<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 number 811-6094
---------------------------------------------
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)
J. Kevin Gao, 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
Date of reporting period: January 1, 2004 to December 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
ANNUAL REPORT
DECEMBER 31, 2004
[LAQ LISTED NYSE(R) LOGO]
3019-AR-04
<Page>
CONTENTS
<Table>
Letter to Shareholders 1
Portfolio Summary 3
Schedule of Investments 5
Statement of Assets and Liabilities 9
Statement of Operations 10
Statement of Changes in Net Assets 11
Financial Highlights 12
Notes to Financial Statements 14
Report of Independent Registered Public Accounting Firm 20
Results of Annual Meeting of Shareholders 21
Tax Information 21
Description of InvestLink(SM) Program 22
Information Concerning Directors and Officers 25
Annual Certifications 28
Proxy Policy and Portfolio Holdings Information 29
</Table>
<Page>
LETTER TO SHAREHOLDERS
February 2, 2005
DEAR SHAREHOLDER:
For the year ended December 31, 2004, the Latin America Equity Fund, Inc. (the
"Fund") had an increase in its net asset value (NAV) of 40.62%, assuming
reinvestment of dividends and distributions. By comparison, the Morgan Stanley
Capital International Latin America Index* had an increase of 39.44% (net of
dividend taxation) for the year. Based on market price, the Fund's shares rose
45.04% during the year. As a result, the Fund's discount to its NAV stood at
11.28% on December 31, 2004, compared with a discount of 13.98% at the beginning
of the year. Over the period the Fund's average discount to NAV was 15.54%.
LATIN AMERICA LEADS AN OUTPERFORMING ASSET CLASS
The global environment was broadly favorable for emerging markets. Ample
liquidity conditions as a result of low global interest rates, robust global
growth and high investor appetite for higher-return and higher-risk assets drove
out-performance versus developed markets for the year as a whole,
notwithstanding a mid-period downturn. Latin America's equity markets
outperformed emerging markets broadly, aided by better-than-expected economic
data in much of the region, in particular Brazil and Chile, which benefited in
part from higher prices for many commodities including steel, iron ore and
copper. Surging oil prices, meanwhile, benefited oil exporters Venezuela and
Mexico. Aided by strong export revenues, most countries in the region showed
strong current account balances; this in turn led in most cases to strong
currency appreciation.
PERFORMANCE: AIDED BY STOCK SELECTION
The Fund performed well in absolute and relative terms, helped by the favorable
environment for Latin American equities and good stock selection, particularly
in Brazil. On average we were overweight in both Mexico and Brazil for most of
the year and both of these weightings contributed to returns. Standouts among
our Brazilian holdings included a low cost airline and a cosmetics company, both
IPOs. In Mexico, our overweight in mobile operator, America Movil, S.A de C.V
(10.28% of the Fund's net assets as of December 31, 2004), helped performance.
Other factors that helped the Fund included its underweighting in Peru, which
underperformed in the year. On the negative side, in relative terms, the Fund
was hindered by its lack of exposure to Colombia, which had a strong gain (that
market comprises less than 1% of the Fund's benchmark).
THE PORTFOLIO: A SHIFT TOWARD SMALLER COMPANIES
In the latter part of the period we increased our focus on small and mid-cap
stocks that we viewed as more attractive on a risk-reward basis. These included
a Brazilian producer of railway rolling stock. We increased our overweight
position in Brazilian banks, based on continued loan growth and improvements in
the net interest margins. We do not view the recent interest rate increases by
the country's central bank as a significant threat to the demand for credit.
In other noteworthy recent portfolio activity, we raised our overweight exposure
to home builders in Mexico. We believe these companies could benefit from a
strong pent-up demand for housing combined with the public's easier access to
mortgage financing.
On the sell side, we took profits in the above-noted cosmetics company and an
aircraft manufacturer, both in Brazil. We also reduced our exposure to Colombia.
These moves were all based on valuation in the wake of good performance.
OUTLOOK: RISKS MOSTLY EXTERNAL
We continue to view fundamentals within Latin America as generally constructive
in terms of economic growth, debt reduction and profit improvements. Regarding
commodities, our view is that high prices could persist, in part due
1
<Page>
to demand from a still-growing China. We are monitoring inflation as a concern,
though we think that monetary authorities in Mexico and Brazil will probably
continue to tighten as necessary.
These factors, along with valuations that still appear reasonable to us compared
with developed stock markets, should continue to support the region's markets,
barring a decrease in risk appetite generally. We remain of the view that the
risks to emerging markets are mainly external risks, such as a spike in U.S.
bond yields or renewed geopolitical concerns. In this environment, we expect
stock selection to be key to performance in 2005, and we continue to emphasize
companies we think can deliver on strong earnings and cash flows.
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 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, Director, is Chief Investment Officer for Latin American
equities and shares primarily responsible for management of the Fund's assets.
She joined 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 holds a B.A. in economics and
development studies from Brown University and an M.B.A. from Stanford
University. She also studied economics at L'Institut d'Etudes Politiques in
Paris and was a Rotary Scholar at Instituto di Tella in Buenos Aires. She is
fluent in Spanish and conversant in French, and is a Chartered Financial
Analyst. 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, Vice President, is a portfolio manager specializing in
Latin American equities and shares primarily responsible for management of the
Fund's assets. He joined 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 and 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 2005.
Mr. Hickman is Co-Chief Investment Officer of the Fund. 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, 2004 (UNAUDITED)
[CHART]
GEOGRAPHIC ASSET BREAKDOWN
AS A PERCENT OF NET ASSETS
<Table>
<Caption>
12/31/2004 12/31/2003
Argentina 1.75% 0.58%
Brazil 52.02% 49.09%
Chile 8.45% 9.58%
Latin America 0.82% 1.07%
Mexico 30.78% 36.14%
Panama 0.83% 0.00%
Peru 1.52% 0.00%
Venezuela 1.21% 1.12%
Global 1.01% 1.29%
Cash & Other Assets 1.61% 1.13%
</Table>
[CHART]
SECTOR ALLOCATION
AS A PERCENT OF NET ASSETS
<Table>
<Caption>
12/31/2004 12/31/2003
Banking 9.69% 7.12%
Bottling 1.82% 5.56%
Broadcast, Radio & Television 0.93% 3.77%
Cellular Telecommunications 11.44% 9.21%
Cement 2.12% 3.75%
Electric-Integrated 3.59% 5.06%
Food & Beverages 5.12% 2.65%
Food-Retail 0.99% 3.97%
Mining 11.86% 9.17%
Oil & Natural Gas 11.11% 12.73%
Retail-Major Department Stores 1.69% 3.76%
Telephone-Integrated 14.97% 16.17%
Other 24.67% 17.08%
</Table>
3
<Page>
TOP 10 HOLDINGS, BY ISSUER
<Table>
<Caption>
PERCENT OF
HOLDING SECTOR COUNTRY NET ASSETS
- -------------------------------------------------------------------------------------------------------------
1. America Movil, S.A. de C.V. Cellular Telecommunications Mexico 10.3
2. Companhia Vale do Rio Doce Mining Brazil 10.2
3. Petroleo Brasileiro S.A. Oil & Natural Gas Brazil 10.0
4. Telefonos de Mexico, S.A. de C.V. Telephone-Integrated Mexico 4.3
5. Tele Norte Leste Participacoes S.A. Telephone-Integrated Brazil 3.8
6. Banco Itau Holding Financeira S.A. Banking Brazil 3.3
7. Banco Bradesco S.A. Banking Brazil 2.6
8. Cemex, S.A. de C.V. Cement Mexico 2.1
9. Compania de Telecomunicaciones de Chile S.A. Telephone-Integrated Chile 2.0
10. Companhia de Bebidas das Americas Bottling Brazil 1.8
</Table>
4
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
SCHEDULE OF INVESTMENTS - DECEMBER 31, 2004
<Table>
<Caption>
NO. OF
DESCRIPTION SHARES/UNITS VALUE
- ----------------------------------------------------------------------------------------
EQUITY OR EQUITY-LINKED SECURITIES-98.39%
ARGENTINA-1.75%
OIL & NATURAL GAS-1.08%
Tenaris S.A., ADR 34,100 $ 1,667,490
----------------
REAL ESTATE DEVELOPMENT-0.25%
IRSA Inversiones y Representaciones
S.A., GDR+ 33,900 381,375
----------------
TELEPHONE-INTEGRATED-0.42%
Nortel Inversora
S.A., PNB, ADR+ 45,700 320,357
Telecom Argentina S.A., ADR+ 30,000 328,800
----------------
649,157
----------------
TOTAL ARGENTINA
(Cost $2,142,343) 2,698,022
----------------
BRAZIL-52.03%
AEROSPACE/DEFENSE-EQUIPMENT-0.35%
Empresa Brasileira de Aeronautica
S.A., ADR 16,200 541,728
----------------
AIRLINES-0.93%
Gol-Linhas Aereas Inteligentes
S.A., ADR+ 44,800 1,428,224
----------------
AUTO PARTS-0.35%
Iochpe Mexion S.A., PN+ 4,830,000 541,902
----------------
BANKING-7.18%
Banco Bradesco S.A., PN 162,900 3,939,408
Banco Bradesco
S.A., PN, Rights+ 6,008 54,402
Banco Itau Holding Financeira
S.A., PN 34,260 5,146,739
Uniao de Bancos Brasileiros
S.A., GDR 60,800 1,928,576
----------------
11,069,125
----------------
BOTTLING-1.82%
Companhia de Bebidas das Americas,
PN, ADR 99,200 2,810,336
----------------
<Caption>
NO. OF
DESCRIPTION SHARES VALUE
- ----------------------------------------------------------------------------------------
CELLULAR TELECOMMUNICATIONS-1.16%
Telesp Celular Participacoes
S.A., ADR+ 263,257 $ 1,790,148
----------------
COSMETICS & TOILETRIES-0.85%
Natura Cosmeticos S.A. 45,000 1,313,065
----------------
DIVERSIFIED OPERATIONS-0.74%
Bradespar S.A., PN+ 34,800 1,146,461
----------------
ELECTRIC-INTEGRATED-2.55%
Centrais Eletricas Brasileiras
S.A., ON 38,600,000 559,526
Centrais Eletricas Brasileiras
S.A., PNB 132,000,000 1,948,193
Companhia Energetica de Minas
Gerais, ADR 57,800 1,418,412
----------------
3,926,131
----------------
FOOD-RETAIL-0.52%
Perdigao S.A., PN 37,000 798,230
----------------
MEDICAL LABS & TESTING SERVICES-0.53%
Diagnosticos da America S.A.+ 90,700 816,163
----------------
MINING-10.80%
Caemi Mineracao e Metalurgia
S.A., PN+ 1,030,000 884,187
Companhia Vale do Rio Doce,
ADR 646,600 15,764,108
----------------
16,648,295
----------------
OIL & NATURAL GAS-10.03%
Petroleo Brasileiro S.A., ADR 427,200 15,468,912
----------------
PAPER & RELATED PRODUCTS-1.46%
Votorantim Celulose e Papel
S.A., ADR 138,750 2,247,750
----------------
PETROCHEMICALS-1.29%
Braskem S.A., PNA+ 39,400,000 1,987,801
----------------
PUBLIC THOROUGHFARES-0.66%
Companhia de Concessoes
Rodoviarias 46,800 1,023,750
----------------
</Table>
See accompanying notes to financial statements.
5
<Page>
<Table>
<Caption>
NO. OF
DESCRIPTION SHARES VALUE
- ----------------------------------------------------------------------------------------
STEEL-2.00%
Companhia Siderurgica Nacional
S.A., ON 41,900 $ 801,243
Gerdau S.A., PN 49,600 887,048
Usinas Siderurgicas de
Minas Gerais S.A., PNA 68,700 1,395,469
----------------
3,083,760
----------------
TELEPHONE-INTEGRATED-6.68%
Brasil Telecom Participacoes
S.A 85,200,000 859,699
Brasil Telecom Participacoes
S.A., ADR 29,500 1,125,425
Tele Norte Leste Participacoes
S.A., ADR 187,100 3,156,377
Tele Norte Leste Participacoes
S.A., ON 152,660 2,677,872
Telecomunicacoes de Sao Paulo
S.A., PN 106,600,000 2,034,872
Telemar Norte Leste S.A., PNA 17,800 452,707
----------------
10,306,952
----------------
TEXTILES-0.96%
Companhia Tecidos Norte de
Minas S.A., PN 2,800,000 316,265
Sao Paulo Alpargatas S.A., PN 8,634,500 1,170,339
----------------
1,486,604
----------------
TRANSPORTATION-0.56%
All America Latina
Logistica, PN 29,000 862,575
----------------
UTILITIES-0.61%
Companhia de Saneamento
Basico do Estado de Sao
Paulo, ON 15,850,000 939,602
----------------
TOTAL BRAZIL
(Cost $49,705,918) 80,237,514
----------------
CHILE-8.44%
BANKING-1.22%
Banco Santander Chile S.A. 29,273,000 $ 950,747
Banco Santander Chile
S.A., ADR 14,900 504,514
Corpbanca S.A., ADR+ 14,818 425,276
----------------
1,880,537
----------------
CHEMICALS-DIVERSIFIED-0.73%
Sociedad Quimica y Minera de
Chile S.A., Class B 182,100 1,127,169
----------------
DIVERSIFIED OPERATIONS-1.22%
Empresas Copec S.A. 238,785 1,890,516
----------------
ELECTRIC-INTEGRATED-1.04%
Empresa Nacional de
Electricidad S.A. 1,474,568 888,853
Enersis S.A.+ 2,500,000 420,603
Enersis S.A., ADR 34,200 291,042
----------------
1,600,498
----------------
FOOD & BEVERAGES-0.67%
Embotelladora Andina
S.A., PNA 206,721 457,520
Vina Concha y Toro S.A. 404,311 576,912
----------------
1,034,432
----------------
FOOD-RETAIL-0.47%
Cencosud S.A., ADR++ 27,500 727,394
----------------
PAPER & RELATED PRODUCTS-0.77%
Empresas CMPC S.A. 50,000 1,187,584
----------------
TELEPHONE-INTEGRATED-2.32%
Compania de Telecomunicaciones
de Chile S.A., ADR 192,600 2,164,824
Compania de Telecomunicaciones
de Chile S.A., Class A 305,000 856,140
Empresa Nacional de
Telecomunicaciones S.A. 71,500 550,643
----------------
3,571,607
----------------
TOTAL CHILE
(Cost $8,719,368) 13,019,737
----------------
</Table>
See accompanying notes to financial statements.
6
<Page>
<Table>
<Caption>
NO. OF
DESCRIPTION SHARES/UNITS VALUE
- ----------------------------------------------------------------------------------------
LATIN AMERICA-0.82%
TELECOMMUNICATIONS-0.00%
International Wireless
Communications Holdings
Corp.^^ 12,636 $ 0
----------------
VENTURE CAPITAL-0.82%
J.P. Morgan Latin America Capital
Partners (Cayman), L.P.+^^ 880,437 734,135
J.P. Morgan Latin America Capital
Partners (Delaware), L.P.+^^# 1,398,860 527,692
----------------
1,261,827
----------------
TOTAL LATIN AMERICA
(Cost $1,951,954) 1,261,827
----------------
MEXICO-30.78%
AIRPORT DEVELOPMENT/MAINTANANCE-0.96%
Grupo Aeroportuario del Sureste
S.A. de C.V., ADR 54,300 1,485,105
----------------
BROADCAST, RADIO & TELEVISION-0.93%
Grupo Televisa S.A., ADR 23,600 1,427,800
----------------
BUILDING-HEAVY CONSTRUCTION-1.33%
Empresas ICA Sociedad
Controladora S.A. de C.V.+ 5,309,600 2,048,200
----------------
CELLULAR TELECOMMUNICATIONS-10.28%
America Movil, S.A. de C.V.,
Series L, ADR 302,800 15,851,580
----------------
CEMENT-2.12%
Cemex, S.A. de C.V., ADR 89,907 3,274,413
----------------
ENGINEERING & CONSTRUCTION-1.11%
Corporacion GEO, S.A. de C.V.,
Series B+ 854,500 1,709,460
----------------
<Caption>
NO. OF
DESCRIPTION SHARES VALUE
- ----------------------------------------------------------------------------------------
ENTERTAINMENT-0.27%
Corporacion Interamericana de
Entretenimiento S.A. de C.V.,
Class B+ 135,300 $ 424,823
----------------
FOOD & BEVERAGES-4.45%
Fomento Economico Mexicano,
S.A. de C.V., ADR 43,700 2,299,057
Gruma S.A., Class B 317,600 754,467
Grupo Bimbo, S.A. de C.V.,
Series A 496,100 1,253,268
Grupo Modelo, S.A. de C.V.,
Series C 928,800 2,554,679
----------------
6,861,471
----------------
METAL-DIVERSIFIED-1.64%
Grupo Mexico S.A. de C.V.,
Class B+ 500,100 2,523,605
----------------
REAL ESTATE DEVELOPMENT-1.66%
Consorcio ARA,
S.A. de C.V.+ 384,500 1,155,535
Desarrolladora Homex
S.A. de C.V., ADR+ 18,500 437,525
Urbi, Desarrollos Urbanos,
S.A. de C.V.+ 221,800 969,019
----------------
2,562,079
----------------
RETAIL-MAJOR DEPARTMENT STORES-1.69%
Wal-Mart de Mexico,
S.A. de C.V., Series V 524,300 1,801,443
Wal-Mart de Mexico,
S.A. de C.V., Series V, ADR 23,306 800,771
----------------
2,602,214
----------------
TELEPHONE-INTEGRATED-4.34%
Telefonos de Mexico,
S.A. de C.V., Class L, ADR 174,800 6,698,336
----------------
TOTAL MEXICO
(Cost $30,097,935) 47,469,086
----------------
</Table>
See accompanying notes to financial statements.
7
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
SCHEDULE OF INVESTMENTS (CONCLUDED)
<Table>
<Caption>
NO. OF
DESCRIPTION SHARES/UNITS VALUE
- ----------------------------------------------------------------------------------------
PANAMA-0.83%
BANKING-0.83%
Banco Latinoamericano de
Exportaciones S.A., E Shares
(Cost $1,086,010) 64,100 $ 1,278,154
----------------
PERU-1.52%
BANKING-0.46%
Credicorp Limited 45,000 711,450
----------------
MINING-1.06%
Compania de Minas
Buenaventura S.A.u., ADR 71,400 1,635,060
----------------
TOTAL PERU
(Cost $2,176,361) 2,346,510
----------------
VENEZUELA-1.21%
TELEPHONE-INTEGRATED-1.21%
Compania Anonima Nacional
Telefonos de Venezuela, ADR
(Cost $1,421,543) 83,500 1,869,565
----------------
GLOBAL-1.01%
VENTURE CAPITAL-1.01%
Emerging Markets
Ventures I L.P.+^^#
(Cost $1,543,548) 2,205,494 1,551,455
----------------
TOTAL EQUITY OR EQUITY-LINKED
SECURITIES (Cost $98,844,980) 151,731,870
----------------
SHORT-TERM INVESTMENTS-3.20%
CHILEAN MUTUAL FUNDS-0.11%
Security Check Fund
(Cost $158,483) 32,932 167,748
----------------
<Caption>
PRINCIPAL
DESCRIPTION AMOUNT (000'S) VALUE
- ----------------------------------------------------------------------------------------
UNITED KINGDOM-3.09%
Bank of America N.A.,
overnight deposit, 1.35%,
01/03/05* (Cost $4,765,000) $ 4,765 $ 4,765,000
----------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $4,923,483) 4,932,748
----------------
TOTAL INVESTMENTS-101.59%
(Cost $103,768,463) (Notes A,D,F) 156,664,618
----------------
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS-(1.59)% (2,450,399)
----------------
NET ASSETS-100.00% $ 154,214,219
================
</Table>
+ Non-income producing security.
++ 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 by, or under the direction of, the Board
of Directors under procedures established by the Board of Directors. (See
Notes A and G)
# As of December 31, 2004, the Fund has committed to investing additional
capital as follows: J.P. Morgan Latin America Capital Partners (Delaware),
L.P. ($1,623,892) and Emerging Markets Ventures I L.P. ($294,506), The
aggregate amount of open commitments for the Fund is $1,918,398.
* Variable rate account. Rate resets on a daily basis; amounts are available
on the same business day.
ADR American Depository Receipts.
GDR Global Depository Receipts.
ON Ordinary Shares.
PN Preferred Shares.
PNA Preferred Shares, Class A.
PNB Preferred Shares, Class B.
See accompanying notes to financial statements.
8
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 2004
<Table>
ASSETS
Investments, at value (Cost $103,768,463) (Note A, D, F) $ 156,664,618
Cash (including $2,234 of foreign currencies with a cost of $1,125) 2,515
Dividends receivable 894,413
Prepaid expenses 4,460
---------------
Total Assets 157,566,006
---------------
LIABILITIES
Payables:
Dividends (Note A) 2,908,230
Investment advisory fee (Note B) 294,954
Administration fees (Note B) 45,677
Directors' fees 3,787
Chilean repatriation taxes 2,855
Other accrued expenses 96,284
---------------
Total Liabilities 3,351,787
---------------
NET ASSETS (applicable to 6,322,240 shares of common stock outstanding) (Note C) $ 154,214,219
===============
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 (332,056)
Accumulated net realized loss on investments and foreign currency related transactions (38,969,974)
Net unrealized appreciation in value of investments and translation of other
assets and liabilities denominated in foreign currencies 52,903,060
---------------
Net assets applicable to shares outstanding $ 154,214,219
===============
NET ASSET VALUE PER SHARE ($154,214,219 DIVIDED BY 6,322,240) $ 24.39
===============
MARKET PRICE PER SHARE $ 21.64
===============
</Table>
See accompanying notes to financial statements.
9
<Page>
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME
Income (Note A):
Dividends $ 5,145,824
Interest 11,648
Net investment loss allocated from partnerships (139,022)
Less: Foreign taxes withheld (462,458)
---------------
Total Investment Income 4,555,992
---------------
Expenses:
Investment advisory fees (Note B) 1,012,939
Administration fees (Note B) 206,089
Custodian fees 107,741
Legal fees 79,536
Audit fees 74,801
Directors' fees 51,387
Accounting fees 44,731
Printing (Note B) 39,699
NYSE listing fees 23,750
Transfer agent fees 19,100
Insurance 16,914
Other 9,749
Brazilian taxes (Note A) 14,668
Chilean repatriation taxes (Note A) 2,855
---------------
Total Expenses 1,703,959
---------------
Net Investment Income 2,852,033
---------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND
FOREIGN CURRENCY RELATED TRANSACTIONS
Net realized gain/(loss) from:
Investments 19,174,716
Foreign currency related transactions (48,825)
Net change in unrealized appreciation in value of investments and translation
of other assets and liabilities denominated in foreign currencies 22,966,932
---------------
Net realized and unrealized gain on investments and foreign currency related
transactions 42,092,823
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 44,944,856
===============
</Table>
See accompanying notes to financial statements.
10
<Page>
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE YEARS ENDED
DECEMBER 31,
---------------------------------
2004 2003
--------------- ---------------
INCREASE IN NET ASSETS
Operations:
Net investment income $ 2,852,033 $ 2,159,896
Net realized gain on investments and foreign currency related
transactions 19,125,891 2,669,385
Net change in unrealized appreciation/depreciation in value of
investments and translation of other assets and liabilities denominated
in foreign currencies 22,966,932 35,187,981
--------------- ---------------
Net increase in net assets resulting from operations 44,944,856 40,017,262
--------------- ---------------
Dividends to shareholders:
Net investment income (2,908,230) (885,114)
--------------- ---------------
Total increase in net assets 42,036,626 39,132,148
--------------- ---------------
NET ASSETS
Beginning of year 112,177,593 73,045,445
--------------- ---------------
End of year $ 154,214,219 $ 112,177,593
=============== ===============
</Table>
See accompanying notes to financial statements.
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,
----------------------------------------------
2004 2003 2002
------------ ------------ ------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $ 17.74 $ 11.55 $ 15.06
------------ ------------ ------------
Net investment income/(loss) 0.45+ 0.34+ 0.01**
Net realized and unrealized gain/(loss) on investments
and foreign currency related transactions 6.66 5.99 (3.41)
------------ ------------ ------------
Net increase/(decrease) in net assets resulting from operations 7.11 6.33 (3.40)
------------ ------------ ------------
Dividends and distributions to shareholders:
Net investment income (0.46) (0.14) (0.21)
Net realized gain on investments and
foreign currency related transactions -- -- --
------------ ------------ ------------
Total dividends and distributions to shareholders (0.46) (0.14) (0.21)
------------ ------------ ------------
Anti-dilutive impact due to capital shares tendered or repurchased -- -- 0.10
------------ ------------ ------------
Net asset value, end of year $ 24.39 $ 17.74 $ 11.55
============ ============ ============
Market value, end of year $ 21.64 $ 15.26 $ 9.67
============ ============ ============
Total investment return (a) 45.04% 59.15% (18.83)%
============ ============ ============
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000 omitted) $ 154,214 $ 112,178 $ 73,045
Ratio of expenses to average net assets (b) 1.41% 1.37% 3.06%
Ratio of expenses to average net assets, excluding fee waivers 1.41% 1.37% 3.06%
Ratio of expenses to average net assets, excluding taxes 1.40% 1.49% 1.52%
Ratio of net investment income/(loss) to average net assets 2.36% 2.49%(c) 0.21%
Portfolio turnover rate 69.80% 62.62% 75.28%
</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,
----------------------------------------------
2001 2000 1999
------------ ------------ ------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $ 16.60 $ 18.57 $ 10.96
------------ ------------ ------------
Net investment income/(loss) 0.41* (0.11)+ 0.07+
Net realized and unrealized gain/(loss) on investments
and foreign currency related transactions (1.50) (2.44) 7.07
------------ ------------ ------------
Net increase/(decrease) in net assets resulting from operations (1.09) (2.55) 7.14
------------ ------------ ------------
Dividends and distributions to shareholders:
Net investment income (0.57) (0.08) --
Net realized gain on investments and
foreign currency related transactions -- -- --
------------ ------------ ------------
Total dividends and distributions to shareholders (0.57) (0.08) --
------------ ------------ ------------
Anti-dilutive impact due to capital shares tendered or repurchased 0.12 0.66 0.47
------------ ------------ ------------
Net asset value, end of year $ 15.06 $ 16.60 $ 18.57
============ ============ ============
Market value, end of year $ 12.15 $ 12.875 $ 13.76
============ ============ ============
Total investment return (a) (1.07)% (5.87)% 75.65%
============ ============ ============
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000 omitted) $ 112,009 $ 145,281 $ 123,262
Ratio of expenses to average net assets (b) 1.51% 2.13% 2.14%
Ratio of expenses to average net assets, excluding fee waivers 1.51% 2.19% 2.22%
Ratio of expenses to average net assets, excluding taxes 1.40% 2.03% 2.05%
Ratio of net investment income/(loss) to average net assets 2.52% (0.55)% 0.46%
Portfolio turnover rate 101.73% 125.83% 161.71%
<Caption>
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
1998 1997 1996 1995
------------ ------------ ------------ ------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $ 18.77 $ 18.41 $ 16.27 $ 19.53
------------ ------------ ------------ ------------
Net investment income/(loss) 0.16 0.16 0.21 0.07
Net realized and unrealized gain/(loss) on investments
and foreign currency related transactions (7.85)^^ 2.01 2.00 (3.07)
------------ ------------ ------------ ------------
Net increase/(decrease) in net assets resulting from operations (7.69) 2.17 2.21 (3.00)
------------ ------------ ------------ ------------
Dividends and distributions to shareholders:
Net investment income (0.12) (0.17) (0.07) --
Net realized gain on investments and
foreign currency related transactions -- (1.64) -- (0.26)
------------ ------------ ------------ ------------
Total dividends and distributions to shareholders (0.12) (1.81) (0.07) (0.26)
------------ ------------ ------------ ------------
Anti-dilutive impact due to capital shares tendered or repurchased -- -- -- --
------------ ------------ ------------ ------------
Net asset value, end of year $ 10.96 $ 18.77 $ 18.41 $ 16.27
============ ============ ============ ============
Market value, end of year $ 7.834 $ 14.918 $ 15.259 $ 14.033
============ ============ ============ ============
Total investment return (a) (46.63)% 10.29% 9.18% (25.65)%
============ ============ ============ ============
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000 omitted) $ 86,676 $ 148,130 $ 145,230 $ 128,377
Ratio of expenses to average net assets (b) 2.41% 1.89% 1.69% 2.04%
Ratio of expenses to average net assets, excluding fee waivers 2.60% 2.02% 1.80% 2.15%
Ratio of expenses to average net assets, excluding taxes 1.77% 1.65% -- 1.81%
Ratio of net investment income/(loss) to average net assets 1.12% 0.77% 1.16% 0.42%
Portfolio turnover rate 142.35% 111.83% 43.22% 27.05%
</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
a 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 it is determined that
this method would not represent fair 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 by, or under the
direction of, the Board of Directors under procedures established by the Board
of Directors. The Fund may utilize a service provided by an independent third
party which has been approved by the Board of Directors to fair value certain
securities. At December 31, 2004, the Fund held 1.83% of its net assets in
securities valued at fair value as determined in good faith under procedures
established by the Board of Directors with an aggregate cost of $3,495,502 and
fair value of $2,813,282. 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 Bank of America N.A. 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 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
14
<Page>
taxes imposed by such countries. Also, certain Latin American countries impose
taxes on funds remitted or repatriated from such countries.
For Chilean securities 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. For the year ended December
31, 2004, the Fund accrued $2,855 of such expense.
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 in investments in
equity securities which is due to changes in the foreign exchange rates from
that which is due to changes in market prices of equity securities. Accordingly,
realized and unrealized foreign currency gains and losses with respect to such
securities are included in the reported net realized and unrealized gains and
losses on investment transactions balances.
The Fund reports certain foreign currency related transactions and foreign taxes
withheld on security transactions as components of realized gains for financial
reporting purposes, whereas such 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.
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 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.
15
<Page>
OTHER: The Fund invests 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 financial 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, 2004,
CSAM earned $1,012,939 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, 2004, CSAM was reimbursed $20,000 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 discount at
which the Fund's shares are trading. For the year ended December 31, 2004, these
sub-advisory fees amounted to $15,708. Effective January 1, 2005, as
compensation for its services, Celfin will be paid a
16
<Page>
fee, out of the advisory fees payable to CSAM, calculated weekly and paid
quarterly at an annual rate of 0.10% of the Fund's average weekly market value
or net assets (whichever is lower).
For the year ended December 31, 2004, Celfin earned approximately $6,000 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, 2004, BSFM earned $116,374 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 $61,000 at December 31, 2004) 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, 2004, the administration fees and accounting fees amounted to $69,715 and
$5,587, 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, 2004, Merrill was paid $39,892 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, 2004, CSAM
owned 13,746 shares.
NOTE D. INVESTMENT IN SECURITIES
For the year ended December 31, 2004, purchases and sales of securities, other
than short-term investments, were $84,019,998 and $86,294,969, respectively.
NOTE E. CREDIT FACILITY
The Fund, together with other funds/portfolios advised by CSAM (collectively,
the "Participating Funds"), participates in a $75 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%. The Fund had no borrowings under the Credit Facility at December 31,
2004.
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 and post October losses.
17
<Page>
The tax character of dividends paid during the years ended December 31 for the
Fund were as follows:
<Table>
<Caption>
ORDINARY INCOME
---------------------------
2004 2003
------------ ------------
$ 2,908,230 $ 885,114
</Table>
At December 31, 2004, the components of distributable earnings on a tax basis
for the Fund were as follows:
<Table>
Undistributed ordinary income $ (332,056)
Accumulated net realized loss (36,274,467)
Unrealized appreciation 50,207,553
---------------
Total distributable earnings $ 13,601,030
===============
</Table>
At December 31, 2004, the Fund had a capital loss carryover for U.S. federal
income tax purposes of $36,274,467 of which, $669,188, $674,775, $19,880,258 and
$15,050,246 expire in 2006, 2007, 2009 and 2010, respectively. It is uncertain
whether the Fund will be able to realize the benefits before they expire. For
the calendar year ending December 31, 2004, the Fund utilized $17,335,914 in
capital loss carryforwards.
At December 31, 2004, 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 $106,463,970, $51,292,772,
$(1,092,124) and $50,200,648, respectively.
At December 31, 2004, the Fund reclassified from accumulated net realized loss
on investments and foreign currency related transactions of $66,107 to
distributions in excess of net investment income. Net assets were not affected
by this reclassification.
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 by, or under the direction of, the Board
of Directors 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, 2004, 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 12/31/04 UNIT/SHARE ASSETS
- ----------------------------------- ------------ ------------------- ------------ ------------ -------------- -------
Emerging Markets
Ventures I L.P. 2,194,792 01/22/98 - 12/30/03 $ 1,533,406 $ 1,543,927 $ 0.70 1.00
10,702 07/06/04 10,142 7,528 0.70 0.01
------------ ------------ ------------ ----
2,205,494 1,543,548 1,551,455 1.01
------------ ------------ ------------ ----
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 12/31/04 UNIT/SHARE ASSETS
- ----------------------------------- ------------ ------------------- ------------ ------------ -------------- -------
J.P. Morgan Latin America Capital
Partners (Cayman), L.P. 880,437 04/10/00 - 05/28/03 $ 854,576 $ 734,135 $ 0.83 0.48
------------ ------------ ------------ -------
J.P. Morgan Latin America
Capital Partners (Delaware),
L.P. 1,295,734 04/10/00 - 04/17/03 762,047 488,790 0.38 0.32
103,126 03/26/04 60,651 38,902 0.38 0.02
------------ ------------ ------------ -------
1,398,860 822,698 527,692 0.34
------------ ------------ ------------ -------
Total $ 3,495,502 $ 2,813,282 1.83
============ ============ =======
</Table>
The Fund may incur certain costs in connection with the disposition of the above
securities.
NOTE H. SELF-TENDER OFFERS
On December 4, 2003 the Board of Directors announced that it was suspending the
annual self-tender program that the Fund was previously engaged in, 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 was completed in 2004) does not have its anticipated affect within a
reasonable period of time, the Board of Directors 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 of Directors 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 REGISTERED PUBLIC ACCOUNTING FIRM
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, 2004, 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 the standards of the
Public Company Accounting Oversight Board (United States). These standards
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, 2004 by correspondence with the
custodian and issuers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 18, 2005
20
<Page>
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
On April 21, 2004, the Annual Meeting of Shareholders of The Latin America
Equity Fund, Inc. (the "Fund") (the "Meeting") was held and the following
matters were voted upon:
(1) To re-elect two directors to the Board of Directors of the Fund.
<Table>
<Caption>
NAME OF DIRECTOR FOR WITHHELD
- ---------------- --------- --------
William W. Priest, Jr. 5,363,139 311,786
Martin M. Torino 5,541,140 133,785
</Table>
In addition to the directors re-elected at the Meeting, Enrique R. Arzac, James
J. Cattano and George W. Landau continued as directors of the Fund.
Effective August 9, 2004, Riordan Roett resigned as Director of the Fund.
Effective August 9, 2004, Michael E. Kenneally was appointed as Chairman of the
Fund, Chief Executive Officer and President. Joseph D. Gallagher, who previously
held these positions, resigned from the Fund effective the same day.
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, 2004) as to the U.S. federal tax status of dividends and
distributions received by the Fund's shareholders in respect of such year. The
$0.46 per share dividend paid in respect of such year, is represented entirely
by net investment income. The Fund has met the requirements to pass through all
ordinary income as qualified dividends as noted on Box 1B on Form 1099-DIV.
Please note that to utilize the lower tax rate for qualifying dividend income,
shareholders must have held their shares in the Fund for at least 61 days during
the 121 day period beginning 60 days before the ex-dividend date. 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 amount of foreign taxes that were
passed through to shareholders for the year ended December 31, 2004, were
$310,475, equal to $0.05 per share, and $194,862, equal to $0.03 per share from
Brazil and Chile, respectively. 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 Form 1099-DIV to determine the amount includable on their
respective tax returns for 2004.
Notification for calendar year 2004 was mailed in January 2005. 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 Trust
Company, N.A., with EquiServe, Inc. acting as service agent to the
aforementioned and, not by The Latin America Equity Fund, Inc. (the "Fund").
EquiServe Trust Company, N.A., will act as program administrator (the "Program
Administrator") of the InvestLink(SM) Program (the "Program"). The purpose of
the Program is to provide 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 Trust Company, N.A., as Program Administrator, administers the Program
for participants, keeps records, sends statements of account to participants and
performs other duties relating to the Program. Each participant in the Program
will receive a statement of his account following each purchase of Shares. The
statements will also show the amount of dividends credited to such participant's
account (if applicable), as well as the fees paid by the participant. In
addition, each participant 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 Trust Company, N.A.
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 THE 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 closed-
Management, LLC Committee ends at the Graduate School of end investment company);
Attn: General Counsel Chairman and 2006 annual Business, Columbia Director of Petroleum and
466 Lexington Avenue Audit Committee meeting University since 1971 Resources Corporation (a
New York, New York Member closed-end investment
10017-3140 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 trading
Greenwich, Connecticut Member and 2005 annual and manufacturing
06830 Audit Committee meeting company specializing
Chairman in the sale of
Date of Birth: 06/24/43 agricultural
commodities
throughout Latin
American markets)
since October 1996
George W. Landau Director and Since 1990; Senior Advisor, Latin 5 Director of GAM Funds, Inc.
c/o Credit Suisse Asset Audit Committee current term America, The
Management, LLC Member ends at the Coca-Cola Company
Attn: General Counsel 2006 annual since 1988; 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
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 2007 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 THE PAST FIVE YEARS DIRECTOR HELD BY DIRECTOR
- --------------------------- --------------- ------------ --------------------- ------------- ---------------------------
INTERESTED DIRECTOR
William W. Priest, Jr.* Director Since 1997; Chief Executive 47 Director of Globe Wireless,
c/o Epoch Investment current term Officer of J Net LLC (a maritime
Partners ends at the Enterprises, Inc. (a communications company);
667 Madison Avenue 2007 annual technology holding Director of InfraRed X
New York, New York meeting company) since June (a medical device company);
10021 2004; Chief Executive Director of J Net
Officer of Epoch Enterprises, Inc.
Date of Birth: 09/24/41 Investment Partners,
Inc. since April
2004; Co-Managing
Partner, Steinberg
Priest & Sloane
Capital Management,
LLC from 2001 to
March 2004; Chairman
and Managing Director
of CSAM from 2000 to
February 2001, Chief
Executive Officer and
Managing Director of
CSAM from 1990 to
2000
<Caption>
POSITION(S) LENGTH
NAME, ADDRESS AND HELD WITH OF TIME
DATE OF BIRTH FUND SERVED PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS
- --------------------------- --------------- ------------ -----------------------------------------------------------------
OFFICERS
Michael E. Kenneally** Chairman of the Since 2004 Chairman and Global Chief Executive Officer of CSAM since 2003;
c/o Credit Suisse Asset Fund, Chief Chairman and Chief Investment Officer of Banc of America Capital
Management, LLC Executive Management from 1998 to March 2003
466 Lexington Avenue Officer and
New York, New York President
10017-3140
Date of Birth: 03/30/54
Emily Alejos*** Co-Chief Since 1999 Director of CSAM; Associated with CSAM since 1997; Officer of
c/o Credit Suisse Asset Investment other Credit Suisse Funds
Management, LLC Officer
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 10/27/63
</Table>
26
<Page>
<Table>
<Caption>
POSITION(S) LENGTH
NAME, ADDRESS AND HELD WITH OF TIME
DATE OF BIRTH FUND SERVED PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS
- --------------------------- --------------- ------------ -----------------------------------------------------------------
OFFICERS--(Continued)
Matthew J.K. Hickman*** Co-Chief Since 2004 Vice President of CSAM since December 2003; Financial Advisor
c/o Credit Suisse Asset Investment with Global Advisors from July 2003 to November 2003; General
Management, LLC Officer Manager of Compass Group Investment Advisors S.A. from
466 Lexington Avenue February 2002 to July 2003; Financial Advisor with Credit Suisse
New York, New York First Boston from August 2000 to February 2002; Director of ABN
10017-3140 AMRO from September 1998 to August 2000; Officer of other Credit
Suisse Funds
Date of Birth: 01/21/64
Michael A. Pignataro Chief Financial Since 1993 Director and Director of Fund Administration of CSAM; Associated
c/o Credit Suisse Asset Officer and with CSAM since 1984; Officer of other Credit Suisse Funds
Management, LLC Secretary
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 11/15/59
Emidio Morizio Chief Since 2004 Director and Global Head of Compliance of CSAM; Associated with
c/o Credit Suisse Asset Compliance CSAM since July 2000; Vice President and Director of Compliance
Management, LLC Officer of Forstmann-Leff Associates from 1998 to June 2000; Officer of
466 Lexington Avenue other Credit Suisse Funds
New York, New York
10017-3140
Date of Birth: 09/21/66
Ajay Mehra Chief Legal Since 2004 Director and Deputy General Counsel of CSAM since September 2004;
c/o Credit Suisse Asset Officer Senior Associate of Shearman and Sterling LLP from September 2000
Management, LLC to September 2004; Senior Counsel of the SEC Division of
466 Lexington Avenue Investment Management from June 1997 to September 2000; Officer
New York, New York of other Credit Suisse Funds
10017-3140
Date of Birth: 08/14/70
J. Kevin Gao Senior Vice Since 2004 Vice President and legal counsel of CSAM; Associated with CSAM
c/o Credit Suisse Asset President since July 2003; Associated with the law firm of Willkie Farr &
Management, LLC Gallagher LLP from 1998 to 2003; Officer of other Credit Suisse
466 Lexington Avenue Funds
New York, New York
10017-3140
Date of Birth: 10/13/67
</Table>
27
<Page>
<Table>
<Caption>
POSITION(S) LENGTH
NAME, ADDRESS AND HELD WITH OF TIME
DATE OF BIRTH FUND SERVED PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS
- --------------------------- --------------- ------------ -----------------------------------------------------------------
OFFICERS--(Concluded)
Robert M. Rizza Treasurer Since 1999 Assistant Vice President of CSAM since January 2001;
c/o Credit Suisse Asset Associated with CSAM since 1998; Officer of other Credit Suisse
Management, LLC 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 August 9, 2004, Michael E. Kenneally was appointed as Chairman of
the Fund, Chief Executive Officer and President of the Fund. Joseph D.
Gallagher who previously held these positions has resigned effective August
9, 2004.
*** Effective February 12, 2004, Emily Alejos and Matthew J.K. Hickman were
appointed as Co-Chief Investment Officers of the Fund.
ANNUAL CERTIFICATIONS (UNAUDITED)
The Fund's Chief Executive Officer has filed an annual certification with the
NYSE that, as of the date of the certification, he was unaware of any violation
by the Fund of the NYSE's corporate governance listing standards. The Fund's
Chief Executive Officer and Chief Financial Officer have also filed
certifications with the SEC as part of the Fund's Form N-CSR filings that cover
certain public disclosure documents of the Fund, including its annual and
semi-annual reports to stockholders.
28
<Page>
PROXY POLICY AND PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)
Information regarding how the The Latin America Equity Fund, Inc. (the "Fund")
voted proxies related to its portfolio securities during the 12-month period
ended June 30, 2004 as well as the policies and procedures that the Fund uses to
determine how to vote proxies relating to its portfolio securities are
available:
- By calling 1-800-293-1232;
- On the Fund's website, www.csam.com/us
- On the website of the Securities and Exchange
Commission, http://www.sec.gov.
The Fund files a complete schedule of its portfolio holdings for the first and
third quarters of its fiscal year with the SEC on Form N-Q. The Fund's Forms N-Q
are available on the SEC's website at http://www.sec.gov and may be reviewed and
copied at the SEC's Public Reference Room in Washington, DC. Information on the
operation of the SEC's Public Reference Room may be obtained by calling
1-800-SEC-0330.
29
<Page>
OTHER FUNDS MANAGED BY CREDIT SUISSE ASSET MANAGEMENT, LLC
Credit Suisse Capital Appreciation Fund
Credit Suisse Cash Reserve Fund
Credit Suisse Emerging Markets Fund
Credit Suisse Fixed Income Fund
Credit Suisse Global Fixed Income Fund
Credit Suisse Global Small Cap Fund
Credit Suisse High Income Fund
Credit Suisse International Focus Fund
Credit Suisse Japan Equity Fund
Credit Suisse Large Cap Value Fund
Credit Suisse Mid-Cap Growth Fund
Credit Suisse New York Municipal Fund
Credit Suisse Select Equity Fund
Credit Suisse Short Duration Bond Fund
Credit Suisse Small Cap Growth Fund
Credit Suisse Small Cap Value 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, private equity, 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.
30
<Page>
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<Page>
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<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 September 30, 2004,
CSAM managed over $27 billion in the U.S. and, together with its global
affiliates, managed assets of over $308 billion in 15 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/us.
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
Martin M. Torino Director
Michael E. Kenneally Chairman of the Fund,
Chief Executive Officer
and President
Emily Alejos Co-Chief Investment Officer
Matthew J.K. Hickman Co-Chief Investment Officer
J. Kevin Gao Senior Vice President
Ajay Mehra Chief Legal Officer
Emidio Morizio Chief Compliance Officer
Michael A. Pignataro Chief Financial Officer and
Secretary
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
EquiServe Trust Company, N.A.
P.O. Box 43010
Providence, RI 02940
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
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-04
<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
12(a)(1) to this Form. There were no amendments to the code during the fiscal
year ended December 31, 2004. There were no waivers or implicit waivers from the
code granted by the registrant during the fiscal year ended December 31, 2004.
<Page>
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 independent registered public accounting firm,
PricewaterhouseCoopers LLP ("PwC"), for its fiscal years ended December 31, 2003
and December 31, 2004.
<Table>
<Caption>
2003 2004
- ------------------------------------------------------
Audit Fees $ 54,741 $ 56,150
Audit-Related Fees(1) $ 3,000 $ 4,500
Tax Fees(2) $ 7,482 $ 7,482
All Other Fees -- --
- ------------------------------------------------------
Total $ 65,223 $ 68,132
- ------------------------------------------------------
</Table>
(1) Services include agreed-upon procedures in connection with the registrant's
semi-annual financial statements ($3,000 per year) and the registrant's
third quarter 2004 Form N-Q filing ($1,500).
(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, 2003 and December 31, 2004.
<Table>
<Caption>
2003 2004
- ------------------------------------------------------
Audit-Related Fees N/A N/A
</Table>
2
<Page>
<Table>
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 registered public
accounting firm to the registrant and (ii) all permissible non-audit services to
be provided by the independent registered public accounting firm 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
registered public accounting firm 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>
2003 2004
- ------------------------------------------------------
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>
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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, 2003 and December 31, 2004:
<Table>
<Caption>
2003 2004
- ------------------------------------------------------
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, 2003 and December 31, 2004 were $10,482 and $11,982, 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 Cattano,
George Landau and Martin Torino.
ITEM 6. SCHEDULE OF INVESTMENTS.
Included as part of the report to shareholders filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
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CREDIT SUISSE ASSET MANAGEMENT, LLC
CREDIT SUISSE FUNDS
CREDIT SUISSE INSTITUTIONAL FUNDS
CSAM CLOSED-END FUNDS
PROXY VOTING POLICY AND PROCEDURES
Introduction
Credit Suisse Asset Management, LLC ("CSAM") is a fiduciary that owes 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
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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.
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;
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- 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.
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.
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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.
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
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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
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
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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
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.
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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
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.
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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
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
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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
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private placement if it is expected that the company will file for
bankruptcy if the transaction is not approved.
Prepackaged Bankruptcy Plans
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
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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. 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
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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 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.
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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 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
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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
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.
May 19, 2004
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Form N-CSR disclosure requirement is not yet effective with respect to the
registrant.
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ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
None.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of directors since the registrant
last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(g)
of Schedule 14A in its definitive proxy statement dated March 1, 2005.
ITEM 11. 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
second fiscal quarter of the period covered by this report that have materially
affected, or are reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) 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.
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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/ Michael E. Kenneally
------------------------
Name: Michael E. Kenneally
Title: Chief Executive Officer
Date: March 8, 2005
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/ Michael E. Kenneally
------------------------
Name: Michael E. Kenneally
Title: Chief Executive Officer
Date: March 8, 2005
/s/ Michael A. Pignataro
------------------------
Name: Michael A. Pignataro
Title: Chief Financial Officer
Date: March 8, 2005