil 2.9
</Table>
4
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
SCHEDULE OF INVESTMENTS - DECEMBER 31, 2003
<Table>
<Caption>
NO. OF
DESCRIPTION SHARES VALUE
- ----------------------------------------------------------------------------------------------
EQUITY OR EQUITY-LINKED SECURITIES-99.75%
ARGENTINA-0.58%
TELEPHONE-INTEGRATED-0.58%
Telecom Argentina Stet -
France Telecom S.A., ADR+
(Cost $475,630) 74,000 $ 647,500
--------------
BRAZIL-49.09%
BANKING-5.23%
Banco Bradesco S.A., PN 244,500,000 1,285,952
Banco Itau Holding
Financeira S.A., PN 36,960,000 3,670,422
Uniao de Bancos
Brasileiros S.A., GDR 36,600 913,170
--------------
5,869,544
--------------
BOTTLING-5.56%
Companhia de Bebidas das
Americas, PN, ADR 244,600 6,239,746
--------------
BUILDING PRODUCTS-0.50%
Duratex S.A., PN 19,500,000 560,102
--------------
CELLULAR TELECOMMUNICATIONS-1.21%
Telesp Celular Participacoes
S.A., ADR+ 140,000 921,200
Telesp Celular Participacoes
S.A., PN+ 167,200,000 437,960
--------------
1,359,160
--------------
ELECTRIC-INTEGRATED-3.41%
Centrais Eletricas Brasileiras
S.A., PNB 122,600,000 1,917,481
Companhia Energetica de
Minas Gerais, ADR 103,900 1,911,760
--------------
3,829,241
--------------
FOOD-RETAIL-2.44%
Companhia Brasileira de
Distribuicao Grupo Pao de
Acucar, ADR 108,600 2,731,290
--------------
MINING-8.29%
Companhia Vale do Rio Doce,
ADR 180,500 $ 9,297,555
--------------
OIL & NATURAL GAS-12.73%
Petroleo Brasileiro S.A., ADR 535,700 14,281,762
--------------
PAPER & RELATED PRODUCTS-1.63%
Aracruz Celulose S.A., ADR 27,200 953,088
Votorantim Celulose e Papel
S.A., ADR 28,000 877,800
--------------
1,830,888
--------------
STEEL-2.90%
Gerdau S.A., ADR 31,600 638,952
Gerdau S.A., PN 123,900 2,615,190
--------------
3,254,142
--------------
TELEPHONE-INTEGRATED-5.19%
Brasil Telecom Participacoes
S.A., ADR 40,600 1,534,680
Tele Norte Leste Participacoes
S.A., ADR 202,400 3,123,032
Telecomunicacoes de Sao Paulo
S.A., PN 74,200,000 1,163,066
--------------
5,820,778
--------------
TOTAL BRAZIL
(Cost $35,601,854) 55,074,208
--------------
CHILE-9.58%
BANKING-1.89%
Banco de Chile 6,300,000 294,507
Banco Santander Chile S.A 29,273,000 673,840
Banco Santander Chile
S.A., ADR 14,900 354,322
Corpbanca S.A., ADR## 30,518 798,294
--------------
2,120,963
--------------
CHEMICALS-DIVERSIFIED-0.68%
Sociedad Quimica y Minera de
Chile S.A., Class B 182,100 762,113
--------------
CONTAINERS-METAL/GLASS-0.19%
Cristalerias de Chile S.A 22,603 217,428
--------------
</Table>
See accompanying notes to financial statements.
5
<Page>
<Table>
<Caption>
NO. OF
DESCRIPTION SHARES/UNITS VALUE
- ----------------------------------------------------------------------------------------------
DIVERSIFIED OPERATIONS-1.53%
Empresas Copec S.A 238,785 $ 1,720,719
--------------
ELECTRIC-INTEGRATED-1.65%
Colbun S.A 4,250,000 580,964
Enersis S.A.+ 2,500,000 362,839
Enersis S.A., ADR 123,000 905,280
--------------
1,849,083
--------------
FOOD & BEVERAGES-0.85%
Compania Cervecerias Unidas
S.A., ADR 24,300 522,450
Embotelladora Andina
S.A., PNA 47,000 82,491
Vina Concha y Toro S.A 404,311 347,985
--------------
952,926
--------------
FOOD-RETAIL-0.47%
Distribucion y Servicio D&S
S.A., ADR 25,200 520,632
--------------
PAPER & RELATED PRODUCTS-0.89%
Empresas CMPC S.A 50,000 999,916
--------------
RETAIL-MAJOR DEPARTMENT STORES-0.49%
S.A.C.I. Falabella, S.A 310,000 548,274
--------------
TELEPHONE-INTEGRATED-0.94%
Compania de Telecomunicaciones
de Chile S.A., ADR 33,300 497,835
Compania de Telecomunicaciones
de Chile S.A., Class A 98,000 372,120
Empresa Nacional de
Telecomunicaciones S.A 30,000 184,794
--------------
1,054,749
--------------
TOTAL CHILE
(Cost $7,044,709) 10,746,803
--------------
LATIN AMERICA-1.07%
VENTURE CAPITAL-1.07%
J.P. Morgan Latin America Capital
Partners (Cayman), L.P.+ ++ 807,719 696,617
J.P. Morgan Latin America Capital
Partners (Delaware), L.P.+ ++# 1,363,091 506,266
--------------
1,202,883
--------------
<Caption>
NO. OF
DESCRIPTION SHARES VALUE
- ----------------------------------------------------------------------------------------------
TELECOMMUNICATIONS-0.00%
International Wireless
Communications Holdings
Corp.++ 12,636 $ 0
--------------
TOTAL LATIN AMERICA
(Cost $2,026,887) 1,202,883
--------------
MEXICO-36.14%
BROADCAST, RADIO & TELEVISION-3.77%
Grupo Televisa, S.A., ADR 92,200 3,675,092
TV Azteca, S.A. de C.V., ADR 61,200 556,920
--------------
4,232,012
--------------
CELLULAR TELECOMMUNICATIONS-8.00%
America Movil, S.A. de C.V.,
Series L, ADR 328,400 8,978,456
--------------
CEMENT-3.75%
Cemex, S.A. de C.V., ADR 160,700 4,210,340
--------------
DIVERSIFIED OPERATIONS-0.93%
Grupo Carso S.A. de C.V.,
Series A1 295,500 1,038,780
--------------
ENGINEERING & CONSTRUCTION-0.90%
Corporacion GEO, S.A. de C.V.,
Series B+ 197,600 1,007,124
--------------
FINANCIAL SERVICES-3.35%
Grupo Financiero Banorte
S.A. de C.V., Series O 482,400 1,674,329
Grupo Financiero BBVA
Bancomer, S.A. de C.V., Class B+2,430,970 2,076,920
--------------
3,751,249
--------------
FOOD & BEVERAGES-1.80%
Fomento Economico Mexicano,
S.A. de C.V., ADR 29,400 1,084,272
Grupo Modelo, S.A. de C.V.,
Series C 391,022 936,100
--------------
2,020,372
--------------
FOOD-RETAIL-1.06%
Controladora Comercial Mexicana
S.A. de C.V 1,179,000 1,185,663
--------------
</Table>
See accompanying notes to financial statements.
6
<Page>
<Table>
<Caption>
NO. OF
DESCRIPTION SHARES/UNITS VALUE
- ----------------------------------------------------------------------------------------------
REAL ESTATE DEVELOPMENT-0.97%
Consorcio ARA, S.A. de C.V.+ 439,300 $ 1,090,773
--------------
RETAIL-MAJOR DEPARTMENT STORES-3.27%
Wal-Mart de Mexico, S.A. de
C.V., ADR 128,606 3,665,708
--------------
TELEPHONE-INTEGRATED-8.34%
Telefonos de Mexico, S.A. de
C.V., Class L, ADR 283,300 9,357,399
--------------
TOTAL MEXICO
(Cost $33,701,291) 40,537,876
--------------
PERU-0.88%
MINING-0.88%
Compania de Minas Buenaventura
S.A.u., ADR (Cost $370,733) 34,866 986,010
--------------
VENEZUELA-1.12%
TELEPHONE-INTEGRATED-1.12%
Compania Anonima Nacional
Telefonos de Venezuela, ADR
(Cost $1,100,649) 82,700 1,262,002
--------------
GLOBAL-1.29%
VENTURE CAPITAL-1.29%
Emerging Markets
Ventures I L.P.+ ++#
(Cost $1,648,204) 2,194,792 1,443,515
--------------
TOTAL EQUITY OR EQUITY-LINKED
SECURITIES (Cost $81,969,957) 111,900,797
--------------
<Caption>
PRINCIPAL
DESCRIPTION AMOUNT (000'S) VALUE
- ----------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENT-0.60%
GRAND CAYMAN-0.60%
Brown Brothers Harriman & Co.,
overnight deposit, 0.10%,
01/02/04* (Cost $673,000) $ 673 $ 673,000
--------------
TOTAL INVESTMENTS-100.35%
(Cost $82,642,957) (Notes A,D,F) 112,573,797
--------------
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS-(0.35)% (396,204)
--------------
NET ASSETS-100.00% $ 112,177,593
==============
</Table>
+ Security is non-income producing.
## SEC Rule 144A security. Such securities are traded only among "qualified
institutional buyers."
++ Restricted security, not readily marketable; security is valued at fair
value as determined in good faith under procedures established by the Board
of Directors. (See Notes A and G.)
# As of December 31, 2003, the Fund has committed to investing additional
capital as follows: J.P. Morgan Latin America Capital Partners (Delaware),
L.P. ($3,789,370) and Emerging Markets Ventures I L.P. ($305,208). The
aggregate amount of open commitments for the Fund is $4,094,578.
* Variable rate account. Rate resets on a daily basis; amounts are available
on the same business day.
ADR American Depositary Receipts.
GDR Global Depositary Receipts.
PN Preferred Shares.
PNA Preferred Shares, Class A.
PNB Preferred Shares, Class B.
See accompanying notes to financial statements.
7
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 2003
<Table>
ASSETS
Investments, at value (Cost $82,642,957) (Notes A, D, F) $ 112,573,797
Cash (including $36,514 of foreign currencies with a cost of $32,125) 36,583
Dividends receivable 792,050
Prepaid expenses 15,575
--------------
Total Assets 113,418,005
--------------
LIABILITIES
Payables:
Distributions (Note A) 885,114
Investment advisory fee (Note B) 220,191
Administration fees (Note B) 41,162
Directors' fees 974
Other accrued expenses 92,971
--------------
Total Liabilities 1,240,412
--------------
NET ASSETS (applicable to 6,322,240 shares of common stock outstanding) (Note C) $ 112,177,593
==============
NET ASSETS CONSIST OF
Capital stock, $0.001 par value; 6,322,240 shares issued and outstanding
(100,000,000 shares authorized) $ 6,322
Paid-in capital 140,606,867
Distributions in excess of net investment income (209,752)
Accumulated net realized loss on investments and foreign currency related transactions (58,161,972)
Net unrealized appreciation in value of investments and translation of other
assets and liabilities denominated in foreign currencies 29,936,128
--------------
Net assets applicable to shares outstanding $ 112,177,593
==============
NET ASSET VALUE PER SHARE ($112,177,593 DIVIDED BY 6,322,240) $ 17.74
==============
MARKET PRICE PER SHARE $ 15.26
==============
</Table>
See accompanying notes to financial statements.
8
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 2003
<Table>
INVESTMENT INCOME
Income (Note A):
Dividends $ 3,026,430
Net investment income allocated from partnerships 566,657
Interest 3,874
Less: Foreign taxes withheld (250,183)
--------------
Total Investment Income 3,346,778
--------------
Expenses:
Investment advisory fees (Note B) 731,621
Administration fees (Note B) 160,916
Audit fees 77,672
Legal fees 72,403
Custodian fees 54,650
Printing (Note B) 51,562
Directors' fees 41,889
Accounting fees 36,182
Transfer agent fees 25,042
NYSE listing fees 23,607
Insurance 9,976
Other 10,623
Brazilian taxes (Note A) 1,697
Chilean repatriation taxes (Note A) (110,958)
--------------
Total Expenses 1,186,882
--------------
Net Investment Income 2,159,896
--------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND
FOREIGN CURRENCY RELATED TRANSACTIONS
Net realized gain/(loss) from:
Investments 2,741,981
Foreign currency related transactions (72,596)
Net change in unrealized depreciation in value of investments and translation
of other assets and liabilities denominated in foreign currencies 35,187,981
--------------
Net realized and unrealized gain on investments and foreign currency related transactions 37,857,366
--------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 40,017,262
==============
</Table>
See accompanying notes to financial statements.
9
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------------
2003 2002
-------------- --------------
INCREASE/(DECREASE) IN NET ASSETS
Operations:
Net investment income $ 2,159,896 $ 210,693
Net realized gain/(loss) on investments and foreign currency related
transactions 2,669,385 (16,468,305)
Net change in unrealized appreciation/depreciation in value of
investments and translation of other assets and liabilities denominated
in foreign currencies 35,187,981 (9,317,510)
-------------- --------------
Net increase/(decrease) in net assets resulting from operations 40,017,262 (25,575,122)
-------------- --------------
Dividends to shareholders:
Net investment income (885,114) (1,327,670)
-------------- --------------
Capital share transactions (Note H):
Cost of 1,115,689 shares purchased under tender offer -- (12,060,598)
-------------- --------------
Total increase/(decrease) in net assets 39,132,148 (38,963,390)
-------------- --------------
NET ASSETS
Beginning of year 73,045,445 112,008,835
-------------- --------------
End of year $ 112,177,593 $ 73,045,445
============== ==============
</Table>
See accompanying notes to financial statements.
10
<Page>
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11
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
FINANCIAL HIGHLIGHTS#
Contained below is per share operating performance data for a share of common
stock outstanding, total investment return, ratios to average net assets and
other supplemental data for each year indicated. This information has been
derived from information provided in the financial statements and market price
data for the Fund's shares.
<Table>
<Caption>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------
2003 2002 2001
------------ ------------ ------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $ 11.55 $ 15.06 $ 16.60
------------ ------------ ------------
Net investment income/(loss) 0.34+ 0.01** 0.41*
Net realized and unrealized gain/(loss) on investments
and foreign currency related transactions 5.99 (3.41) (1.50)
------------ ------------ ------------
Net increase/(decrease) in net assets resulting from operations 6.33 (3.40) (1.09)
------------ ------------ ------------
Dividends and distributions to shareholders:
Net investment income (0.14) (0.21) (0.57)
Net realized gain on investments and
foreign currency related transactions -- -- --
------------ ------------ ------------
Total dividends and distributions to shareholders (0.14) (0.21) (0.57)
------------ ------------ ------------
Anti-dilutive impact due to capital shares tendered or repurchased -- 0.10 0.12
------------ ------------ ------------
Dilutive impact due to capital share rights offering -- -- --
------------ ------------ ------------
Net asset value, end of year $ 17.74 $ 11.55 $ 15.06
============ ============ ============
Market value, end of year $ 15.26 $ 9.67 $ 12.15
============ ============ ============
Total investment return(a) 59.15% (18.83)% (1.07)%
============ ============ ============
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000 omitted) $ 112,178 $ 73,045 $ 112,009
Ratio of expenses to average net assets (b) 1.37% 3.06% 1.51%
Ratio of expenses to average net assets, excluding fee waivers 1.37% 3.06% 1.51%
Ratio of expenses to average net assets, excluding taxes 1.49% 1.52% 1.40%
Ratio of net investment income/(loss) to average net assets 2.49%(c) 0.21% 2.52%
Portfolio turnover rate 62.62% 75.28% 101.73%
</Table>
# Per share amounts prior to November 10, 2000 have been restated to reflect
a conversion factor of 0.9175 for shares issued in connection with the
merger of The Latin America Investment Fund, Inc. and The Latin America
Equity Fund, Inc.
* Based on actual shares outstanding on November 21, 2001 (prior to the 2001
tender offer) and December 31, 2001.
** Based on actual shares outstanding on November 6, 2002 (prior to the 2002
tender offer) and December 31, 2002.
+ Based on average shares outstanding.
++ Includes a $0.01 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.
See accompanying notes to financial statements.
12
<Page>
<Table>
<Caption>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
2000 1999 1998 1997
------------ ------------ ------------ ------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $ 18.57 $ 10.96 $ 18.77 $ 18.41
------------ ------------ ------------ ------------
Net investment income/(loss) (0.11)+ 0.07+ 0.16 0.16
Net realized and unrealized gain/(loss) on investments
and foreign currency related transactions (2.44) 7.07 (7.85)++ 2.01
------------ ------------ ------------ ------------
Net increase/(decrease) in net assets resulting from operations (2.55) 7.14 (7.69) 2.17
------------ ------------ ------------ ------------
Dividends and distributions to shareholders:
Net investment income (0.08) -- (0.12) (0.17)
Net realized gain on investments and
foreign currency related transactions -- -- -- (1.64)
------------ ------------ ------------ ------------
Total dividends and distributions to shareholders (0.08) -- (0.12) (1.81)
------------ ------------ ------------ ------------
Anti-dilutive impact due to capital shares tendered or repurchased 0.66 0.47 -- --
------------ ------------ ------------ ------------
Dilutive impact due to capital share rights offering -- -- -- --
------------ ------------ ------------ ------------
Net asset value, end of year $ 16.60 $ 18.57 $ 10.96 $ 18.77
============ ============ ============ ============
Market value, end of year $ 12.875 $ 13.760 $ 7.834 $ 14.918
============ ============ ============ ============
Total investment return(a) (5.87)% 75.65% (46.63)% 10.29%
============ ============ ============ ============
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000 omitted) $ 145,281 $ 123,262 $ 86,676 $ 148,130
Ratio of expenses to average net assets (b) 2.13% 2.14% 2.41% 1.89%
Ratio of expenses to average net assets, excluding fee waivers 2.19% 2.22% 2.60% 2.02%
Ratio of expenses to average net assets, excluding taxes 2.03% 2.05% 1.77% 1.65%
Ratio of net investment income/(loss) to average net assets (0.55)% 0.46% 1.12% 0.77%
Portfolio turnover rate 125.83% 161.71% 142.35% 111.83%
<Caption>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------
1996 1995 1994
------------ ------------ ------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $ 16.27 $ 19.53 $ 24.52
------------ ------------ ------------
Net investment income/(loss) 0.21 0.07 0.01+
Net realized and unrealized gain/(loss) on investments
and foreign currency related transactions 2.00 (3.07) 1.05
------------ ------------ ------------
Net increase/(decrease) in net assets resulting from operations 2.21 (3.00) 1.06
------------ ------------ ------------
Dividends and distributions to shareholders:
Net investment income (0.07) -- (0.18)
Net realized gain on investments and
foreign currency related transactions -- (0.26) (3.38)
------------ ------------ ------------
Total dividends and distributions to shareholders (0.07) (0.26) (3.56)
------------ ------------ ------------
Anti-dilutive impact due to capital shares tendered or repurchased -- -- --
------------ ------------ ------------
Dilutive impact due to capital share rights offering -- -- (2.49)
------------ ------------ ------------
Net asset value, end of year $ 18.41 $ 16.27 $ 19.53
============ ============ ============
Market value, end of year $ 15.259 $ 14.033 $ 19.210
============ ============ ============
Total investment return(a) 9.18% (25.65)% (17.78)%
============ ============ ============
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000 omitted) $ 145,230 $ 128,377 $ 153,128
Ratio of expenses to average net assets (b) 1.69% 2.04% 1.94%
Ratio of expenses to average net assets, excluding fee waivers 1.80% 2.15% --
Ratio of expenses to average net assets, excluding taxes -- 1.81% 1.70%
Ratio of net investment income/(loss) to average net assets 1.16% 0.42% 0.04%
Portfolio turnover rate 43.22% 27.05% 68.46%
</Table>
(a) Total investment return at market value is based on the changes in market
price of a share during the year and assumes reinvestment of dividends and
distributions, if any, at actual prices pursuant to the Fund's dividend
reinvestment program.
(b) Ratios reflect actual expenses incurred by the Fund. Amounts are net of fee
waivers and inclusive of taxes.
(c) Ratio includes the effect of a reversal of Chilean repatriation tax
accrual; excluding the reversal, the ratio would have been 2.36%.
13
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A. SIGNIFICANT ACCOUNTING POLICIES
The Latin America Equity Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as a closed-end, non-diversified
management investment company.
USE OF ESTIMATES: The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
("GAAP") requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenue and expenses during the reporting period. Actual results could differ
from those estimates.
SECURITY VALUATION: The net asset value of the Fund is determined daily as of
the close of regular trading on the New York Stock Exchange, Inc. ("the
Exchange") on each day the Exchange is open for business. The Fund's equity
investments are valued at market value, which is generally determined using the
closing price on the exchange or market on which the security is primarily
traded at the time of valuation (the "Valuation Time"). If no sales are
reported, equity investments are generally valued at the most recent bid
quotation as of the Valuation Time or at the lowest ask quotation in the case of
short sale of securities. Debt securities with a remaining maturity greater than
60 days are valued in accordance with the price supplied by a pricing service,
which may use a matrix, formula or other objective method that takes into
consideration market indices, yield curves and other specific adjustments. Debt
obligations that will mature in 60 days or less are valued on the basis of
amortized cost, which approximates market value, unless the Board of Directors
determines that using this method would not reflect an investment's value.
Securities and other assets for which market quotations are not readily
available or whose values have been materially affected by events occurring
before the Fund's Valuation Time, but after the close of the securities primary
market are valued at fair value as determined in good faith under procedures
established by the Board of Directors. At December 31, 2003, the Fund held 2.36%
of its net assets in securities valued at fair value as determined in good faith
by the Board of Directors with an aggregate cost of $3,675,091 and fair value of
$2,646,398. The Fund's estimate of fair value assumes a willing buyer and a
willing seller neither acting under a compulsion to buy or sell. Although these
securities may be resold in privately negotiated transactions, the prices
realized on such sales could differ from the prices originally paid by the Fund
or the current carrying values, and the difference could be material.
SHORT-TERM INVESTMENT: The Fund sweeps available cash into a short-term deposit
issued by Brown Brothers Harriman & Co., the Fund's custodian. The short-term
time deposit is a variable rate account classified as a short-term investment.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are
accounted for on a trade date basis. The cost of investments sold is determined
by use of the specific identification method for both financial reporting and
U.S. income tax purposes. Interest income is accrued as earned; dividend income
is recorded on the ex-dividend date.
TAXES: No provision is made for U.S. income or excise taxes as it is the Fund's
intention to continue to qualify as a regulated investment company and to make
the requisite distributions to its shareholders which will be sufficient to
relieve it from all or substantially all U.S. income and excise taxes.
Income received by the Fund from sources within Latin America may be subject to
withholding and other taxes imposed by such countries. Also, certain Latin
American countries impose taxes on funds remitted or repatriated from such
countries.
14
<Page>
The Fund accrues foreign taxes on realized gains and repatriation taxes in an
amount equal to what the Fund would owe if the securities were sold and the
proceeds repatriated on the valuation date as a liability and reduction of
realized/unrealized gains. Taxes on foreign income are recorded when the related
income is recorded.
The amount paid for Chilean repatriation taxes in 2003 was less than the amount
accrued in the prior year. The difference of $110,958 is presented in the
Statement of Operations.
FOREIGN CURRENCY TRANSLATIONS: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(I) market value of investment securities, assets and liabilities at the
valuation date rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at
the relevant rates of exchange prevailing on the respective dates of
such transactions.
The Fund does not isolate that portion of gains and losses on investments in
equity securities which is due to changes in the foreign exchange rates from
that which is due to changes in market prices of equity securities. Accordingly,
realized and unrealized foreign currency gains and losses with respect to such
securities are included in the reported net realized and unrealized gains and
losses on investment transactions balances.
The Fund reports certain foreign currency related transactions and foreign taxes
withheld on security transactions as components of realized gains for financial
reporting purposes, whereas such foreign currency related transactions are
treated as ordinary income for U.S. federal income tax purposes.
Net unrealized currency gains or losses from valuing foreign currency
denominated assets and liabilities at period end exchange rates are reflected as
a component of net unrealized appreciation/depreciation in value of investments,
and translation of other assets and liabilities denominated in foreign
currencies.
Net realized foreign exchange gains or losses represent foreign exchange gains
and losses from transactions in foreign currencies and forward foreign currency
contracts, exchange gains or losses realized between the trade date and
settlement dates on security transactions, and the difference between the
amounts of interest and dividends recorded on the Fund's books and the U.S.
dollar equivalent of the amounts actually received.
DISTRIBUTIONS OF INCOME AND GAINS: The Fund distributes at least annually to
shareholders substantially all of its net investment income and net realized
short-term capital gains, if any. The Fund determines annually whether to
distribute any net realized long-term capital gains in excess of net realized
short-term capital losses, including capital loss carryovers, if any. An
additional distribution may be made to the extent necessary to avoid the payment
of a 4% U.S. federal excise tax. Dividends and distributions to shareholders are
recorded by the Fund on the ex-dividend date.
On December 12, 2003, a dividend in the aggregate amount of $885,114, equal to
$0.14 per share from net investment income was declared. This dividend was
payable on January 9, 2004 to shareholders of record as of December 23, 2003.
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for U.S.
income tax purposes due to U.S. generally accepted accounting principles/tax
differences in the character of income and expense recognition.
PARTNERSHIP ACCOUNTING POLICY: The Fund records its pro-rata share of the
income/(loss) and capital
15
<Page>
gains/(losses) allocated from the underlying partnerships and adjusts the cost
of the underlying partnerships accordingly. These amounts are included in the
Fund's Statement of Operations.
OTHER: The Fund may invest in securities of foreign countries and governments
which involve certain risks in addition to those inherent in domestic
investments. Such risks generally include, among others currency risks
(fluctuations in currency exchange rates), information risk (key information may
be inaccurate or unavailable) and political risk (expropriation, nationalization
or the imposition of capital or currency controls or punitive taxes). Other
risks of investing in foreign securities include liquidity and valuation risks.
Some countries require governmental approval for the repatriation of investment
income, capital or the proceeds of sales of securities by foreign investors. In
addition, if there is a deterioration in a country's balance of payments or for
other reasons, a country may impose temporary restrictions on foreign capital
remittances abroad. Amounts repatriated prior to the end of specified periods
may be subject to taxes as imposed by a foreign country.
The Latin American securities markets are substantially smaller, less liquid and
more volatile than the major securities markets in the United States. A high
proportion of the securities of many companies in Latin American countries may
be held by a limited number of persons, which may limit the number of securities
available for the investment by the Fund. The limited liquidity of Latin
American country securities markets may also affect the Fund's ability to
acquire or dispose of securities at the price and time it wishes to do so.
The Fund, subject to local investment limitations, may invest up to 10% of its
assets (at the time of commitment) in illiquid equity securities, including
securities of private equity funds (whether in corporate or partnership form)
that invest primarily in emerging markets. When investing through another
investment fund, the Fund will bear its proportionate share of the expenses
incurred by the fund, including management fees. Such securities are expected to
be illiquid which may involve a high degree of business and fSinancial risk and
may result in substantial losses. Because of the current absence of any liquid
trading market for these investments, the Fund may take longer to liquidate
these positions than would be the case for publicly traded securities. Although
these securities may be resold in privately negotiated transactions, the prices
realized on such sales could be substantially less than those originally paid by
the Fund or the current carrying values and these differences could be material.
Further, companies whose securities are not publicly traded may not be subject
to the disclosure and other investor protection requirements applicable to
companies whose securities are publicly traded.
NOTE B. AGREEMENTS
Credit Suisse Asset Management, LLC ("CSAM") serves as the Fund's investment
adviser with respect to all investments. CSAM receives as compensation for its
advisory services from the Fund, an annual fee, calculated weekly and paid
quarterly, equal to 1.00% of the first $100 million of the Fund's average weekly
market value or net assets (whichever is lower), 0.90% of the next $50 million
and 0.80% of amounts over $150 million. For the year ended December 31, 2003,
CSAM earned $731,621 for advisory services. CSAM also provides certain
administrative services to the Fund and is reimbursed by the Fund for costs
incurred on behalf of the Fund (up to $20,000 per annum). For the year ended
December 31, 2003, CSAM was reimbursed $11,982 for administrative services
rendered to the Fund.
CELFIN CAPITAL Servicios Financieros S.A. ("Celfin") serves as the Fund's
sub-adviser with respect to Chilean investments. As compensation for its
services, Celfin is paid a fee, out of the advisory fees payable to CSAM,
calculated weekly and paid quarterly at an annual rate of 0.25% of the assets
invested in Chilean securities reduced by a percentage equal to the
16
<Page>
discount at which the Fund's shares are trading. For the year ended December 31,
2003, these sub-advisory fees amounted to $11,701.
For the year ended December 31, 2003, Celfin earned approximately $2,800 in
brokerage commissions from portfolio transactions executed on behalf of the
Fund.
Bear Stearns Funds Management Inc. ("BSFM") serves as the Fund's U.S.
administrator. The Fund pays BSFM a monthly fee that is calculated weekly at an
annual rate of 0.10% of the first $100 million of the Fund's average weekly net
assets and 0.08% of amounts in excess of $100 million. For the year ended
December 31, 2003, BSFM earned $86,947 for administrative services.
Celfin Capital S.A. Administradora de Fondos de Capital Extranjero ("AFCE")
serves as the Fund's Chilean administrator. For its services, AFCE is paid an
annual fee by the Fund equal to the greater of 2,000 Unidad de Fomentos
("U.F.s") (approximately $56,500 at December 31, 2003) or 0.10% of the Fund's
average weekly market value or net assets invested in Chile (whichever is lower)
and an annual reimbursement of out-of-pocket expenses not to exceed 500 U.F.s.
In addition, an accounting fee is also paid to AFCE. For the year ended December
31, 2003, the administration fees and accounting fees amounted to $61,987 and
$5,132, respectively.
Merrill Corporation ("Merrill"), an affiliate of CSAM, has been engaged by the
Fund to provide certain financial printing services. For the year ended December
31, 2003, Merrill was paid $28,926 for its services to the Fund.
The Independent Directors receive fifty percent (50%) of their annual retainer
in the form of shares purchased by the Fund's transfer agent in the open market.
Directors as a group own less than 1% of the Fund's outstanding shares.
NOTE C. CAPITAL STOCK
The authorized capital stock of the Fund is 100,000,000 shares of common stock,
$0.001 par value. Of the 6,322,240 shares outstanding at December 31, 2003, CSAM
owned 13,746 shares.
NOTE D. INVESTMENT IN SECURITIES
For the year ended December 31, 2003, purchases and sales of securities, other
than short-term investments, were $54,702,190 and $54,127,381, respectively.
NOTE E. CREDIT FACILITY
The Fund, together with other funds/portfolios advised by CSAM (collectively,
the "Participating Funds"), participates in a $100 million committed, unsecured
line of credit facility ("Credit Facility") with Deutsche Bank, A.G. as
administrative agent and syndication agent and State Street Bank and Trust
Company as operations agent for temporary or emergency purposes. Under the terms
of the Credit Facility, the Participating Funds pay an aggregate commitment fee
at a rate of 0.10% per annum on the average unused amount of the Credit
Facility, which is allocated among the Participating Funds in such manner as is
determined by the governing Boards of the Participating Funds. In addition, the
Participating Funds pay interest on borrowing at the Federal Funds rate plus
0.50%. During the year ended December 31, 2003, the Fund had no borrowings under
the Credit Facility.
NOTE F. FEDERAL INCOME TAXES
Income and capital gains distributions are determined in accordance with federal
income tax regulations, which may differ from GAAP. These differences are
primarily due to differing treatments of foreign currency transactions, losses
deferred due to wash sales, Post-October losses (as later defined), and excise
tax regulations.
The tax character of dividends paid during the years ended December 31 for the
Fund were as follows:
<Table>
<Caption>
ORDINARY INCOME
-------------------------
2003 2002
---------- -----------
$ 885,114 $ 1,327,670
</Table>
17
<Page>
At December 31, 2003, the components of distributable earnings on a tax basis
for the Fund were as follows:
<Table>
Undistributed ordinary income $ (209,752)
Accumulated net realized loss (53,627,663)
Unrealized appreciation 25,401,819
--------------
Total distributable earnings $ (28,435,596)
==============
</Table>
Under current tax law, certain capital losses realized after October 31 within a
taxable year may be deferred and treated as occurring on the first day of the
following tax year ("Post-October losses"). For the tax period ended December
31, 2003, the Fund incurred and elected to defer net realized losses of $17,282
from foreign currency related transactions.
At December 31, 2003, the Fund had a capital loss carryover for U.S. federal
income tax purposes of $53,610,381 of which, $9,424,172, and $674,775 expire in
2006 and 2007, respectively. These amounts are subject to Internal Revenue Code
Sections limitations. Capital loss carryforwards of $8,426,620, $154,310,
$19,880,258 and $15,050,246 expire in 2005, 2006, 2009 and 2010, respectively.
It is uncertain whether the Fund will be able to realize the benefits before
they expire.
At December 31, 2003, the identified cost for federal income tax purposes, as
well as the gross unrealized appreciation from investments for those securities
having an excess of value over cost, gross unrealized depreciation from
investments for those securities having an excess of cost over value and the net
unrealized appreciation from investments were $87,177,266, $26,766,541,
$(1,370,010) and $25,396,531, respectively.
At December 31, 2003, the Fund reclassified from accumulated net realized loss
on investments and foreign currency related transactions of $127,876 to
distributions in excess of net investment income. In addition, the Fund
reclassified $1,350 of non-deductible expenses from distributions in excess of
net investment income to paid-in capital, to adjust for current period permanent
book/tax differences. Net assets were not affected by these reclassifications.
NOTE G. RESTRICTED SECURITIES
Certain of the Fund's investments are restricted as to resale and are valued at
fair value as determined in good faith under procedures established by the Board
of Directors in the absence of readily ascertainable market values. The table
below shows the number of units/shares held, the acquisition dates, aggregate
cost, fair value as of December 31, 2003, value per unit/share of such
securities and percent of net assets which the securities comprise.
<Table>
<Caption>
NUMBER FAIR PERCENT
OF VALUE AT VALUE PER OF NET
SECURITY UNITS/SHARES ACQUISITION DATES COST 12/31/03 UNIT/SHARE ASSETS
- -------- ------------ ----------------- ------------ ------------ ---------- -------
Emerging Markets
Ventures I L.P. 2,172,510 01/22/98 - 10/01/02 $ 1,627,997 $ 1,428,861 $ 0.66 1.27
11,141 06/30/03 9,066 7,327 0.66 0.01
11,141 12/30/03 11,141 7,327 0.66 0.01
---------- ------------ ------------ ----
2,194,792 1,648,204 1,443,515 1.29
---------- ------------ ------------ ----
International Wireless
Communications Holdings
Corp. 12,636 12/08/97 274,680 0 0.00 0.00
---------- ------------ ------------ ----
</Table>
18
<Page>
<Table>
<Caption>
NUMBER FAIR PERCENT
OF VALUE AT VALUE PER OF NET
SECURITY UNITS/SHARES ACQUISITION DATES COST 12/31/03 UNIT/SHARE ASSETS
- -------- ------------ ------------------- ----------- ----------- ---------- -------
J.P. Morgan Latin America Capital
Partners (Cayman), L.P. 609,755 04/10/00 - 6/28/01 $ 593,760 $ 525,883 $ 0.86 0.47
34,010 04/17/03 33,829 29,332 0.86 0.02
163,954 05/28/03 163,079 141,402 0.86 0.13
--------- ----------- ----------- ----
807,719 790,668 696,617 0.62
--------- ----------- ----------- ----
J.P. Morgan Latin America
Capital Partners (Delaware),
L.P. 1,288,029 04/10/00 - 12/09/02 898,863 478,387 0.37 0.43
75,062 04/17/03 62,676 27,879 0.37 0.02
--------- ----------- ----------- ----
1,363,091 961,539 506,266 0.45
--------- ----------- ----------- ----
Total $ 3,675,091 $ 2,646,398 2.36
=========== =========== ====
</Table>
The Fund may incur certain costs in connection with the disposition of the above
securities.
NOTE H. SELF-TENDER OFFER
In November 2002, the Fund completed a tender offer for 15% of its outstanding
shares (1,115,689 shares) at a price of $10.81 per share, pursuant to a
previously announced annual self-tender program. On December 4, 2003, the Board
of Directors announced that it was suspending the program, and had authorized
management to take the necessary actions to make the Fund's shares eligible for
sale to Chilean pension plans in Chile through a local market listing in the
belief that such eligibility may provide long term and sustained investment
interest in the Fund and thus afford both additional liquidity to existing
shareholders as well as a possible reduction in the discount from net asset
value at which the Fund's shares currently trade. If the Chilean listing (which
is expected to be completed in 2004) does not have its anticipated affect within
a reasonable period of time, the Board will consider other actions, which may
include a reinstitution of the annual self-tender offer program, share
repurchases, the combination of the Fund with another fund, open-ending,
liquidation or such other actions as the Board deems appropriate under the
circumstances.
NOTE I. CONTINGENCIES
In the normal course of business, the Fund may provide general indemnifications
pursuant to certain contracts and organizational documents. The Fund's maximum
exposure under these arrangements is dependent on future claims that may be made
against the Fund and, therefore, cannot be estimated; however, based on
experience, the risk of loss from such claims is considered remote.
19
<Page>
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders
of The Latin America Equity Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations, of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Latin America Equity Fund, Inc.
(the "Fund") at December 31, 2003, the results of its operations for the year
then ended, the changes in its net assets for each of the two years in the
period then ended, and the financial highlights for each of the ten years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States of America, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 2003 by correspondence with the custodian and issuers, provide a
reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 17, 2004
20
<Page>
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
On April 24, 2003, the Annual Meeting of Shareholders of The Latin America
Equity Fund, Inc. (the "Fund") was held and the following matters were voted
upon:
(1) To re-elect two directors to the Board of Directors of the Fund.
<Table>
NAME OF DIRECTOR FOR WITHHELD
- ---------------- --------- --------
Enrique R. Arzac 3,887,210 135,775
George W. Landau 3,881,236 141,749
</Table>
In addition to the directors re-elected at the meeting, James J. Cattano,
William W. Priest, Jr., Riordan Roett and Martin M. Torino continued as
directors of the Fund.
Effective May 21, 2003, Joseph D. Gallagher was appointed as Chairman of the
Fund, Chief Executive Officer and President. Laurence R. Smith who previously
held these positions resigned effective May 21, 2003.
TAX INFORMATION (UNAUDITED)
The Fund is required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise its shareholders within 60 days of the Fund's year end
(December 31, 2003) as to the U.S. federal tax status of dividends and
distributions received by the Fund's shareholders in respect of such year. The
$0.14 per share dividend paid in respect of such year, is represented entirely
by net investment income. The entire amount of the ordinary income dividend
represents qualifying dividend income, which is subject to a maximum tax rate of
15%. Please note that to utilize the lower tax rate for qualifying dividend
income, shareholders must have held their shares in the Fund for 60 days or
more. There were no distributions which qualified for the dividend received
deduction available to corporate shareholders.
The Fund has made an election under Section 853 to pass through foreign taxes
paid by the Fund to its shareholders. The total amount of foreign taxes that
were passed through to shareholders for the year ended December 31, 2003, were
$226,026, equal to $0.04 per share from Brazil. The entire amount of foreign
source income is from qualifying dividend income. This information is given to
meet certain requirements of the Internal Revenue Code of 1986, as amended.
Shareholders should refer to their Form1099-DIV to determine the amount
includable on their respective tax returns for 2003.
Notification for calendar year 2003 was mailed in January 2004. The notification
along with Form 1099-DIV reflects the amount to be used by calendar year
taxpayers on their U.S. federal income tax returns.
Foreign shareholders will generally be subject to U.S. withholding tax on the
amount of the actual ordinary dividends paid by the Fund. They will generally
not be entitled to foreign tax credit or deduction for the withholding taxes
paid by the Fund.
In general, distributions received by tax-exempt recipients (e.g., IRAs and
Keoghs) need not be reported as taxable income for U.S. federal income tax
purposes. However, some retirement trusts (e.g., corporate, Keogh and 403(b)(7)
plans)may need this information for their annual information reporting.
Shareholders are advised to consult their own tax advisers with respect to the
tax consequences of their investment in the Fund.
21
<Page>
DESCRIPTION OF INVESTLINK(SM) PROGRAM (UNAUDITED)
The InvestLink(SM) Program is sponsored and administered by EquiServe, L.P., not
by The Latin America Equity Fund, Inc. (the "Fund"). EquiServe, L.P., will act
as program administrator (the "Program Administrator") of the InvestLink(SM)
Program (the "Program"). The purpose of the Program is to provide existing
shareholders with a simple and convenient way to invest additional funds and
reinvest dividends in shares of the Fund's common stock ("Shares") at prevailing
prices, with reduced brokerage commissions and fees.
In order to participate in the Program, you must be a registered holder of at
least one Share of stock of the Fund. Purchases of Shares with funds from a
participant's cash payment or automatic account deduction will begin on the next
day on which funds are invested. All cash payments must be drawn on a U.S. bank
and payable in U.S. dollars. Checks must be made payable to EquiServe. If a
participant selects the dividend reinvestment option, automatic investment of
dividends generally will begin with the next dividend payable after the Program
Administrator receives his enrollment form. Once in the Program, a person will
remain a participant until he terminates his participation or sells all Shares
held in his Program account, or his account is terminated by the Program
Administrator. A participant may change his investment options at any time by
requesting a new enrollment form and returning it to the Program Administrator.
A participant will be assessed certain charges in connection with his
participation in the Program. All optional cash deposit investments will be
subject to a service charge. Sales processed through the Program will have a
service fee deducted from the net proceeds, after brokerage commissions. In
addition to the transaction charges outlined above, participants will be
assessed per share processing fees (which include brokerage commissions.)
Participants will not be charged any fee for reinvesting dividends.
The number of Shares to be purchased for a participant depends on the amount of
his dividends, cash payments or bank account or payroll deductions, less
applicable fees and commissions, and the purchase price of the Shares. The
investment date for cash payments is the 25th day of each month (or the next
trading day if the 25th is not a trading day). The investment date for dividend
reinvestment is the dividend payment date. The Program Administrator uses
dividends and funds of participants to purchase Shares of the Fund in the open
market. Such purchases will be made by participating brokers as agent for the
participants using normal cash settlement practices. All Shares purchased
through the Program will be allocated to participants as of the settlement date,
which is usually three business days from the purchase date. In all cases,
transaction processing will occur within 30 days of the receipt of funds, except
where temporary curtailment or suspension of purchases is necessary to comply
with applicable provisions of the Federal Securities laws or when unusual market
conditions make prudent investment impracticable. In the event the Program
Administrator is unable to purchase Shares within 30 days of the receipt of
funds, such funds will be returned to the participants.
The average price of all Shares purchased by the Program Administrator with all
funds received during the time period from two business days preceding any
investment date up to the second business day preceding the next investment date
shall be the price per share allocable to a participant in connection with the
Shares purchased for his account with his funds or dividends received by the
Program Administrator during such time period. The average price of all Shares
sold by the Program Administrator pursuant to sell orders received during such
time period shall be the price per share allocable to a participant in
connection with the Shares sold for his account pursuant to his sell orders
received by the Program Administrator during such time period. All sale requests
having an anticipated market value of $100,000.00 or more are expected to be
submitted in
22
<Page>
written form. In addition, all sale requests received by the Program
Administrator within thirty (30) days of an address change are expected to be
submitted in written form.
EquiServe L.P., as Program Administrator, administers the Program for
participants, keeps records, sends statements of account to participants and
performs other duties relating to the Program. Each participant in the Program
will receive a statement of his account following each purchase of Shares. The
statements will also show the amount of dividends credited to such participant's
account (if applicable), as well as the fees paid by the participant. In
addition, each participant will receive copies of the Fund's annual and
semi-annual reports to shareholders, proxy statements and, if applicable,
dividend income information for tax reporting purposes.
If the Fund is paying dividends on the Shares, a participant will receive
dividends through the Program for all Shares held on the dividend record date on
the basis of full and fractional Shares held in his account, and for all other
Shares of the Fund registered in his name. The Program Administrator will send
checks to the participants for the amounts of their dividends that are not to be
automatically reinvested at no cost to the participants.
Shares of the Fund purchased under the Program will be registered in the name of
the accounts of the respective participants. Unless requested, the Fund will not
issue to participants certificates for Shares of the Fund purchased under the
Program. The Program Administrator will hold the Shares in book-entry form until
a Program participant chooses to withdraw his Shares or terminate his
participation in the Program. The number of Shares purchased for a participant's
account under the Program will be shown on his statement of account. This
feature protects against loss, theft or destruction of stock certificates.
A participant may withdraw all or a portion of the Shares from his Program
account by notifying the Program Administrator. After receipt of a participant's
request, the Program Administrator will issue to such participant certificates
for the whole Shares of the Fund so withdrawn or, if requested by the
participant, sell the Shares for him and send him the proceeds, less applicable
brokerage commissions, fees, and transfer taxes, if any. If a participant
withdraws all full and fractional Shares in his Program account, his
participation in the Program will be terminated by the Program Administrator. In
no case will certificates for fractional Shares be issued. The Program
Administrator will convert any fractional Shares held by a participant at the
time of his withdrawal to cash.
Participation in any rights offering, dividend distribution or stock split will
be based upon both the Shares of the Fund registered in participants' names and
the Shares (including fractional Shares) credited to participants' Program
accounts. Any stock dividend or Shares resulting from stock splits with respect
to Shares of the Fund, both full and fractional, which participants hold in
their Program accounts and with respect to all Shares registered in their names
will be automatically credited to their accounts.
All Shares of the Fund (including any fractional share) credited to his account
under the Program will be voted as the participant directs. The participants
will be sent the proxy materials for the annual meetings of shareholders. When a
participant returns an executed proxy, all of such Shares will be voted as
indicated. A participant may also elect to vote his Shares in person at the
Shareholders' meeting.
A participant will receive tax information annually for his personal records and
to help him prepare his U.S. federal income tax return. The automatic
reinvestment of dividends does not relieve him of any income tax which may be
payable on dividends. For further information as
23
<Page>
to tax consequences of participation in the Program, participants should consult
with their own tax advisors.
The Program Administrator in administering the Program will not be liable for
any act done in good faith or for any good faith omission to act. However, the
Program Administrator will be liable for loss or damage due to error caused by
its negligence, bad faith or willful misconduct. Shares held in custody by the
Program Administrator are not subject to protection under the Securities
Investors Protection Act of 1970.
The participant should recognize that neither the Fund nor the Program
Administrator can provide any assurance of a profit or protection against loss
on any Shares purchased under the Program. A participant's investment in Shares
held in his Program account is no different than his investment in directly held
Shares in this regard. The participant bears the risk of loss and the benefits
of gain from market price changes with respect to all of his Shares. Neither the
Fund nor the Program Administrator can guarantee that Shares purchased under the
Program will, at any particular time, be worth more or less than their purchase
price. Each participant must make an independent investment decision based on
his own judgment and research.
While the Program Administrator hopes to continue the Program indefinitely, the
Program Administrator reserves the right to suspend or terminate the Program at
any time. It also reserves the right to make modifications to the Program.
Participants will be notified of any such suspension, termination or
modification in accordance with the terms and conditions of the Program. The
Program Administrator also reserves the right to terminate any participant's
participation in the Program at any time. Any question of interpretation arising
under the Program will be determined in good faith by the Program Administrator
and any such good faith determination will be final.
Any interested shareholder may participate in the Program. All other cash
payments or bank account deductions must be at least $100.00, up to a maximum of
$100,000.00 annually. An interested shareholder may join the Program by reading
the Program description, completing and signing the enrollment form and
returning it to the Program Administrator. The enrollment form and information
relating to the Program (including the terms and conditions) may be obtained by
calling the Program Administrator at one of the following telephone numbers:
(800) 730-6001 (U.S. and Canada) or (781) 575-3100 (outside U.S. and Canada).
All correspondence regarding the Program should be directed to: EquiServe Trust
Company N.A., InvestLink(SM) Program, P.O. Box 43010, Providence, RI 02940-3010.
InvestLink is a service mark of EquiServe, L.P.
24
<Page>
INFORMATION CONCERNING DIRECTORS AND OFFICERS (UNAUDITED)
<Table>
<Caption>
TERM NUMBER OF
OF OFFICE PORTFOLIOS IN
AND FUND
POSITION(S) LENGTH PRINCIPAL COMPLEX OTHER
NAME, ADDRESS AND HELD WITH OF TIME OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS
DATE OF BIRTH FUND SERVED PAST FIVE YEARS DIRECTOR HELD BY DIRECTOR
- ---------------------------- --------------- ------------ -------------------- ------------- ---------------------
INDEPENDENT DIRECTORS
Enrique R. Arzac Lead Director; Since 1996; Professor of Finance 8 Director of The Adams
c/o Credit Suisse Asset Nominating current term and Economics, Express Company (a
Management, LLC Committee ends at the Graduate School of closed-end investment
Attn: General Counsel Chairman and 2006 annual Business, Columbia company); Director of
466 Lexington Avenue Audit Committee meeting University since Petroleum and
New York, New York Member 1971 Resources Corporation
10017-3140 (a closed-end
investment company)
Date of Birth: 10/02/41
James J. Cattano Director; Since 1990; President, Primary 4 None
c/o Primary Resources, Inc. Nominating current term Resources, Inc. (an
55 Old Field Point Road Committee ends at the international
Greenwich, Connecticut Member and 2005 annual trading and
06830 Audit Committee meeting manufacturing
Chairman company specializing
Date of Birth: 06/24/43 in the sale of
agricultural
commodities
throughout Latin
American markets)
since October 1996
George W. Landau Director and Since 1990; Senior Advisor, 5 Director of GAM
c/o Credit Suisse Asset Audit Committee current term Latin America, The Funds, Inc.
Management, LLC Member ends at the Coca-Cola Company
Attn: General Counsel 2006 annual since 1987; Advisor
466 Lexington Avenue meeting of Guardian
New York, New York Industries (a glass
10017-3140 manufacturer) since
1992
Date of Birth: 03/04/20
Riordan Roett Director; Since 1999; Sarita and Don 1 Director of
The Johns Hopkins University Nominating and current term Johnston Professor investment companies
1740 Massachusetts Audit Committee ends at the of Political advised by Citigroup
Avenue N.W. Member 2005 annual Science, The Johns Asset Management
Washington, Hopkins University
District of Columbia 20036 since meeting 1973
Date of Birth: 09/10/38
Martin M. Torino Director; Since 1990; Chief Executive 3 None
c/o Credit Suisse Asset Nominating and current term Officer and Director
Management, LLC Audit Committee ends at the of Celsur Logistica
Attn: General Counsel Member 2004 annual S.A. (Logistics)
466 Lexington Avenue meeting since 2002; Chairman
New York, New York of the Board of
10017-3140 Ingenio y Refineria
San Martin Del
Date of Birth: 08/14/49 Tabacal S.A. (a sugar
refinery) from
August 1996 to 2000
</Table>
25
<Page>
<Table>
<Caption>
TERM NUMBER OF
OF OFFICE PORTFOLIOS IN
AND FUND
POSITION(S) LENGTH PRINCIPAL COMPLEX OTHER
NAME, ADDRESS AND HELD WITH OF TIME OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS
DATE OF BIRTH FUND SERVED PAST FIVE YEARS DIRECTOR HELD BY DIRECTOR
- ---------------------------- --------------- ------------ -------------------- ------------- ---------------------
INTERESTED DIRECTOR
William W. Priest, Jr.* Director Since 1997; Co-Managing Partner, 49 Director of Globe
Steinberg Priest & Sloane current term Steinberg Priest & Wireless, L.L.C. (a
Capital Management, LLC ends at the Sloane Capital maritime
12 East 49th Street 2004 annual Management, LLC communications
12th Floor meeting since March 2001; company); Director of
New York, New York Chairman and InfraRed X (a medical
10017 Managing Director of device company)
CSAM from 2000 to
Date of Birth: 09/24/41 February 2001, Chief
Executive Officer
and Managing
Director of CSAM
from 1990 to 2000
</Table>
<Table>
<Caption>
POSITION(S) LENGTH
NAME, ADDRESS AND HELD WITH OF TIME
DATE OF BIRTH FUND SERVED PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
- ---------------------------- --------------- ------------ ----------------------------------------------
OFFICERS
Joseph D. Gallagher** Chairman of the Since 2003 Managing Director, Chief Executive Officer of
c/o Credit Suisse Asset Fund, Chief CSAM and Global Chief Operating Officer of
Management, LLC Executive Credit Suisse Asset Management since 2003;
466 Lexington Avenue Officer and Global Chief Financial Officer, Credit Suisse
New York, New York President Asset Management from 1999 to 2003; Chief
10017-3140 Executive Officer and Director of Credit
Suisse Asset Management Limited, London,
Date of Birth: 12/14/62 England, from June 2000 to 2003; Director of
Credit Suisse Asset Management Funds (UK)
Limited, London, England, from June 2000 to
2003; Managing Director, Head-Asian Corporate
Finance and M&A, Credit Suisse First Boston,
Hong Kong, China, from January 1998 to May
1999; Officer of other Credit Suisse Funds
Emily Alejos*** Co-Chief Since 1999 Director of CSAM since January 1999; Vice
c/o Credit Suisse Asset Investment President of CSAM from 1997 to January 1999;
Management, LLC Officer Associated with CSAM since 1997; Officer of
466 Lexington Avenue other Credit Suisse Funds
New York, New York
10017-3140
Date of Birth: 10/27/63
Matthew J.K. Hickman*** Co-Chief Since 2004 Vice President of CSAM since December 2003;
c/o Credit Suisse Asset Investment Financial Advisor with Global Advisors from
Management, LLC Officer July 2003 to November 2003; General Manager of
466 Lexington Avenue Compass Group Investment Advisors S.A. from
New York, New York February 2002 to July 2003; Financial Advisor
10017-3140 with Credit Suisse First Boston from August
2000 to February 2002; Director of ABN AMRO
Date of Birth: 01/21/64 from September 1998 to August 2000; Officer of
other Credit Suisse Funds
</Table>
26
<Page>
<Table>
<Caption>
POSITION(S) LENGTH
NAME, ADDRESS AND HELD WITH OF TIME
DATE OF BIRTH FUND SERVED PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
- ---------------------------- --------------- ------------ ----------------------------------------------
OFFICERS--(CONCLUDED)
Hal Liebes Senior Vice Since 1997 Managing Director and Global General Counsel
c/o Credit Suisse Asset President of CSAM; Associated with CSAM since 1997;
Management, LLC Officer of other Credit Suisse Funds
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 07/06/64
Michael A. Pignataro Chief Financial Since 1993 Director and Director of Fund Administration
c/o Credit Suisse Asset Officer and of CSAM; Associated with CSAM since 1984;
Management, LLC Secretary Officer of other Credit Suisse Funds
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 11/15/59
Rocco A. Del Guercio Vice President Since 1997 Vice President of CSAM; Associated with CSAM
c/o Credit Suisse Asset since 1996; Officer of other Credit Suisse
Management, LLC Funds
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 04/28/63
Robert M. Rizza Treasurer Since 1999 Assistant Vice President of CSAM since January
c/o Credit Suisse Asset 2001; Associated with CSAM since 1998; Officer
Management, LLC of other Credit Suisse Funds
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 12/09/65
</Table>
- ----------
* Designates a director who is an "interested person" of the Fund as defined
under the Investment Company Act of 1940, as amended. Mr. Priest is an
interested person of the Fund because up to December 31, 2002 he was
retained by CSAM to provide consulting services.
** Effective May 21, 2003, Joseph D. Gallagher was appointed as Chairman of the
Fund, Chief Executive Officer and President. Laurence R. Smith who
previously held these positions has resigned effective May 21, 2003.
*** Effective February 12, 2004, Emily Alejos and Matthew Hickman were appointed
as Co-Chief Investment Officers of the Fund.
27
<Page>
OTHER FUNDS MANAGED BY CREDIT SUISSE ASSET MANAGEMENT, LLC
Credit Suisse Capital Appreciation Fund
Credit Suisse Cash Reserve Fund
Credit Suisse Emerging Growth Fund
Credit Suisse Emerging Markets Fund
Credit Suisse Fixed Income Fund
Credit Suisse Global Fixed Income Fund
Credit Suisse Global Post-Venture Capital Fund
Credit Suisse High Income Fund
Credit Suisse International Focus Fund
Credit Suisse Japan Equity Fund
Credit Suisse Large Cap Value Fund
Credit Suisse Municipal Money Fund
Credit Suisse New York Municipal Fund
Credit Suisse New York Tax Exempt Fund
Credit Suisse Select Equity Fund
Credit Suisse Short Duration Bond Fund
Credit Suisse Small Cap Growth Fund
Credit Suisse Small Cap Value Fund
Credit Suisse Strategic Small Cap Fund
Credit Suisse U.S. Government Money Fund
Fund shares are not deposits or other obligations of Credit Suisse Asset
Management, LLC or any affiliate, are not FDIC-insured and are not guaranteed by
Credit Suisse Asset Management, LLC or any affiliate. Fund investments are
subject to investment risks, including loss of your investment. There are
special risk considerations associated with international, global,
emerging-market, small-company, high-yield debt, single-industry, single-country
and other special, aggressive or concentrated investment strategies. Past
performance cannot guarantee future results.
More complete information about a fund, including charges and expenses, is
provided in the Prospectus, which should be read carefully before investing. You
may obtain copies by calling Credit Suisse Funds at 800-927-2874. For up-to-date
performance, please look in the mutual fund section of your newspaper under
Credit Suisse.
Credit Suisse Asset Management Securities, Inc., Distributor.
28
<Page>
SUMMARY OF GENERAL INFORMATION
The Fund--The Latin America Equity Fund, Inc.--is a closed-end, non-diversified
management investment company whose shares trade on the New York Stock Exchange,
Inc. Its investment objective is long-term capital appreciation through
investments primarily in Latin American equity securities. Credit Suisse Asset
Management, LLC (New York), the Fund's investment adviser, is part of Credit
Suisse Asset Management ("CSAM"), the institutional and mutual-fund
asset-management arm of Credit Suisse First Boston. As of December 31, 2003,
CSAM managed over $51 billion in the U.S. and, together with its global
affiliates, managed assets of over $317 billion in 14 countries.
SHAREHOLDER INFORMATION
The market price is published in: THE NEW YORK TIMES (daily) under the
designation "LatAmerEq" and The WALL STREET JOURNAL (daily), and BARRON'S (each
Monday) under the designation "LatAmEq". The Fund's New York Stock Exchange,
Inc. trading symbol is LAQ. Weekly comparative net asset value (NAV) and market
price information about The Latin America Equity Fund, Inc.'s shares are
published each Sunday in THE NEW YORK TIMES and each Monday in THE WALL STREET
JOURNAL and BARRON'S, as well as other newspapers, in a table called "Closed-End
Funds."
THE CSAM GROUP OF FUNDS
LITERATURE REQUEST--Call today for free descriptive information on the
closed-end funds listed below at 1-800-293-1232 or visit our website on the
Internet: http://www.csam.com.
CLOSED-END FUNDS
SINGLE COUNTRY
The Brazilian Equity Fund, Inc. (BZL)
The Chile Fund, Inc. (CH)
The First Israel Fund, Inc. (ISL)
The Indonesia Fund, Inc. (IF)
MULTIPLE COUNTRY
The Emerging Markets Telecommunications Fund, Inc. (ETF)
FIXED INCOME
Credit Suisse Asset Management Income Fund, Inc. (CIK)
Credit Suisse High Yield Bond Fund (DHY)
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that The Latin America Equity Fund, Inc. may
from time to time purchase shares of its capital stock in the open market.
<Page>
DIRECTORS AND CORPORATE OFFICERS
Enrique R. Arzac Lead Director
James J. Cattano Director
George W. Landau Director
William W. Priest, Jr. Director
Riordan Roett Director
Martin M. Torino Director
Joseph D. Gallagher Chairman of the Fund, Chief Executive Officer and
President
Emily Alejos Co-Chief Investment Officer
Matthew J.K. Hickman Co-Chief Investment Officer
Hal Liebes Senior Vice President
Michael A. Pignataro Chief Financial Officer and Secretary
Rocco A. Del Guercio Vice President
Robert M. Rizza Treasurer
INVESTMENT ADVISER
Credit Suisse Asset Management, LLC
466 Lexington Avenue
New York, NY 10017
ADMINISTRATOR
Bear Stearns Funds Management Inc.
383 Madison Avenue
New York, NY 10179
CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
SHAREHOLDER SERVICING AGENT
Fleet National Bank (c/o EquiServe, L.P.)
P.O. Box 43010
Providence, RI 02940
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
Two Commerce Square
Philadelphia, PA 19103
LEGAL COUNSEL
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
This report, including the financial statements herein, is sent to the
shareholders of the Fund for their information. It is not a prospectus, circular
or representation intended for use in the purchase or sale of shares of the Fund
or of any securities mentioned in this report.
[LAQ LISTED NYSE(R) LOGO]
3019-AR-03
<Page>
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics applicable to its Chief Executive
Officer, President, Chief Financial Officer and Chief Accounting Officer, or
persons performing similar functions. A copy of the code is filed as Exhibit
11(a)(1) to this Form. There were no amendments to the code during the fiscal
year ended December 31, 2003. There were no waivers or implicit waivers from the
code granted by the registrant during the fiscal year ended December 31, 2003.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's governing board has determined that it has one audit committee
financial expert serving on its audit committee: Enrique R. Arzac. The audit
committee financial expert is "independent" for purposes of this item.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) through (d). The information in the table below is provided for services
rendered to the registrant by its principal auditors, PricewaterhouseCoopers LLP
("PwC"), for its fiscal years ended December 31, 2002 and December 31, 2003.
<Table>
<Caption>
2002 2003
- --------------------------------------------------------------------------------
Audit Fees $ 49,900 $ 54,741
Audit-Related Fees(1) -- 3,000
Tax Fees(2) 8,600 7,482
All Other Fees -- --
Total $ 58,500 $ 65,223
</Table>
(1) Services include agreed-upon procedures in connection with the registrant's
semi-annual financial statements.
(2) Tax services in connection with the registrant's excise tax calculations and
review of the registrant's applicable tax returns.
The information in the table below is provided with respect to non-audit
services that directly relate to the registrant's operations and financial
reporting and that were rendered by PwC to the registrant's investment adviser,
Credit Suisse Asset Management, LLC ("CSAM"), and any service provider to the
registrant controlling, controlled by or under common control with CSAM that
provided ongoing services to the registrant ("Covered Services Provider"), for
the registrant's fiscal years ended December 31, 2002 and December 31, 2003.
<Page>
<Table>
<Caption>
2002 2003
- ---------------------------------------------------------------------------------
Audit-Related Fees N/A N/A
Tax Fees N/A N/A
All Other Fees N/A N/A
Total N/A N/A
</Table>
(e)(1) Pre-Approval Policies and Procedures. The Audit Committee ("Committee")
of the registrant is responsible for pre-approving (i) all audit and permissible
non-audit services to be provided by the independent auditors to the registrant
and (ii) all permissible non-audit services to be provided by the independent
auditors to CSAM and any Covered Services Provider if the engagement relates
directly to the operations and financial reporting of the registrant. The
Committee may delegate its responsibility to pre-approve any such audit and
permissible non-audit services to the Chairperson of the Committee, and the
Chairperson shall report to the Committee, at its next regularly scheduled
meeting after the Chairperson's pre-approval of such services, his or her
decision(s). The Committee may also establish detailed pre-approval policies and
procedures for pre-approval of such services in accordance with applicable laws,
including the delegation of some or all of the Committee's pre-approval
responsibilities to other persons (other than CSAM or the registrant's
officers). Pre-approval by the Committee of any permissible non-audit services
shall not be required so long as: (i) the aggregate amount of all such
permissible non-audit services provided to the registrant, CSAM and any Covered
Services Provider constitutes not more than 5% of the total amount of revenues
paid by the registrant to its independent auditors during the fiscal year in
which the permissible non-audit services are provided; (ii) the permissible
non-audit services were not recognized by the registrant at the time of the
engagement to be non-audit services; and (iii) such services are promptly
brought to the attention of the Committee and approved by the Committee (or its
delegate(s)) prior to the completion of the audit.
(e)(2) The information in the table below sets forth the percentages of fees for
services (other than audit, review or attest services) rendered by PwC to the
registrant for which the pre-approval requirement was waived pursuant to Rule
2-01(c)(7)(i)(C) of Regulation S-X:
<Table>
<Caption>
2002 2003
- ---------------------------------------------------------------------------------
Audit-Related Fees N/A N/A
Tax Fees N/A N/A
All Other Fees N/A N/A
Total N/A N/A
</Table>
<Page>
The information in the table below sets forth the percentages of fees for
services (other than audit, review or attest services) rendered by PwC to CSAM
and any Covered Services Provider required to be approved pursuant to Rule
2-01(c)(7)(ii)of Regulation S-X, for the registrant's fiscal years ended
December 31, 2002 and December 31, 2003:
<Table>
<Caption>
2002 2003
- ---------------------------------------------------------------------------------
Audit-Related Fees N/A N/A
Tax Fees N/A N/A
All Other Fees N/A N/A
Total N/A N/A
</Table>
(f) Not Applicable.
(g) The aggregate fees billed by PwC for non-audit services rendered to the
registrant, CSAM and Covered Service Providers for the fiscal years ended
December 31, 2002 and December 31, 2003 were $8,600 and $10,482, respectively.
(h) Not Applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
The registrant has a separately designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934,
as amended. The members of the committee are Enrique R. Arzac, James J. Cattano,
George W. Landau, Riordan Roett and Martin M. Torino.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
CREDIT SUISSE ASSET MANAGEMENT, LLC
CSAM CAPITAL INC.
CREDIT SUISSE FUNDS
CREDIT SUISSE INSTITUTIONAL FUNDS
<Page>
CSAM CLOSED-END FUNDS
PROXY VOTING POLICY AND PROCEDURES
Introduction
Credit Suisse Asset Management, LLC and CSAM Capital Inc.
(collectively, "CSAM") are fiduciaries that owe each of its clients duties of
care and loyalty with respect to proxy voting. The duty of care requires CSAM to
monitor corporate events and to vote proxies. To satisfy its duty of loyalty,
CSAM must cast proxy votes in the best interests of each of its clients.
The Credit Suisse Funds, Credit Suisse Institutional Funds,
and CSAM Closed-End Funds (the "Funds"), which have engaged Credit Suisse Asset
Management, LLC as their investment adviser, are of the belief that the proxy
voting process is a means of addressing corporate governance issues and
encouraging corporate actions both of which can enhance shareholder value.
Policy
The Proxy Voting Policy (the "Policy") set forth below is
designed to ensure that proxies are voted in the best interests of CSAM's
clients. The Policy addresses particular issues and gives a general indication
of how CSAM will vote proxies. The Policy is not exhaustive and does not include
all potential issues.
Proxy Voting Committee
The Proxy Voting Committee will consist of a member of the
Portfolio Management Department, a member of the Legal and Compliance
Department, and a member of the Operations Department (or their designees). The
purpose of the Proxy Voting Committee is to administer the voting of all
clients' proxies in accordance with the Policy. The Proxy Voting Committee will
review the Policy annually to ensure that it is designed to promote the best
interests of CSAM's clients.
For the reasons disclosed below under "Conflicts," the Proxy
Voting Committee has engaged the services of an independent third party
(initially, Institutional Shareholder Services ("ISS")) to assist in issue
analysis and vote recommendation for proxy proposals. Proxy proposals addressed
by the Policy will be voted in accordance with the Policy. Proxy proposals
addressed by the Policy that require a case-by-case analysis will be voted in
accordance with the vote recommendation of ISS. Proxy proposals not addressed by
the Policy will also be voted in accordance with the vote recommendation of ISS.
To the extent that the Proxy Voting Committee proposes to deviate from the
Policy or the ISS vote recommendation, the Committee shall obtain client consent
as described below.
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CSAM investment professionals may submit a written
recommendation to the Proxy Voting Committee to vote in a manner inconsistent
with the Policy and/or the recommendation of ISS. Such recommendation will set
forth its basis and rationale. In addition, the investment professional must
confirm in writing that he/she is not aware of any conflicts of interest
concerning the proxy matter or provide a full and complete description of the
conflict.
Conflicts
CSAM is the institutional and mutual fund asset management arm
of Credit Suisse First Boston, which is part of Credit Suisse Group, one of the
world's largest financial organizations. As part of a global, full service
investment-bank, broker-dealer, and asset-management organization, CSAM and its
affiliates and personnel may have multiple advisory, transactional, financial,
and other interests in securities, instruments, and companies that may be
purchased or sold by CSAM for its clients' accounts. The interests of CSAM
and/or its affiliates and personnel may conflict with the interests of CSAM's
clients in connection with any proxy issue. In addition, CSAM may not be able to
identify all of the conflicts of interest relating to any proxy matter.
Consent
In each and every instance in which the Proxy Voting Committee
favors voting in a manner that is inconsistent with the Policy or the vote
recommendation of ISS (including proxy proposals addressed and not addressed by
the Policy), it shall disclose to the client conflicts of interest information
and obtain client consent to vote. Where the client is a Fund, disclosure shall
be made to any one director who is not an "interested person," as that term is
defined under the Investment Company Act of 1940, as amended, of the Fund.
Recordkeeping
CSAM is required to maintain in an easily accessible place for
five years all records relating to proxy voting.
These records include the following:
a copy of the Policy;
a copy of each proxy statement received on behalf of CSAM
clients;
a record of each vote cast on behalf of CSAM clients;
a copy of all documents created by CSAM personnel that were
material to making a decision on a vote or that memorializes the basis for the
decision; and
a copy of each written request by a client for information on
how CSAM voted proxies, as well as a copy of any written response.
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CSAM reserves the right to maintain certain required proxy
records with ISS in accordance with all applicable regulations.
Disclosure
CSAM will describe the Policy to each client. Upon request,
CSAM will provide any client with a copy of the Policy. CSAM will also disclose
to its clients how they can obtain information on their proxy votes.
ISS will capture data necessary for Funds to file Form N-PX on
an annual basis concerning their proxy voting record in accordance with
applicable law.
Procedures
The Proxy Voting Committee will administer the voting of all
client proxies. CSAM has engaged ISS as an independent third party proxy voting
service to assist in the voting of client proxies. ISS will coordinate with each
client's custodian to ensure that proxy materials reviewed by the custodians are
processed in a timely fashion. ISS will provide CSAM with an analysis of proxy
issues and a vote recommendation for proxy proposals. ISS will refer proxies to
the Proxy Voting Committee for instructions when the application of the Policy
is not clear. The Proxy Voting Committee will notify ISS of any changes to the
Policy or deviating thereof.
PROXY VOTING POLICY
Operational Items
Adjourn Meeting
Proposals to provide management with the authority to adjourn
an annual or special meeting will be determined on a case-by-case basis.
Amend Quorum Requirements
Proposals to reduce quorum requirements for shareholder
meetings below a majority of the shares outstanding will be determined on a
case-by-case basis.
Amend Minor Bylaws
Generally vote for bylaw or charter changes that are of a
housekeeping nature.
Change Date, Time, or Location of Annual Meeting
Generally vote for management proposals to change the
date/time/location of the annual meeting unless the proposed change is
unreasonable. Generally vote against shareholder proposals to change the
date/time/location of the annual meeting unless the current scheduling or
location is unreasonable.
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Ratify Auditors
Generally vote for proposals to ratify auditors unless: (1) an
auditor has a financial interest in or association with the company, and is
therefore not independent; (2) fees for non-audit services are excessive, or (3)
there is reason to believe that the independent auditor has rendered an opinion,
which is neither accurate nor indicative of the company's financial position.
Generally vote on a case-by-case basis on shareholder proposals asking companies
to prohibit their auditors from engaging in non-audit services (or capping the
level of non-audit services). Generally vote on a case-by-case basis on auditor
rotation proposals taking into consideration: (1) tenure of audit firm; (2)
establishment and disclosure of a renewal process whereby the auditor is
regularly evaluated for both audit quality and competitive price; (3) length of
the rotation period advocated in the proposal, and (4) significant audit related
issues.
Board of Directors
Voting on Director Nominees in Uncontested Elections
Generally votes on director nominees on a case-by-case basis.
Votes may be withheld: (1) from directors who attended less than 75% of the
board and committee meetings without a valid reason for the absences; (2)
implemented or renewed a dead-hand poison pill; (3) ignored a shareholder
proposal that was approved by a majority of the votes cast for two consecutive
years; (4) ignored a shareholder proposal approved by a majority of the shares
outstanding; (5) have failed to act on takeover offers where the majority of the
shareholders have tendered their shares; (6) are inside directors or affiliated
outside directors and sit on the audit, compensation, or nominating committee;
(7) are inside directors or affiliated outside directors and the full board
serves as the audit, compensation, or nominating committee or the company does
not have one of these committees; or (8) are audit committee members and the
non-audit fees paid to the auditor are excessive
Cumulative Voting
Proposals to eliminate cumulative voting will be determined on
a case-by-case basis. Proposals to restore or provide for cumulative voting in
the absence of sufficient good governance provisions and/or poor relative
shareholder returns will be determined on a case-by-case basis.
Director and Officer Indemnification and Liability Protection
Proposals on director and officer indemnification and
liability protection generally evaluated on a case-by-case basis. Generally vote
against proposals that would: (1) eliminate entirely directors' and officers'
liability for monetary damages for violating the duty of care; or (2) expand
coverage beyond just legal expenses to acts, such as negligence, that are more
serious violations of fiduciary obligation than mere carelessness. Generally
vote for only those proposals providing such expanded coverage in cases when a
director's or officer's legal defense was unsuccessful if: (1) the director was
found to have acted in good faith and in a manner that he reasonably believed
was in the best interests of the company, and (2) only if the director's legal
expenses would be covered.
Filling Vacancies/Removal of Directors
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Generally vote against proposals that provide that directors
may be removed only for cause. Generally vote for proposals to restore
shareholder ability to remove directors with or without cause. Proposals that
provide that only continuing directors may elect replacements to fill board
vacancies will be determined on a case-by-case basis. Generally vote for
proposals that permit shareholders to elect directors to fill board vacancies.
Independent Chairman (Separate Chairman/CEO)
Generally vote for shareholder proposals requiring the
position of chairman be filled by an independent director unless there are
compelling reasons to recommend against the proposal, including: (1) designated
lead director, elected by and from the independent board members with clearly
delineated duties; (2) 2/3 independent board; (3) all independent key
committees; or (4) established governance guidelines.
Majority of Independent Directors
Generally vote for shareholder proposals requiring that the
board consist of a majority or substantial majority (two-thirds) of independent
directors unless the board composition already meets the adequate threshold.
Generally vote for shareholder proposals requiring the board audit,
compensation, and/or nominating committees be composed exclusively of
independent directors if they currently do not meet that standard. Generally
withhold votes from insiders and affiliated outsiders sitting on the audit,
compensation, or nominating committees. Generally withhold votes from insiders
and affiliated outsiders on boards that are lacking any of these three panels.
Generally withhold votes from insiders and affiliated outsiders on boards that
are not at least majority independent.
Term Limits
Generally vote against shareholder proposals to limit the
tenure of outside directors.
Proxy Contests
Voting on Director Nominees in Contested Elections
Votes in a contested election of directors should be decided
on a case-by-case basis, with shareholders determining which directors are best
suited to add value for shareholders. The major decision factors are: (1)
company performance relative to its peers; (2) strategy of the incumbents versus
the dissidents; (3) independence of directors/nominees; (4) experience and
skills of board candidates; (5) governance profile of the company; (6) evidence
of management entrenchment; (7) responsiveness to shareholders; or (8) whether
takeover offer has been rebuffed.
Amend Bylaws without Shareholder Consent
Proposals giving the board exclusive authority to amend the
bylaws will be determined on a case-by-case basis. Proposals giving the board
the ability to amend the bylaws in addition to shareholders will be determined
on a case-by-case basis.
Confidential Voting
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Generally vote for shareholder proposals requesting that
corporations adopt confidential voting, use independent vote tabulators and use
independent inspectors of election, as long as the proposal includes a provision
for proxy contests as follows: In the case of a contested election, management
should be permitted to request that the dissident group honor its confidential
voting policy. If the dissidents agree, the policy may remain in place. If the
dissidents will not agree, the confidential voting policy may be waived.
Generally vote for management proposals to adopt confidential voting.
Cumulative Voting
Proposals to eliminate cumulative voting will be determined on
a case-by-case basis. Proposals to restore or provide for cumulative voting in
the absence of sufficient good governance provisions and/or poor relative
shareholder returns will be determined on a case-by-case basis.
Antitakeover Defenses and Voting Related Issues
Advance Notice Requirements for Shareholder
Proposals/Nominations
Votes on advance notice proposals are determined on a
case-by-case basis.
Amend Bylaws without Shareholder Consent
Proposals giving the board exclusive authority to amend the
bylaws will be determined on a case-by-case basis. Generally vote for proposals
giving the board the ability to amend the bylaws in addition to shareholders.
Poison Pills (Shareholder Rights Plans)
Generally vote for shareholder proposals requesting that the
company submit its poison pill to a shareholder vote or redeem it. Votes
regarding management proposals to ratify a poison pill should be determined on a
case-by-case basis. Plans should embody the following attributes: (1) 20% or
higher flip-in or flip-over; (2) two to three year sunset provision; (3) no
dead-hand or no-hand features; or (4) shareholder redemption feature
Shareholders' Ability to Act by Written Consent
Generally vote against proposals to restrict or prohibit
shareholders' ability to take action by written consent. Generally vote for
proposals to allow or make easier shareholder action by written consent.
Shareholders' Ability to Call Special Meetings
Proposals to restrict or prohibit shareholders' ability to
call special meetings or that remove restrictions on the right of shareholders
to act independently of management will be determined on a case-by-case basis.
Supermajority Vote Requirements
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Proposals to require a supermajority shareholder vote will be
determined on a case-by-case basis Proposals to lower supermajority vote
requirements will be determined on a case-by-case basis.
Merger and Corporate Restructuring
Appraisal Rights
Generally vote for proposals to restore, or provide
shareholders with, rights of appraisal.
Asset Purchases
Generally vote case-by-case on asset purchase proposals,
taking into account: (1) purchase price, including earnout and contingent
payments; (2) fairness opinion; (3) financial and strategic benefits; (4) how
the deal was negotiated; (5) conflicts of interest; (6) other alternatives for
the business; or (7) noncompletion risk (company's going concern prospects,
possible bankruptcy).
Asset Sales
Votes on asset sales should be determined on a case-by-case
basis after considering: (1) impact on the balance sheet/working capital; (2)
potential elimination of diseconomies; (3) anticipated financial and operating
benefits; (4) anticipated use of funds; (5) value received for the asset;
fairness opinion (if any); (6) how the deal was negotiated; or (6) Conflicts of
interest
Conversion of Securities
Votes on proposals regarding conversion of securities are
determined on a case-by-case basis. When evaluating these proposals, should
review (1) dilution to existing shareholders' position; (2) conversion price
relative to market value; (3) financial issues: company's financial situation
and degree of need for capital; effect of the transaction on the company's cost
of capital; (4) control issues: change in management; change in control;
standstill provisions and voting agreements; guaranteed contractual board and
committee seats for investor; veto power over certain corporate actions; (5)
termination penalties; (6) conflict of interest: arm's length transactions,
managerial incentives. Generally vote for the conversion if it is expected that
the company will be subject to onerous penalties or will be forced to file for
bankruptcy if the transaction is not approved.
Corporate Reorganization
Votes on proposals to increase common and/or preferred shares
and to issue shares as part of a debt restructuring plan are determined on a
case-by-case basis, after evaluating: (1) dilution to existing shareholders'
position; (2) terms of the offer; (3) financial issues; (4) management's efforts
to pursue other alternatives; (5) control issues; (6) conflict of interest.
Generally vote for the debt restructuring if it is expected that the company
will file for bankruptcy if the transaction is not approved.
Reverse Leveraged Buyouts
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Votes on proposals to increase common and/or preferred shares
and to issue shares as part of a debt restructuring plan are determined on a
case-by-case basis, after evaluating: (1) dilution to existing shareholders'
position; (2) terms of the offer; (3) financial issues; (4) management's efforts
to pursue other alternatives; (5) control issues; (6) conflict of interest.
Generally vote for the debt restructuring if it is expected that the company
will file for bankruptcy if the transaction is not approved.
Formation of Holding Company
Votes on proposals regarding the formation of a holding
company should be determined on a case-by-case basis taking into consideration:
(1) the reasons for the change; (2) any financial or tax benefits; (3)
regulatory benefits; (4) increases in capital structure; (5) changes to the
articles of incorporation or bylaws of the company. Absent compelling financial
reasons to recommend the transaction, generally vote against the formation of a
holding company if the transaction would include either of the following: (1)
increases in common or preferred stock in excess of the allowable maximum as
calculated a model capital structure; (2) adverse changes in shareholder rights;
(3) going private transactions; (4) votes going private transactions on a
case-by-case basis, taking into account: (a) offer price/premium; (b) fairness
opinion; (c) how the deal was negotiated; (d) conflicts of interest; (e) other
alternatives/offers considered; (f) noncompletion risk.
Joint Ventures
Vote on a case-by-case basis on proposals to form joint
ventures, taking into account: (1) percentage of assets/business contributed;
(2) percentage ownership; (3) financial and strategic benefits; (4) governance
structure; (5) conflicts of interest; (6) other alternatives; (7) noncompletion
risk; (8) liquidations. Votes on liquidations should be determined on a
case-by-case basis after reviewing: (1) management's efforts to pursue other
alternatives such as mergers; (2) appraisal value of the assets (including any
fairness opinions); (3) compensation plan for executives managing the
liquidation. Generally vote for the liquidation if the company will file for
bankruptcy if the proposal is not approved.
Mergers and Acquisitions
Votes on mergers and acquisitions should be considered on a
case-by-case basis, determining whether the transaction enhances shareholder
value by giving consideration to: (1) prospects of the combined companies; (2)
anticipated financial and operating benefits; (3) offer price; (4) fairness
opinion; (5) how the deal was negotiated; (6) changes in corporate governance
and their impact on shareholder rights; (7) change in the capital structure; (8)
conflicts of interest.
Private Placements
Votes on proposals regarding private placements should be
determined on a case-by-case basis. When evaluating these proposals, should
review: (1) dilution to existing shareholders' position; (2) terms of the offer;
(3) financial issues; (4) management's efforts to pursue alternatives such as
mergers; (5) control issues; (6) conflict of interest. Generally vote for the
private placement if it is expected that the company will file for bankruptcy if
the transaction is not approved.
Prepackaged Bankruptcy Plans
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Votes on proposals to increase common and/or preferred shares
and to issue shares as part of a debt restructuring plan are determined on a
case-by-case basis, after evaluating: (1) dilution to existing shareholders'
position; (2) terms of the offer; (3) financial issues; (4) management's efforts
to pursue other alternatives; (5) control issues; (6) conflict of interest.
Generally vote for the debt restructuring if it is expected that the company
will file for bankruptcy if the transaction is not approved.
Recapitalization
Votes case-by-case on recapitalizations (reclassifications of
securities), taking into account: (1) more simplified capital structure; (2)
enhanced liquidity; (3) fairness of conversion terms, including fairness
opinion; (4) impact on voting power and dividends; (5) reasons for the
reclassification; (6) conflicts of interest; (7) other alternatives considered.
Reverse Stock Splits
Generally vote for management proposals to implement a reverse
stock split when the number of authorized shares will be proportionately
reduced. Generally vote for management proposals to implement a reverse stock
split to avoid delisting. Votes on proposals to implement a reverse stock split
that do not proportionately reduce the number of shares authorized for issue
should be determined on a case-by-case basis.
Spinoffs
Votes on spinoffs should be considered on a case-by-case basis
depending on: (1) tax and regulatory advantages; (2) planned use of the sale
proceeds; (3) valuation of spinoff; fairness opinion; (3) benefits that the
spinoff may have on the parent company including improved market focus; (4)
conflicts of interest; managerial incentives; (5) any changes in corporate
governance and their impact on shareholder rights; (6) change in the capital
structure
Value Maximization Proposals
Vote case-by-case on shareholder proposals seeking to maximize
shareholder value.
Capital Structure
Adjustments to Par Value of Common Stock
Generally vote for management proposals to reduce the par
value of common stock unless the action is being taken to facilitate an
antitakeover device or some other negative corporate governance action.
Generally vote for management proposals to eliminate par value.
Common Stock Authorization
Votes on proposals to increase the number of shares of common
stock authorized for issuance are determined on a case-by-case basis. Generally
vote against proposals at companies with dual-class capital structures to
increase the number of authorized shares of the class of stock that has superior
voting rights.
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Generally vote for proposals to approve increases beyond the allowable increase
when a company's shares are in danger of being delisted or if a company's
ability to continue to operate as a going concern is uncertain.
Dual-class Stock
Generally vote against proposals to create a new class of
common stock with superior voting rights. Generally vote for proposals to create
a new class of nonvoting or subvoting common stock if: (1) it is intended for
financing purposes with minimal or no dilution to current shareholders; (2) it
is not designed to preserve the voting power of an insider or significant
shareholder.
Issue Stock for Use with Rights Plan
Generally vote against proposals that increase authorized
common stock for the explicit purpose of implementing a shareholder rights plan.
Preemptive Rights
Votes regarding shareholder proposals seeking preemptive
rights should be determined on a case-by-case basis after evaluating: (1) the
size of the company; (2) the shareholder base; (3) the liquidity of the stock
Preferred Stock
Generally vote against proposals authorizing the creation of
new classes of preferred stock with unspecified voting, conversion, dividend
distribution, and other rights ("blank check" preferred stock). Generally vote
for proposals to create "declawed" blank check preferred stock (stock that
cannot be used as a takeover defense). Generally vote for proposals to authorize
preferred stock in cases where the company specifies the voting, dividend,
conversion, and other rights of such stock and the terms of the preferred stock
appear reasonable. Generally vote against proposals to increase the number of
blank check preferred stock authorized for issuance when no shares have been
issued or reserved for a specific purpose. Generally vote case-by-case on
proposals to increase the number of blank check preferred shares after analyzing
the number of preferred shares available for issue given a company's industry
and performance in terms of shareholder returns.
Recapitalization
Vote case-by-case on recapitalizations (reclassifications of
securities), taking into account: (1) more simplified capital structure; (2)
enhanced liquidity; (3) fairness of conversion terms, including fairness
opinion; (4) impact on voting power and dividends; (5) reasons for the
reclassification; (6) conflicts of interest; (7) other alternatives considered.
Reverse Stock Splits
Generally vote for management proposals to implement a reverse
stock split when the number of authorized shares will be proportionately
reduced. Generally vote for management proposals to implement a reverse stock
split to avoid delisting. Votes on proposals to implement a reverse stock split
that do not
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proportionately reduce the number of shares authorized for issue should be
determined on a case-by-case basis.
Share Repurchase Programs
Generally vote for management proposals to institute
open-market share repurchase plans in which all shareholders may participate on
equal terms.
Stock Distributions: Splits and Dividends
Generally vote for management proposals to increase the common
share authorization for a stock split or share dividend, provided that the
increase in authorized shares would not result in an excessive number of shares
available for issuance.
Tracking Stock
Votes on the creation of tracking stock are determined on a
case-by-case basis, weighing the strategic value of the transaction against such
factors as: (1) adverse governance changes; (2) excessive increases in
authorized capital stock; (3) unfair method of distribution; (4) diminution of
voting rights; (5) adverse conversion features; (6) negative impact on stock
option plans; (7) other alternatives such as a spinoff.
Executive and Director Compensation
Executive and Director Compensation
Votes on compensation plans for directors are determined on a
case-by-case basis.
Stock Plans in Lieu of Cash
Votes for plans which provide participants with the option of
taking all or a portion of their cash compensation in the form of stock are
determined on a case-by-case basis. Generally vote for plans which provide a
dollar-for-dollar cash for stock exchange. Votes for plans which do not provide
a dollar-for-dollar cash for stock exchange should be determined on a
case-by-case basis.
Director Retirement Plans
Generally vote against retirement plans for nonemployee
directors. Generally vote for shareholder proposals to eliminate retirement
plans for nonemployee directors.
Management Proposals Seeking Approval to Reprice Options
Votes on management proposals seeking approval to reprice
options are evaluated on a case-by-case basis giving consideration to the
following: (1) historic trading patterns; (2) rationale for the repricing; (3)
value-for-value exchange; (4) option vesting; (5) term of the option; (6)
exercise price; (7) participants; (8) employee stock purchase plans. Votes on
employee stock purchase plans should be determined on a case-by-case basis.
Generally vote for employee stock purchase plans where: (1) purchase price is at
least 85 percent
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of fair market value; (2) offering period is 27 months or less, and (3)
potential voting power dilution (VPD) is ten percent or less. Generally vote
against employee stock purchase plans where either: (1) purchase price is less
than 85 percent of fair market value; (2) Offering period is greater than 27
months, or (3) VPD is greater than ten percent
Incentive Bonus Plans and Tax Deductibility Proposals
Generally vote for proposals that simply amend
shareholder-approved compensation plans to include administrative features or
place a cap on the annual grants any one participant may receive. Generally vote
for proposals to add performance goals to existing compensation plans. Votes to
amend existing plans to increase shares reserved and to qualify for favorable
tax treatment considered on a case-by-case basis. Generally vote for cash or
cash and stock bonus plans that are submitted to shareholders for the purpose of
exempting compensation from taxes if no increase in shares is requested.
Employee Stock Ownership Plans (ESOPs)
Generally vote for proposals to implement an ESOP or increase
authorized shares for existing ESOPs, unless the number of shares allocated to
the ESOP is excessive (more than five percent of outstanding shares.)
401(k) Employee Benefit Plans
Generally vote for proposals to implement a 401(k) savings
plan for employees.
Shareholder Proposals Regarding Executive and Director Pay
Generally vote for shareholder proposals seeking additional
disclosure of executive and director pay information, provided the information
requested is relevant to shareholders' needs, would not put the company at a
competitive disadvantage relative to its industry, and is not unduly burdensome
to the company. Generally vote against shareholder proposals seeking to set
absolute levels on compensation or otherwise dictate the amount or form of
compensation. Generally vote against shareholder proposals requiring director
fees be paid in stock only. Generally vote for shareholder proposals to put
option repricings to a shareholder vote. Vote for shareholders proposals to
exclude pension fund income in the calculation of earnings used in determining
executive bonuses/compensation. Vote on a case-by-case basis for all other
shareholder proposals regarding executive and director pay, taking into account
company performance, pay level versus peers, pay level versus industry, and long
term corporate outlook.
Performance-Based Option Proposals
Generally vote for shareholder proposals advocating the use of
performance-based equity awards (indexed, premium-priced, and performance-vested
options), unless: (1) the proposal is overly restrictive; or (2) the company
demonstrates that it is using a substantial portion of performance-based awards
for its top executives.
Stock Option Expensing
<Page>
Generally vote for shareholder proposals asking the company to
expense stock options unless the company has already publicly committed to start
expensing by a specific date.
Golden and Tin Parachutes
Generally vote for shareholder proposals to require golden and
tin parachutes to be submitted for shareholder ratification, unless the proposal
requires shareholder approval prior to entering into employment contracts. Vote
on a case-by-case basis on proposals to ratify or cancel golden or tin
parachutes.
January 13, 2004
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Form N-CSR disclosure requirement not yet effective with respect to the
registrant.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Form N-CSR disclosure requirement not yet applicable to the registrant.
ITEM 10. CONTROLS AND PROCEDURES.
(a) As of a date within 90 days from the filing date of this report, the
principal executive officer and principal financial officer concluded that the
registrant's disclosure controls and procedures (as defined in Rule 30a-3(c)
under the Investment Company Act of 1940 (the "Act")) were effective based on
their evaluation of the disclosure controls and procedures required by Rule
30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934.
(b) There were no changes in registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the
registrant's second fiscal half-year that have materially affected, or are
reasonably likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS.
(a)(1) The registrant's code of ethics is an exhibit to this report.
(a)(2) The certifications of the registrant as required by Rule 30a-2(a) under
the Act are exhibits to this report.
(a)(3) Not applicable.
(b) The certifications of the registrant as required by Rule 30a-2(b) under
the Act are an exhibit to this report.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934 and the Investment Company Act of 1940, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
THE LATIN AMERICA EQUITY FUND, INC.
/s/ Joseph D. Gallagher
-----------------------
Name: Joseph D. Gallagher
Title: Chief Executive Officer
Date: March 5, 2004
Pursuant to the requirements of the Securities Exchange Act of
1934 and the Investment Company Act of 1940, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
/s/ Joseph D. Gallagher
-----------------------
Name: Joseph D. Gallagher
Title: Chief Executive Officer
Date: March 5, 2004
/s/ Michael A. Pignataro
------------------------
Name: Michael A. Pignataro
Title: Chief Financial Officer
Date: March 5, 2004