<Page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File No. 811-06094
----------
THE LATIN AMERICA EQUITY FUND, INC.
(Exact Name of Registrant as Specified in Charter)
466 Lexington Avenue, New York, New York 10017-3140
(Address of Principal Executive Offices) (Zip Code)
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, 2006 to June 30, 2006
<Page>
ITEM 1. REPORTS TO STOCKHOLDERS.
<Page>
THE LATIN AMERICA
EQUITY FUND, INC.
SEMI-ANNUAL REPORT
JUNE 30, 2006
(UNAUDITED)
[AMERICAN STOCK EXCHANGE(R) LOGO]
LISTED
LAQ
LAQ-SAR-0606
<Page>
CONTENTS
<Table>
Letter to Shareholders 1
Portfolio Summary 3
Schedule of Investments 5
Statement of Assets and Liabilities 10
Statement of Operations 11
Statement of Changes in Net Assets 12
Financial Highlights 14
Notes to Financial Statements 16
Results of Annual Meeting of Shareholders 22
Privacy Policy Notice 23
Description of InvestLink(SM) Program 24
Proxy Voting and Portfolio Holdings Information 27
</Table>
<Page>
LETTER TO SHAREHOLDERS
August 2, 2006
DEAR SHAREHOLDER:
For the six month period ended June 30, 2006, The Latin America Equity Fund,
Inc. (the "Fund") had an increase in its net asset value (NAV) of 14.47%,
assuming reinvestment of dividends and distributions. By comparison, the Morgan
Stanley Capital International Latin America Index* had an increase of 12.02%
(net of dividend taxation) for the period. Based on market price, the Fund's
shares rose 19.01%. As a result, the Fund's discount to its NAV stood at 10.16%,
compared with a discount of 13.59% at the beginning of the period.
FUND NOW TRADING ON AMEX
Effective May 11, 2006, the Fund is listed on, and has commenced trading on, the
American Stock Exchange, LLC ("AMEX"). The Fund opted to make the move based on
listing costs. The Fund estimates that the Fund's annual listing fees will
decline substantially. The Fund continues to trade under the same ticker symbol
(LAQ).
MARKET OVERVIEW: POSITIVE THOUGH TURBULENT
The world's emerging equity markets had positive, though volatile, performance
in the period. The group started the year on a bright note, extending a rally
begun in 2003. Emerging markets turned sharply down in May, however, when
worries over US inflation and global interest-rates sparked a broad sell off
that hit riskier asset classes the hardest. The group suffered a peak-to-trough
fall of 25%, before staging a partial rebound late in the period.
For the period as a whole, most emerging market countries had gains. Brazil was
among the best performers, with its local-market gains boosted in dollar terms
due to strength in Brazil's currency. This helped Latin America outperform the
broader emerging market group, as did strong gains from Argentina, Venezuela and
Peru. Mexico, while positive, was a laggard.
PERFORMANCE: AIDED BY STOCK SELECTION
The Fund's outperformance in the period reflected good stock selection in the
consumer staples, industrials, telecommunications and utilities sectors. The
Fund's overweighting in the consumer discretionary sector modestly detracted
from its relative return, as that sector underperformed.
THE PORTFOLIO AND OUTLOOK
With regard to recent noteworthy portfolio activity, we slightly reduced our
position in a Mexican homebuilder whose growth rates, we anticipate, will lag
its industry peers. That said, we have remained heavily overweighted in Mexican
homebuilders as a whole. Our purchases included several large cap Mexican names,
such as a retail store chain, a mobile telephony operator and a cement producer.
All of these had underperformed in the May sell off and had become more
attractive to us (as a result of the purchases, we became less underweighted in
these companies). In addition, we took advantage of price volatility to increase
our position in a Mexican airport operator. We also participated in the IPO of a
Brazilian software company that came to market attractively priced, in our view.
From a sector standpoint, we modestly increased our exposure to the consumer
discretionary and industrial areas. We reduced our position in the financials
sector.
Recent market volatility notwithstanding, we view the May/June correction as a
normal and even healthy one, considering the strong market conditions last year
and into early 2006. We believe the pullback was more a reflection of shifting
risk appetite generally, as opposed to economic and financial fundamentals,
which, in our view, continue to improve for the most part. On the political
front, we believe that the recent (narrowly decided) election of Felipe Calderon
in Mexico leaves investors with less to worry about through the remainder of the
year. In this context, we will continue to seek to use short-term market
downturns as buying opportunities in companies we favor.
1
<Page>
Respectfully,
/s/ Matthew J.K. Hickman
- ----------------------------------------
Matthew J.K. Hickman
Chief Investment Officer**
/s/ Steven B. Plump
- ----------------------------------------
Steven B. Plump
Chief Executive Officer and President***
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 that includes reinvestment of
dividends (net of taxes). It is the exclusive property of Morgan Stanley
Capital International Inc. Investors cannot invest directly in an index.
** Matthew J.K. Hickman, Director, is a portfolio manager specializing in
Latin American equities and is 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
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 BA in modern languages from Cambridge University and a diploma in
corporate finance from London Business School. He is fluent in Spanish,
Portuguese and French. He is also the Chief Investment Officer of The Chile
Fund, Inc.
*** Steven B. Plump is a Managing Director of Credit Suisse Asset Management,
LLC ("Credit Suisse") and CEO/President of the Fund. He joined Warburg
Pincus Asset Management ("WPAM") in 1995 and came to Credit Suisse in 1999
when it acquired WPAM.
2
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
PORTFOLIO SUMMARY - AS OF JUNE 30, 2006 (UNAUDITED)
GEOGRAPHIC ASSET BREAKDOWN
[CHART]
AS A PERCENT OF NET ASSETS
<Table>
<Caption>
30-JUN-06 31-DEC-05
--------- ---------
Argentina 2.30% 1.60%
Brazil 60.60% 57.50%
Chile 7.00% 7.40%
Colombia 1.30% 1.70%
Latin America 0.40% 0.40%
Mexico 26.70% 27.30%
Peru 0.50% 0.90%
Venezuela 0.60% 0.20%
Global 0.50% 0.80%
Cash and Other Assets 0.10% 2.30%
</Table>
SECTOR ALLOCATION
[CHART]
AS A PERCENT OF NET ASSETS
<Table>
<Caption>
30-JUN-06 31-DEC-05
--------- ---------
Beverages 5.90% 6.90%
Commercial Banks 8.70% 10.20%
Construction Materials 2.90% 2.80%
Diversified Telecommunication 6.00% 6.40%
Electric Utilities 3.70% 1.70%
Food Products 4.30% 4.10%
Household Durables 3.50% 4.10%
Media 3.20% 3.20%
Metals & Mining 12.70% 12.90%
Oil, Gas & Consumable Fuels 15.20% 13.60%
Transportation Infrastructure 2.40% 1.20%
Water Utilities 2.80% 2.10%
Wireless Telecommunication Services 8.40% 7.60%
Other Sectors 20.50% 23.20%
</Table>
3
<Page>
TOP 10 HOLDINGS, BY ISSUER
<Table>
<Caption>
PERCENT OF
HOLDING SECTOR COUNTRY NET ASSETS
- -----------------------------------------------------------------------------------------------------------
1. Petroleo Brasileiro S.A. Oil, Gas & Consumable Fuels Brazil 15.2
2. Companhia Vale do Rio Doce Metals & Mining Brazil 7.6
3. America Telecom, S.A. de C.V Wireless Telecommunication Services Mexico 4.2
4. America Movil S.A. de C.V. Wireless Telecommunication Services Mexico 3.3
5. Uniao de Bancos Brasileiros S.A. Commercial Banks Brazil 3.2
6. Tele Norte Leste Participacoes S.A. Diversified Telecommunication Brazil 2.9
7. Cemex, S.A. de C.V. Construction Materials Mexico 2.9
8. Fomento Economico Mexicano, S.A. de C.V. Beverages Mexico 2.3
9. Cosan SA Industria e Comercio Food Products Brazil 2.0
10. Grupo Televisa S.A. Media Mexico 2.0
</Table>
4
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
SCHEDULE OF INVESTMENTS - JUNE 30, 2006 (UNAUDITED)
<Table>
<Caption>
NO. OF
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
EQUITY OR EQUITY-LINKED SECURITIES-99.89%
ARGENTINA-2.29%
DIVERSIFIED TELECOMMUNICATION-0.14%
Nortel Inversora S.A., PNB, ADR+ 45,700 $ 352,804
-----------
ENERGY EQUIPMENT & SERVICES-1.04%
Tenaris S.A., ADR 65,500 2,652,095
-----------
FOOD PRODUCTS-0.41%
Cresud S.A.C.I.F. y A., ADR 76,600 1,035,632
-----------
METALS & MINING-0.22%
Ternium SA, ADR+ 23,200 560,744
-----------
REAL ESTATE MANAGEMENT & DEVELOPMENT-0.15%
IRSA Inversiones y Representaciones S.A., GDR+ 33,900 380,697
-----------
THRIFTS & MORTGAGE FINANCE-0.33%
Banco Hipotecario S.A., ADR+ 250,300 852,246
-----------
TOTAL ARGENTINA
(Cost $4,506,889) 5,834,218
-----------
BRAZIL-60.62%
AEROSPACE & DEFENSE-0.74%
Empresa Brasileira de Aeronautica S.A., ADR 52,100 1,900,087
-----------
AIRLINES-1.76%
Tam S.A., PN 164,100 4,484,932
-----------
BEVERAGES-1.69%
Companhia de Bebidas das Americas, ADR 22,600 827,160
Companhia de Bebidas das Americas, PN, ADR 84,800 3,498,000
-----------
4,325,160
-----------
BUILDING PRODUCTS-0.38%
Duratex S.A., PN 107,900 971,686
-----------
COMMERCIAL BANKS-6.16%
Banco Itau Holding Financeira S.A., PN 139,900 $ 4,078,868
Investimentos Itau S.A., PN 886,822 3,573,103
Itausa-Investimentos Itau S.A.+ 3,878 15,607
Uniao de Bancos Brasileiros S.A., GDR 121,100 8,039,829
-----------
15,707,407
-----------
COMMERCIAL SERVICES & SUPPLIES-0.31%
American Banknote SA+ 122,100 789,835
-----------
CONSTRUCTION & ENGINEERING-0.16%
Lupatech SA+ 42,200 413,372
-----------
CONTAINERS & PACKAGING-0.54%
Klabin S.A., PN 589,000 1,379,799
-----------
DIVERSIFIED FINANCIAL SERVICES-1.29%
Bradespar S.A., PN 96,300 3,292,688
-----------
DIVERSIFIED TELECOMMUNICATION-5.14%
Brasil Telecom Participacoes S.A. 143,300,000 1,890,362
Brasil Telecom Participacoes S.A., ADR 31,500 1,025,955
Telecomunicacoes de Sao Paulo S.A ., PN 78,800 1,674,853
Tele Norte Leste Participacoes S.A., ADR 260,000 3,315,000
Tele Norte Leste Participacoes S.A., ON 153,436 4,175,756
Telemar Norte Leste S.A., PNA 51,200 1,026,721
-----------
13,108,647
-----------
ELECTRIC UTILITIES-2.99%
Centrais Eletricas Brasileiras S.A., PNB 152,400,000 3,161,723
Companhia Energetica de Minas Gerais, ADR 57,100 2,433,031
Companhia Energetica de Minas Gerais, PN 14,500,000 615,174
EDP-Energias do Brasil S.A. 112,700 1,405,984
-----------
7,615,912
-----------
</Table>
See accompanying notes to financial statements.
5
<Page>
<Table>
<Caption>
NO. OF
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
FOOD PRODUCTS-2.23%
Cosan SA Industria e Comercio+ 79,900 $ 5,150,075
Perdigao S.A. 53,100 527,504
-----------
5,677,579
-----------
HEALTH CARE PROVIDERS & SERVICES-0.71%
Diagnosticos da America S.A.+ 90,700 1,802,056
-----------
HOUSEHOLD DURABLES-0.63%
Cyrela Brazil Realty S.A. Empreendimentos e
Participacoes 96,500 1,598,487
-----------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS-1.06%
AES Tiete S.A., PN 60,400,000 1,451,219
Tractebel Energia S.A. 158,500 1,259,651
-----------
2,710,870
-----------
INTERNET & CATALOG RETAIL-0.63%
Submarino SA+ 79,800 1,603,559
-----------
MACHINERY-0.56%
Iochpe Maxion S.A., PN 148,500 1,440,915
-----------
MEDIA-1.15%
Net Servicos de Comunicacao SA, PN+ 2,484,700 1,343,236
Vivax S.A.+ 111,900 1,584,722
-----------
2,927,958
-----------
METALS & MINING-9.60%
Arcelor Brasil SA 48,284 740,686
Companhia Vale do Rio Doce, ADR PNA 947,400 19,497,492
Gerdau S.A., PN 72,000 1,082,869
Usinas Siderurgicas de Minas Gerais S.A., PNA 88,100 3,160,894
-----------
24,481,941
-----------
MULTILINE RETAIL-0.22%
Lojas Americanas S.A., PN 15,900,000 573,039
-----------
OIL, GAS & CONSUMABLE FUELS-15.22%
Petroleo Brasileiro S.A., ADR 486,100 $38,810,224
-----------
PAPER & FOREST PRODUCTS-1.10%
Aracruz Celulose S.A., ADR 39,400 2,065,348
Votorantim Celulose e Papel S.A., ADR 47,750 743,945
-----------
2,809,293
-----------
PERSONAL PRODUCTS-0.32%
Natura Cosmeticos S.A. 78,900 827,552
-----------
ROAD & RAIL-1.46%
All America Latina Logistica 54,800 3,719,589
-----------
SOFTWARE-0.30%
Datasul+ 90,900 770,713
-----------
TEXTILES, APPAREL & LUXURY GOODS-0.97%
Companhia de Tecidos Norte de Minas S.A., PN 26,500,000 2,473,374
-----------
TOBACCO-0.28%
Souza Cruz S.A. 48,000 714,372
-----------
TRANSPORTATION INFRASTRUCTURE-0.92%
Obrascon Huarte Lain Brasil S.A.+ 211,100 2,339,974
-----------
WATER UTILITIES-1.24%
Companhia de Saneamento Basico do Estado de Sao
Paulo, ON 24,290,000 2,272,716
Companhia de Saneamento de Minas Gerais+ 106,000 881,599
-----------
3,154,315
-----------
WIRELESS TELECOMMUNICATION SERVICES-0.86%
Vivo Participacoes S.A., ADR 894,757 2,201,102
-----------
TOTAL BRAZIL
(Cost $88,291,944) 154,626,437
-----------
</Table>
See accompanying notes to financial statements.
6
<Page>
<Table>
<Caption>
NO. OF
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
CHILE-7.03%
BEVERAGES-1.63%
Compania Cervecerias Unidas S.A. 197,880 $ 872,623
Compania Cervecerias Unidas S.A., ADR 50,400 1,113,336
Embotelladora Andina S.A., PNA 294,613 660,518
Embotelladora Andina S.A., PNB 140,000 338,521
Embotelladora Andina S.A., PNB, ADR 79,100 1,164,352
-----------
4,149,350
-----------
COMMERCIAL BANKS-0.88%
Banco de Chile 16,906,065 1,071,313
Banco Santander Chile S.A. 30,613,969 1,182,696
-----------
2,254,009
-----------
DIVERSIFIED TELECOMMUNICATION-0.25%
Compania de Telecomunicaciones de Chile S.A.,
Series A 367,916 633,297
-----------
ELECTRIC UTILITIES-0.72%
Enersis S.A. 3,780,000 850,973
Enersis S.A., ADR 88,300 993,375
-----------
1,844,348
-----------
FOOD & STAPLES RETAILING-0.27%
Cencosud S.A. 280,000 684,773
-----------
INDEPENDENT POWER PRODUCERS & ENERGY
TRADERS-0.51%
Empresa Nacional de Electricidad S.A. 1,474,568 1,307,357
-----------
INDUSTRIAL CONGLOMERATES-0.44%
Empresas Copec S.A. 123,000 1,123,569
-----------
MULTILINE RETAIL-0.24%
S.A.C.I. Falabella, S.A. 199,850 609,141
-----------
PAPER & FOREST PRODUCTS-0.54%
Empresas CMPC S.A. 50,000 1,366,500
-----------
</Table>
<Table>
<Caption>
NO. OF
DESCRIPTION SHARES/UNITS VALUE
- --------------------------------------------------------------------------------
WATER UTILITIES-1.55%
Inversiones Aguas Metropolitanas S.A., ADR++ 192,000 $ 3,956,736
-----------
TOTAL CHILE
(Cost $14,633,970) 17,929,080
-----------
COLOMBIA-1.26%
COMMERCIAL BANKS-0.81%
BanColombia S.A., ADR 65,503 1,578,622
Corporacion Financiera Colombina 114,800 497,990
-----------
2,076,612
-----------
DIVERSIFIED FINANCIAL SERVICES-0.45%
Suramericana de Inversiones S.A. 244,100 1,134,513
-----------
TOTAL COLUMBIA
(Cost $3,233,976) 3,211,125
-----------
LATIN AMERICA-0.43%
VENTURE CAPITAL-0.43%
J.P. Morgan Latin America Capital Partners
(Cayman), L.P.+~ 944,649 369,150
J.P. Morgan Latin America Capital Partners
(Delaware), L.P.+~# 1,484,267 723,031
-----------
TOTAL LATIN AMERICA
(Cost $1,224,887) 1,092,181
-----------
MEXICO-26.72%
AIRLINES-0.24%
Cintra, S.A. de C.V.+ 2,290,700 625,051
-----------
BEVERAGES-2.53%
Embotelladoras Arca S.A., Nominative Shares 228,798 533,095
Fomento Economico Mexicano, S.A. de C.V., ADR 70,712 5,920,009
-----------
6,453,104
-----------
CONSTRUCTION MATERIALS-2.86%
Cemex, S.A. de C.V., ADR 128,228 7,305,149
-----------
</Table>
See accompanying notes to financial statements.
7
<Page>
<Table>
<Caption>
NO. OF
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION-0.48%
Telefonos de Mexico S.A. de C.V. Class L, ADR 59,300 $ 1,235,219
------------
FOOD & STAPLES RETAILING-1.86%
Wal-Mart de Mexico, S.A. de C.V., Series V 1,208,540 3,394,038
Wal-Mart de Mexico, S.A. de C.V., Series V, ADR 47,945 1,346,478
------------
4,740,516
------------
FOOD PRODUCTS-1.66%
Gruma S.A., Class B 1,002,200 2,752,406
Grupo Bimbo, S.A. de C.V., Series A 496,100 1,493,884
------------
4,246,290
------------
HOTELS, RESTAURANTS & LEISURE-0.65%
Alsea, S.A. de C.V. 466,800 1,654,197
------------
HOUSEHOLD DURABLES-2.87%
Consorcio ARA, S.A. de C.V. 384,500 1,590,778
Corporacion GEO, S.A. de C.V., Series B+ 854,500 2,844,889
Desarrolladora Homex S.A. de C.V., ADR+ 21,600 708,696
Urbi, Desarrollos Urbanos, S.A. de C.V.+ 929,400 2,165,484
------------
7,309,847
------------
MEDIA-2.01%
Grupo Televisa S.A., ADR 225,600 4,356,336
Grupo Televisa S.A., CPO 198,400 773,376
------------
5,129,712
------------
METALS & MINING-2.57%
Baja Mining Corp.+ 1,357,700 1,843,474
Grupo Mexico SA de C.V., Class B 1,644,732 4,721,028
------------
6,564,502
------------
TRANSPORTATION INFRASTRUCTURE-1.45%
Grupo Aeroportuario del Pacifico S.A. de C.V.,
ADR 116,100 3,697,785
------------
</Table>
<Table>
<Caption>
NO. OF
DESCRIPTION SHARES/UNITS VALUE
- --------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES-7.54%
America Movil S.A. de C.V., ADR 255,500 $ 8,497,930
America Telecom, S.A. de C.V., Series A1 Shares+ 1,815,500 10,727,995
------------
19,225,925
------------
TOTAL MEXICO
(Cost $47,715,670) 68,187,297
------------
PERU-0.48%
COMMERCIAL BANKS-0.22%
Credicorp Limited 18,700 560,252
------------
METALS & MINING-0.26%
Compania de Minas Buenaventura S.A.u., ADR 24,200 660,176
------------
TOTAL PERU
(Cost $982,845) 1,220,428
------------
VENEZUELA-0.59%
COMMERCIAL BANKS-0.59%
Mercantil Servicios Financieros, C.A., ADR
(Cost $1,237,752) 259,700 1,492,885
------------
GLOBAL-0.47%
VENTURE CAPITAL-0.47%
Emerging Markets Ventures I L.P.+~#
(Cost $1,297,153) 2,237,292 1,193,416
------------
TOTAL EQUITY OR EQUITY-LINKED SECURITIES
(Cost $163,125,086) 254,787,067
------------
SHORT TERM INVESTMENTS-1.61%
CHILEAN MUTUAL FUNDS-0.09%
Fondo Mutuo Corporativo BancoEstado 66,575 92,644
Fondo Mutuo Security Check 24,949 137,830
------------
TOTAL CHILEAN MUTUAL FUNDS
(Cost $234,203) 230,474
------------
</Table>
See accompanying notes to financial statements.
8
<Page>
<Table>
<Caption>
PRINCIPAL
DESCRIPTION AMOUNT (000's) VALUE
- --------------------------------------------------------------------------------
GRAND CAYMAN-1.52%
Bank of America, overnight deposit, 4.25%,
07/03/2006* (Cost $3,885,000) $3,885 $ 3,885,000
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $4,119,203) 4,115,474
------------
TOTAL INVESTMENTS-101.50%
(Cost $167,244,289) (Notes B, E, G) 258,902,541
------------
LIABILITIES IN EXCESS OF CASH AND OTHER
ASSETS-(1.50)% (3,830,490)
------------
NET ASSETS-100.00% $255,072,051
============
</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 B and H).
# As of June 30, 2006, the aggregate amount of open commitments for the Fund
is $963,698. (See Note H).
* Variable rate account. Rate resets on a daily basis: amounts are available
on the same business day.
ADR American Depositary Receipts.
CPO Ordinary Participation Certificates.
GDR Global Depositary Receipts.
ON Ordinary Shares.
PN Preferred Shares.
PNA Preferred Shares, Class A.
PNB Preferred Shares, Class B.
See accompanying notes to financial statements.
9
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - JUNE 30, 2006 (UNAUDITED)
<Table>
ASSETS
Investments, at value (Cost $167,244,289) (Notes B, E, G) $258,902,541
Cash (including $101,882 of foreign currencies with a
cost of $116,267) 101,958
Receivables:
Investments sold 1,261,647
Dividends 768,745
Prepaid expense 19,632
------------
Total Assets 261,054,523
------------
LIABILITIES
Payables:
Investments purchased 5,224,322
Investment advisory fees (Note C) 479,931
Administration fees (Note C) 43,410
Directors' fees 35,676
Other accrued expenses 159,434
Chilean taxes 39,699
------------
Total Liabilities 5,982,472
------------
NET ASSETS (applicable to 6,322,240 shares of common stock
outstanding) (Note D) $255,072,051
============
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
Undistributed net investment income 3,336,204
Accumulated net realized gain on investments and foreign
currency related transactions 19,485,432
Net unrealized appreciation in value of investments and
translation of other assets and liabilities denominated
in foreign currencies 91,637,226
------------
Net assets applicable to shares outstanding $255,072,051
============
NET ASSET VALUE PER SHARE ($255,072,051 / 6,322,240) $ 40.35
============
MARKET PRICE PER SHARE $ 36.25
============
</Table>
See accompanying notes to financial statements.
10
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
STATEMENT OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 30, 2006 (UNAUDITED)
<Table>
INVESTMENT INCOME
Income (Note B):
Dividends $ 5,001,815
Interest 33,594
Less: Foreign taxes withheld (345,976)
-----------
Total Investment Income 4,689,433
-----------
Expenses:
Investment advisory fees (Note C) 1,032,732
Custodian fees 159,432
Administration fees (Note C) 124,265
Directors' fees 43,500
Audit and tax fees 42,151
Accounting fees 39,313
Printing (Note C) 35,315
Legal fees 27,273
Stock exchange listing fees 11,745
Shareholder servicing fees 9,521
Insurance 3,372
Miscellaneous 11,453
Brazilian taxes (Note B) 20,780
Chilean taxes (Note B) (26,433)
-----------
Total Expenses 1,534,419
Less: Fee waivers (Note C) (1,700)
-----------
Net Expenses 1,532,719
-----------
Net Investment Income 3,156,714
-----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND
FOREIGN CURRENCY RELATED TRANSACTIONS
Net realized gain/(loss) from:
Investments 14,328,758
Foreign currency related transactions (23,974)
Net change in unrealized appreciation in value of investments
and translation of other assets and liabilities denominated
in foreign currencies 14,758,870
Net realized and unrealized gain on investments and foreign -----------
currency related transactions 29,063,654
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $32,220,368
===========
</Table>
See accompanying notes to financial statements.
11
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE
SIX MONTHS
ENDED FOR THE
JUNE 30, 2006 YEAR ENDED
(UNAUDITED) DECEMBER 31, 2005
------------- -----------------
INCREASE IN NET ASSETS
Operations:
Net investment income $ 3,156,714 $ 3,861,207
Net realized gain on investments and foreign
currency related transactions 14,304,784 45,732,308
Net change in unrealized appreciation in
value of investments and translation of
other assets and liabilities denominated
in foreign currencies 14,758,870 23,975,296
Net increase in net assets resulting from ------------ ------------
operations 32,220,368 73,568,811
------------ ------------
Dividends and distributions to shareholders:
Net investment income -- (3,161,120)
Net realized gain on investments -- (1,770,227)
------------ ------------
Total dividends and distributions to shareholders -- (4,931,347)
------------ ------------
Total increase in net assets 32,220,368 68,637,464
------------ ------------
NET ASSETS
Beginning of period 222,851,683 154,214,219
------------ ------------
End of period* $255,072,051 $222,851,683
============ ============
</Table>
- ----------
* Includes undistributed net investment income of $3,336,204 and $179,490,
respectively.
See accompanying notes to financial statements.
12
<Page>
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13
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
FINANCIAL HIGHLIGHTS(S)
Contained below is per share operating performance data for a share of common
stock outstanding, total investment return, ratios to average net assets and
other supplemental data for each period indicated. This information has been
derived from information provided in the financial statements and market price
data for the Fund's shares.
<Table>
<Caption>
FOR THE
SIX MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, 2006 --------------------------------
(UNAUDITED) 2005 2004 2003
------------- -------- -------- --------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 35.25 $ 24.39 $ 17.74 $ 11.55
-------- -------- -------- --------
Net investment income/(loss) 0.50 0.61 0.45+ 0.34+
Net realized and unrealized gain/(loss) on
investments and foreign currency related
transactions 4.60 11.03 6.66 5.99
-------- -------- -------- --------
Net increase/(decrease) in net assets
resulting from operations 5.10 11.64 7.11 6.33
-------- -------- -------- --------
Dividends and distributions to shareholders:
Net investment income -- (0.50) (0.46) (0.14)
Net realized gain on investments and
foreign currency related transactions -- (0.28) -- --
-------- -------- -------- --------
Total dividends and distributions to
shareholders -- (0.78) (0.46) (0.14)
-------- -------- -------- --------
Anti-dilutive impact due to capital shares
tendered or repurchased -- -- -- --
-------- -------- -------- --------
Net asset value, end of period $ 40.35 $ 35.25 $ 24.39 $ 17.74
======== ======== ======== ========
Market value, end of period $ 36.25 $ 30.46 $ 21.64 $ 15.26
======== ======== ======== ========
Total investment return (a) 19.01% 44.06% 45.04% 59.15%
======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $255,072 $222,852 $154,214 $112,178
Ratio of expenses to average net assets
(b) 1.20%(d) 1.33% 1.41% 1.37%
Ratio of expenses to average net assets,
excluding fee waivers 1.20%(d) 1.33% 1.41% 1.37%
Ratio of expenses to average net assets,
excluding taxes 1.20%(d) 1.26% 1.40% 1.49%
Ratio of net investment income/(loss) to
average net assets 2.47%(d) 2.13% 2.36% 2.49%(c)
Portfolio turnover rate 16.48% 75.60% 69.80% 62.62%
</Table>
(S) 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.
# Impact of the Fund's self-tender program.
See accompanying notes to financial statements.
14
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
FINANCIAL HIGHLIGHTS(S)
<Table>
<Caption>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------
2002 2001 2000 1999 1998 1997 1996
------- -------- -------- -------- ------- -------- --------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 15.06 $ 16.60 $ 18.57 $ 10.96 $ 18.77 $ 18.41 $ 16.27
------- -------- -------- -------- ------- -------- --------
Net investment income/(loss) 0.01** 0.41* (0.11)+ 0.07+ 0.16 0.16 0.21
Net realized and unrealized gain/(loss) on
investments and foreign currency related
transactions (3.41) (1.50) (2.44) 7.07 (7.85)~ 2.01 2.00
------- -------- -------- -------- ------- -------- --------
Net increase/(decrease) in net assets
resulting from operations (3.40) (1.09) (2.55) 7.14 (7.69) 2.17 2.21
------- -------- -------- -------- ------- -------- --------
Dividends and distributions to shareholders:
Net investment income (0.21) (0.57) (0.08) -- (0.12) (0.17) (0.07)
Net realized gain on investments and
foreign currency related transactions -- -- -- -- -- (1.64) --
------- -------- -------- -------- ------- -------- --------
Total dividends and distributions to
shareholders (0.21) (0.57) (0.08) -- (0.12) (1.81) (0.07)
------- -------- -------- -------- ------- -------- --------
Anti-dilutive impact due to capital shares
tendered or repurchased 0.10# 0.12# 0.66 0.47 -- -- --
------- -------- -------- -------- ------- -------- --------
Net asset value, end of period $ 11.55 $ 15.06 $ 16.60 $ 18.57 $ 10.96 $ 18.77 $ 18.41
======= ======== ======== ======== ======= ======== ========
Market value, end of period $ 9.67 $ 12.15 $ 12.875 $ 13.76 $ 7.834 $ 14.918 $ 15.259
======= ======== ======== ======== ======= ======== ========
Total investment return (a) (18.83)% (1.07)% (5.87)% 75.65% (46.63)% 10.29% 9.18%
======= ======== ======== ======== ======= ======== ========
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000 omitted) $73,045 $112,009 $145,281 $123,262 $86,676 $148,130 $145,230
Ratio of expenses to average net assets
(b) 3.06% 1.51% 2.13% 2.14% 2.41% 1.89% 1.69%
Ratio of expenses to average net assets,
excluding fee waivers 3.06% 1.51% 2.19% 2.22% 2.60% 2.02% 1.80%
Ratio of expenses to average net assets,
excluding taxes 1.52% 1.40% 2.03% 2.05% 1.77% 1.65% --
Ratio of net investment income/(loss) to
average net assets 0.21% 2.52% (0.55)% 0.46% 1.12% 0.77% 1.16%
Portfolio turnover rate 75.28% 101.73% 125.83% 161.71% 142.35% 111.83% 43.22%
</Table>
(a) Total investment return at market value is based on the changes in market
price of a share during the period and assumes reinvestment of dividends
and distributions, if any, at actual prices pursuant to the Fund's dividend
reinvestment program.
(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%.
(d) Annualized.
15
<Page>
THE LATIN AMERICA EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE A. ORGANIZATION
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.
NOTE B. SIGNIFICANT ACCOUNTING POLICIES
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 revenues 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. 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. Investments in mutual funds are valued at the mutual
fund's closing net asset value per share on the day of valuation. 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. When
fair-value pricing is employed, the prices of securities used by a fund to
calculate its net asset value may differ from quoted or published prices for the
same securities. At June 30, 2006, the Fund held 0.90% 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 $2,522,040 and
fair value of $2,285,597. The Fund's estimate of fair value assumes a willing
buyer and a willing seller neither acting under the 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 time
deposit available through Brown Brothers Harriman & Co., the Fund's custodian.
The short-term time deposit is a variable rate account classified as a
short-term investment.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are
accounted for on a trade date basis. The cost of investments sold is determined
by use of the specific identification method for both financial reporting and
U.S. income tax purposes. Interest income is accrued as earned; dividend income
is recorded on the ex-dividend date.
16
<Page>
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 taxes imposed by such countries. Also, certain Latin
American countries impose taxes on funds remitted or repatriated from such
countries.
Brazil imposes a CONTRIBUCAO PROVISORIA SOBRE MOVIMENTACAOES FINANCIERAS
("CPMF") tax that applies to foreign exchange transactions related to dividends
carried out by financial institutions. The tax rate is 0.38%. For the six months
ended June 30, 2006, the Fund incurred $20,780 of such expense.
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 six months ended June
30, 2006, the Fund accrued no 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 on investments in
equity securities which is due to changes in the foreign exchange rates from
that which is due to changes in market prices of equity securities. Accordingly,
realized and unrealized foreign currency gains and losses with respect to such
securities are included in the reported net realized and unrealized gains and
losses on investment transactions balances.
The Fund reports certain foreign currency related transactions and foreign taxes
withheld on security transactions as components of realized gains for financial
reporting purposes, whereas such foreign currency related transactions are
treated as ordinary income for U.S. federal income tax purposes.
Net unrealized currency gains or losses from valuing foreign currency
denominated assets and liabilities at period end exchange rates are reflected as
a component of net unrealized appreciation/depreciation in value of investments,
and translation of other assets and liabilities denominated in foreign
currencies.
Net realized foreign exchange gains or losses represent foreign exchange gains
and losses from transactions in foreign currencies and forward foreign currency
contracts, exchange gains or losses realized between the trade date and
settlement date on security transactions, and the difference between the amounts
of interest and dividends recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received.
DISTRIBUTIONS OF INCOME AND GAINS: The Fund distributes at least annually to
shareholders substantially all of its net investment income and net realized
short-term capital gains, if any. The Fund determines annually whether to
distribute any net realized long-term capital gains in excess of net realized
short-term capital losses, including capital loss carryovers, if any. An
additional distribution may be made to the extent necessary to avoid the payment
of a 4% U.S. federal excise tax. Dividends and
17
<Page>
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.
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 risk (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 C. AGREEMENTS
Credit Suisse Asset Management, LLC ("Credit Suisse") serves as the Fund's
investment adviser with respect to all investments. Credit Suisse 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 six months
ended
18
<Page>
June 30, 2006, Credit Suisse earned $1,032,732 for advisory services, of which
Credit Suisse waived $1,700. Credit Suisse 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 six months ended June 30, 2006,
Credit Suisse was reimbursed $9,874 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 Credit
Suisse, 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
six months ended June 30, 2006, these sub-advisory fees amounted to $113,595.
For the six months ended June 30, 2006, Celfin earned approximately $62 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 based
on the Fund's average weekly net assets. For the six months ended June 30, 2006,
BSFM earned $71,240 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 $68,000 at June 30, 2006) 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 six months ended
June 30, 2006, the administration fees and accounting fees amounted to $43,151
and $3,372, respectively.
Merrill Corporation ("Merrill"), an affiliate of Credit Suisse, has been engaged
by the Fund to provide certain financial printing services. For the six months
ended June 30, 2006, Merrill was paid $18,171 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 D. 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 June 30, 2006, Credit
Suisse owned 13,746 shares.
NOTE E. INVESTMENT IN SECURITIES
For the six months ended June 30, 2006, purchases and sales of securities, other
than short-term investments, were $48,413,171 and $41,961,381, respectively.
NOTE F. CREDIT FACILITY
The Fund, together with other funds/portfolios advised by Credit Suisse
(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 borrowings at the
19
<Page>
Federal Funds rate plus 0.50%. During the six months ended June 30, 2006, the
Fund had no borrowings under the Credit Facility.
NOTE G. FEDERAL INCOME TAXES
Income and capital gain 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 excise tax regulations.
At June 30, 2006, 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 $167,689,043, $96,753,383,
$(5,539,885) and $91,213,498, respectively.
NOTE H. 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.
<Table>
<Caption>
NUMBER FAIR PERCENT
OF ACQUISITION VALUE AT VALUE PER OF NET DISTRIBUTIONS OPEN
SECURITY UNITS/SHARES DATE(S) COST 06/30/06 UNIT/SHARE ASSETS RECEIVED COMMITMENTS
- ------------------- ------------ ------------------- ---------- ---------- ---------- ------- ------------- -----------
Emerging Markets
Ventures I L.P. 2,226,890 01/22/98 - 07/01/05 $1,288,044 $1,187,867 $0.53 0.47
10,402 01/10/06 9,109 5,549 0.53 0.00
--------- ---------- ---------- ---- ---------- --------
2,237,292 1,297,153 1,193,416 0.47 $1,216,174 $262,708
--------- ---------- ---------- ---- ---------- --------
J.P. Morgan Latin
America Capital
Partners
(Cayman), L.P. 914,628 04/10/00 - 08/02/05 539,129 357,418 0.39 0.14
30,021 06/27/06 30,021 11,732 0.39 0.01
--------- ---------- ---------- ---- ---------- --------
944,649 569,150 369,150 0.15 776,087 --
--------- ---------- ---------- ---- ---------- --------
J.P. Morgan Latin
America Capital
Partners
(Delaware), L.P. 1,470,896 04/10/00 - 08/02/05 643,985 716,518 0.49 0.28
13,371 03/09/06 11,752 6,513 0.49 0.00
--------- ---------- ---------- ---- ---------- --------
1,484,267 655,737 723,031 0.28 1,305,115 700,990
--------- ---------- ---------- ---- ---------- --------
Total $2,522,040 $2,285,597 0.90 $3,297,376 $963,698
========== ========== ==== ========== ========
</Table>
The Fund may incur certain costs in connection with the disposition of the above
securities.
20
<Page>
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.
21
<Page>
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
On April 20, 2006, the Annual Meeting of Shareholders of the Fund (the
"Meeting") was held and the following matter was voted upon:
(1) To re-elect two directors (Mr. Arzac and Mr. Rappaport) and to elect two
directors (Mr. Fox and Mr. Haber) to the Board of Directors of the Fund:
<Table>
<Caption>
NAME OF DIRECTOR FOR WITHHELD
- ---------------- --------- ---------
Enrique R. Arzac (Class III) 4,971,756 304,319
Lawrence J. Fox (Class III) 5,086,500 189,575
Lawrence D. Haber (Class I) 3,771,418 1,504,657
Steven N. Rappaport (Class II) 4,973,172 302,903
</Table>
In addition to the directors elected at the Meeting, James J. Cattano and Martin
M. Torino continue to serve as directors of the Fund.
22
<Page>
IMPORTANT PRIVACY CHOICES FOR CONSUMERS (UNAUDITED)
We are committed to maintaining the privacy of every current and prospective
customer. We recognize that you entrust important personal information to us,
and we wish to assure you that we take seriously our responsibilities in
protecting and safeguarding this information.
In connection with making available investment products and services to current
and potential customers, we may obtain nonpublic personal information about you.
This information may include your name, address, e-mail address, social security
number, account number, assets, income, financial situation, transaction history
and other personal information.
We may collect nonpublic information about you from the following sources:
- - Information we receive on applications, forms, questionnaires, web sites,
agreements or in the course of establishing or maintaining a customer
relationship; and
- - Information about your transactions with us, our affiliates, or others.
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except with your consent or as otherwise permitted
by law.
In cases where we believe that additional products and services may be of
interest to you, we may share the information described above with our
affiliates.
We may also disclose this information to firms that perform services on our
behalf. These agents and service providers are required to treat the information
confidentially and use it only for the purpose for which it is provided.
We restrict access to nonpublic personal information about you to those
employees, agents or other parties who need to know that information to provide
products or services to you or in connection with your investments with or
through us. We maintain physical, electronic and procedural safeguards that
comply with federal standards to guard your nonpublic personal information.
NOTE: THIS NOTICE IS PROVIDED TO CLIENTS AND PROSPECTIVE CLIENTS OF CREDIT
SUISSE ASSET MANAGEMENT, LLC ("CREDIT SUISSE"), AND CREDIT SUISSE ASSET
MANAGEMENT SECURITIES, INC., AND SHAREHOLDERS AND PROSPECTIVE SHAREHOLDERS IN
CREDIT SUISSE SPONSORED AND ADVISED INVESTMENT COMPANIES, INCLUDING CREDIT
SUISSE FUNDS, AND OTHER CONSUMERS AND CUSTOMERS, AS APPLICABLE. THIS NOTICE IS
NOT INTENDED TO BE INCORPORATED IN ANY OFFERING MATERIALS BUT IS MERELY A
STATEMENT OF OUR CURRENT PRIVACY POLICY, AND MAY BE AMENDED FROM TIME TO TIME
UPON NOTICE TO YOU. THIS NOTICE IS DATED AS OF MAY 18, 2006.
23
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DESCRIPTION OF INVESTLINK(SM) PROGRAM (UNAUDITED)
The InvestLink(SM) Program is sponsored and administered by Computershare Trust
Company N.A. ("Computershare"), not by the Fund. Computershare 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 Computershare. 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
24
<Page>
expected to be submitted in 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.
Computershare, 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 to tax consequences of
participation in
25
<Page>
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: Computershare
Trust Company, N.A., InvestLink(SM) Program, P.O. Box 43010, Providence, RI
02940-3010.
26
<Page>
PROXY VOTING AND PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)
Information regarding how the Fund voted proxies related to its portfolio
securities during the 12-month period ended June 30, of each year, 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.credit-suisse.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
1-202-551-8090.
27
<Page>
OTHER FUNDS MANAGED BY CREDIT SUISSE ASSET MANAGEMENT, LLC
CLOSED-END FUNDS
SINGLE COUNTRY
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)
LITERATURE REQUEST -- Call today for free descriptive information on the
closed-end funds listed above at 1-800-293-1232 or visit our website on the
Internet: http://www.credit-suisse.com/us.
OPEN-END FUNDS
Credit Suisse Capital Appreciation Fund
Credit Suisse Cash Reserve Fund
Credit Suisse Commodity Return Strategy 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 Blend Fund
Credit Suisse Large Cap Value Fund
Credit Suisse Mid-Cap Growth Fund
Credit Suisse New York Municipal Fund
Credit Suisse Short Duration Bond Fund
Credit Suisse Small Cap Growth Fund
Credit Suisse Small Cap Value Fund
Credit Suisse Strategic Allocation 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. Performance
information current to the most recent month-end is available at
www.credit-suisse.com/us.
Credit Suisse Asset Management Securities, Inc., Distributor.
28
<Page>
SUMMARY OF GENERAL INFORMATION (UNAUDITED)
The Fund is a closed-end, non-diversified management investment company whose
shares trade on the American Stock Exchange, LLC ("AMEX"). The Fund's AMEX
trading symbol is LAQ. Its investment objective is long-term capital
appreciation through investments primarily in Latin America equity securities.
Credit Suisse Asset Management, LLC, the Fund's investment adviser, is part of
the Asset Management business of Credit Suisse, a leading global financial
services organization headquartered in Zurich, with offices focused on asset
management in 18 countries.
SHAREHOLDER INFORMATION
The Fund's market price is published in THE NEW YORK TIMES (daily) under the
designation "LatAEqty". THE WALL STREET JOURNAL (daily) under the designation of
"LatAmEq", and BARRON'S (each Monday) under the designation "Latin Amer Eq".
Weekly comparative net asset value (NAV) and market price information about the
Fund'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."
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
<Table>
Enrique R. Arzac Chairman of the Board of Directors
James J. Cattano Director
Lawrence J. Fox Director
Lawrence D. Haber Director
George W. Landau Honorary Director
Steven N. Rappaport Director
Martin M. Torino Director
Steven B. Plump Chief Executive Officer and President
Matthew J.K. Hickman Chief Investment Officer
J. Kevin Gao Senior Vice President and Secretary
Ajay Mehra Chief Legal Officer
Emidio Morizio Chief Compliance Officer
Michael A. Pignataro Chief Financial Officer
Robert Rizza Treasurer
John E. Smith, Jr. Assistant Treasurer
Brooke Brown Assistant Secretary
Karen Regan Assistant Secretary
</Table>
INVESTMENT ADVISER
Credit Suisse Asset Management, LLC
466 Lexington Avenue
New York, NY 10017
INVESTMENT SUB-ADVISER
Celfin Capital Servicios Financieros S.A.
Apoquindo 3721, Piso 19
Santiago, Chile
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
Computershare 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. The financial information
included herein is taken from the records of the Fund without examination by
independent registered public accountants who do not express an opinion thereon.
It is not a prospectus, circular or representation intended for use in the
purchase or sale of shares of the Fund or of any securities mentioned in this
report.
[AMERICAN STOCK EXCHANGE(R) LOGO]
LISTED
LAQ
LAQ-SAR-0606
<Page>
ITEM 2. CODE OF ETHICS.
This item is inapplicable to a semi-annual report on Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
This item is inapplicable to a semi-annual report on Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
This item is inapplicable to a semi-annual report on Form N-CSR.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
This item is inapplicable to a semi-annual report on Form N-CSR.
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.
This item is inapplicable to a semi-annual report on Form N-CSR.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
This item is inapplicable to a semi-annual report on Form N-CSR.
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, 2006.
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
registrant's last fiscal half-year that have materially affected, or are
reasonably likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 12. EXHIBITS.
<Page>
(a)(1) Not applicable.
(a)(2) The certifications of the registrant as required by Rule 30a-2(a) under
the Act are exhibits to this report.
(a)(3) Not applicable.
(b) The certifications of the registrant as required by Rule 30a-2(b) under the
Act are an exhibit to this report.
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
THE LATIN AMERICA EQUITY FUND, INC.
/s/ Steven B. Plump
------------------------------
Name: Steven B. Plump
Title: Chief Executive Officer
Date: September 5, 2006
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/ Steven B. Plump
------------------------------
Name: Steven B. Plump
Title: Chief Executive Officer
Date: September 5, 2006
/s/ Michael A. Pignataro
------------------------------
Name: Michael A. Pignataro
Title: Chief Financial Officer
Date: September 5, 2006