Offer to Purchase for Cash
by
The Brazilian Investment Fund, Inc.
up to 514,043.873 Shares of its Common Stock
at
a Price Net Per Share Equal to the Net Asset Value Per Share
_________________
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MAY 5, 1997
UNLESS THE OFFER IS EXTENDED.
________________
THIS OFFER IS CONDITIONED UPON, AMONG OTHER THINGS,
NO MORE THAN 514,043.873 SHARES BEING TENDERED AND NOT
WITHDRAWN AS OF THE EXPIRATION DATE (AS HEREINAFTER
DEFINED). IF MORE THAN 514,043.873 SHARES ARE TENDERED, THE
FUND WILL NOT PURCHASE ANY SHARES IN THE OFFER AND,
PURSUANT TO ARTICLE ELEVENTH OF THE FUND'S ARTICLES OF
INCORPORATION, THE BOARD OF DIRECTORS OF THE FUND SHALL
CONVENE A SHAREHOLDERS MEETING TO CONSIDER A PLAN OF
LIQUIDATION OF THE FUND.
NEITHER THE FUND NOR ITS BOARD OF DIRECTORS NOR
XXXXXX XXXXXXX ASSET MANAGEMENT INC. (THE INVESTMENT ADVISER
TO THE FUND) NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER OR
REFRAIN FROM TENDERING SHARES. THE FUND HAS BEEN ADVISED
THAT NO DIRECTOR OR EXECUTIVE OFFICER OF THE FUND INTENDS TO
TENDER ANY SHARES PURSUANT TO THE OFFER.
IMPORTANT
Any shareholder desiring to tender all or any
portion of his shares of Common Stock of the Fund
should either (1) complete and sign the Letter of Transmittal
or a facsimile thereof in accordance with the instructions
in the Letter of Transmittal, and mail or deliver the
Letter of Transmittal or such facsimile with his
certificates for the tendered Shares if such Shareholder has
been issued physical certificates, signature guarantees for
all shareholders tendering uncertificated Shares and any
other required documents to the Depository,
or (2) request his broker, dealer, commercial bank, trust company
or other nominee to effect the transaction for him.
Shareholders having Shares registered in the name of a
broker, dealer, commercial bank, trust company or other
nominee are urged to contact such broker, dealer,
commercial bank, trust company or other nominee if they
desire to tender Shares so registered.
Questions and requests for assistance may be
directed to the Depository in the manner set forth on page
17 of this Offer to Purchase. Requests for additional
copies of this Offer to Purchase and the Letter of Transmittal
may also be directed to the Depository.
April 7, 1997
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION
ON BEHALF OF THE FUND OR XXXXXX XXXXXXX ASSET MANAGEMENT INC.
AS TO WHETHER SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER. NO PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE
OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE,
ANY SUCH RECOMMENDATION OR ANY SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE FUND.
TABLE OF CONTENTS
-----------------
Section Page
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1. Terms of the Offer; Expiration Date 2
2. Acceptance for Payment and
Payment for Shares 3
3. Procedure for Tendering Shares 4
4. Rights of Withdrawal 6
5. Certain United States Federal Income Tax
Consequences of the Offer 6
6. Price Range of Shares; Dividends 9
7. Purpose of the Offer; Certain Effects of
the Offer 9
8. Source and Amount of Funds 10
9. Certain Information Concerning
the Fund 11
10. Interest of Directors and Executive
Officers; Transactions and Arrangements
Concerning the Shares 12
11. Certain Legal Matters; Regulatory
Approvals 12
12. Certain Conditions of the Offer 13
13. Fees and Expenses 15
14. Miscellaneous 15
To the Holders of Common Stock of The Brazilian Investment
-----------------------------------------------------------
Fund, Inc.:
-----------
The Brazilian Investment Fund, Inc., a
Maryland corporation (the "Fund"), hereby offers to purchase
514,043.873 shares of its Common Stock, par value $.01 per
share (the "Shares"), at a price per Share, net to the seller in
cash, equal to the net asset value in U.S. dollars ("NAV") per
share as of 5:00 P.M., New York City time on the Expiration
Date (as herein defined) upon the terms and subject to the
conditions set forth in this Offer to Purchase and in the
related Letter of Trans mittal (which together constitute the
"Offer").
THE OFFER IS CONDITIONED UPON NO MORE THAN
514,043.873 SHARES BEING TENDERED AND NOT WITHDRAWN AS OF
THE EXPIRATION DATE. THE OFFER IS ALSO SUBJECT TO CERTAIN
OTHER CONDITIONS. SEE SECTION 12.
THIS OFFER IS BEING MADE PURSUANT TO ARTICLE
ELEVENTH OF THE FUND'S ARTICLES OF INCORPORATION ("ARTICLE
ELEVENTH"), WHICH REQUIRES THE FUND, FOR SO LONG AS THE FUND'S
COMMON STOCK IS NOT LISTED ON A STOCK EXCHANGE, TO MAKE
PERIODIC OFFERS TO PURCHASE ALL SHARES OF ITS COMMON STOCK. IF
MORE THAN
514,043.873 SHARES ARE TENDERED, THE FUND WILL NOT PURCHASE ANY
SHARES IN THE OFFER AND, PURSUANT TO ARTICLE ELEVENTH, THE
BOARD OF DIRECTORS OF THE FUND SHALL CONVENE A SHAREHOLDERS
MEETING TO CONSIDER A PLAN OF LIQUIDATION OF THE FUND.
NEITHER THE FUND NOR ITS BOARD OF DIRECTORS NOR
XXXXXX XXXXXXX ASSET MANAGEMENT INC. (THE "INVESTMENT ADVISER")
NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY
SHAREHOLDER AS TO WHETHER TO TENDER OR REFRAIN FROM
TENDERING SHARES. EACH SHAREHOLDER MUST MAKE HIS OWN
DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW MANY
SHARES TO TENDER AND AT WHAT PRICES.THE FUND HAS BEEN ADVISED
THAT NO DIRECTOR OR EXECUTIVE OFFICER OF THE FUND
INTENDS TO TENDER ANY SHARES PURSUANT TO THE OFFER.
As of April 4, 1997, there were outstanding
1,028,087.747 Shares. As of March 31, 1997, there were
approximately
53 holders of record of Shares. The Shares are not currently
publicly traded. On April 4, 1997, the NAV per Share was
$59.52. Shareholders are urged to contact Chase Global Funds
Services Company (the "Depository") at (000) 000-0000 to
obtain current NAV quotations for the Shares.
See Section 6. Pursuant to the requirements of Article
Eleventh, the Fund currently
intends each quarter to make a tender offer for its
shares of Common Stock at a price per share equal to the then
current NAV.
Any Shares acquired by the Fund pursuant to the
Offer will become treasury Shares and will be available for
issuance by the Fund without further shareholder action
(except as required by applicable law). Tendering shareholders
will not be obligated to pay brokerage fees or commissions or,
subject to Instruction 6 of the Letter of Transmittal,
transfer taxes on the purchase of Shares by the Fund.
1. Terms of the Offer; Expiration Date. Upon
the terms and subject to the conditions set forth in the
Offer (including, if the Offer is extended or amended, the
terms and conditions of such extension or amendment), the Fund
will accept for payment, and pay for, all Shares validly
tendered on or prior to the Expiration Date (as herein
defined) and not withdrawn as permitted by Section 4. The
term "Expiration Date" means 12:00 Midnight, New York City
time, on May 5, 1997, unless and until the Fund, in its
sole discretion, shall have extended the period for which the
Offer is open, in which event the term "Expiration Date" shall
mean the latest time and date on which the Offer, as so
extended by the Fund, shall expire.
The Fund expressly reserves the right, in its
sole discretion, at any time or from time to time, to
extend the period of time during which the Offer is open by
giving oral or written notice of such extension to the
Depository. Any such extension will also be publicly
announced by press release issued no later than 9:00 A.M., New
York City time, on the next business day after the previously
scheduled Expiration Date.
The Fund confirms that if it makes a material change
in the terms of the Offer or the information concerning the
Offer, or if it waives a material condition of the Offer, the
Fund will extend the Offer to the extent required by Rules 13e-
4(d)(2) and 13e-4(e)(2) under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
During any extension, all Shares previously
tendered and not withdrawn will remain subject to the Offer,
subject to the right of a tendering shareholder to withdraw
his Shares. See Section 4.
Subject to the applicable regulations of the
Securities and Exchange Commission (the "Commission"),
the Fund also expressly reserves the right, in its sole
discretion, at any time or from time to time (i) to delay
acceptance for payment of, or, regardless
of whether such Shares were therefore accepted for
payment, payment for,
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any Shares or to terminate the Offer and not accept for
payment or pay for any Shares not therefore accepted for
payment, or paid for, upon the occurrence of any of the
conditions specified in Section 12 and (ii) waive any
condition or otherwise amend the Offer in any respect, by
giving oral or written notice of such delay, termination or
amendment to the Depository and by making a public announcement
thereof. The Fund confirms that its reservation of the right
to delay payment for Shares which it has accepted for payment
is limited by Rule 13e-4(f)(5) under the Exchange Act, which
requires that a tender offer or pay the consideration offered
or return the tendered securities promptly after the
termination or withdrawal of a tender offer. If, following
the Expiration Date, the Fund is permitted under applicable law
to
delay acceptance for payment of or payment for Shares and does
so,
the Fund may not thereafter assert conditions to the Offer to
delay or
avoid acceptance for payment of or payment for Shares except
to the extent permitted by applicable law. The Fund has been
advised by the Staff of the Commission that the Exchange Act
and the rules and regulations promulgated thereunder require
that
all conditions to the Offer, other than the receipt of certain
governmental approvals, must be satisfied or waived prior to the
Expiration
Date.
Any extension, delay, termination or amendment will
be followed as promptly as practicable by public
announcement thereof, such announcement in the case of an
extension to be issued no later than 9:00 A.M., New York
City time, on the next business day after the previously
scheduled Expiration Date. Subject to applicable law
(including Rule 13e-4(e)(2) under the Exchange Act, which
requires that any material change in the information
published, sent or given to shareholders
in connection with the Offer be promptly disseminated
to shareholders in a manner reasonably designed to
inform shareholders of such change) and without limiting the
manner in which the Fund may choose to make any public
announcement, the Fund shall have no obligation to publish,
advertise or
otherwise communicate any such public announcement other than
by making a release to the Dow Xxxxx News Service.
2. Acceptance for Payment and Payment for Shares.
Upon the terms and subject to the conditions of the
Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the
Fund will accept for payment, and will pay for, all Shares that
are validly tendered and not withdrawn as promptly as
practicable
after the Expiration Date. Subject to applicable rules of the
Commission, the Fund expressly reserves the right to delay
acceptance
for payment of, or payment for, Shares in order to comply, in
whole or in part, with any applicable law. See
-3-
Section 1. In all cases, payment for Shares tendered and accepted
for payment pursuant to the Offer will be made only after
timely receipt by the Depository of certificates for such
Shares (unless such Shares are held in uncertificated form),
a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other required documents.
For purposes of the Offer, the Fund will be deemed
to have accepted for payment Shares validly tendered and
not withdrawn as, if and when the Fund gives oral or written
notice to the Depository of its acceptance for payment of such
Shares pursuant to the Offer. Payment for Shares accepted for
payment pursuant to the Offer will be made by deposit of the
aggregate purchase price therefor with the Depository, which
will act as agent for the tendering shareholders for
purpose of receiving payments from the Fund and
transmitting such payments to the tendering shareholders.
Under no circumstances will interest on the purchase price for
Shares be paid, regardless of any delay in making such payment.
If any tendered Shares are not accepted for
payment pursuant to the terms and conditions of the Offer for
any reason, or if certificates are submitted for more
Shares than are tendered, certificates for such
unpurchased Shares will be returned, without expense to the
tendering shareholder, as soon as practicable following
expiration or termination of the Offer.
3. Procedure for Tendering Shares. For a
shareholder validly to tender Shares pursuant to the
Offer, a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), together with any required
signature guarantees and any other required documents, must be
transmitted to and received by the Depository at one of its
addresses set forth on page 17 of this Offer to Purchase and,
if such shareholder's tendered Shares are represented by
certificates, the certificates for the tendered Shares
must be received by the Depository at such address, in
each case prior to the Expiration Date.
Signatures on Letters of Transmittal must be
guaranteed by a firm which is a member of a registered
national securities exchange or of the National Association
of Securities Dealers, Inc. (the "NASD") or by a commercial
bank or trust company having an office, branch or agency in
the United States (an "Eligible Institution") in cases where
Shares held in uncertificated form are tendered. If the
certificates are registered in the name of a person other
than the signer of the Letter of Transmittal the certificates
must be endorsed or accompanied by appropriate stock powers, in
either case signed
-4-
exactly as the name or names of the registered owner or owners
appear on the certificates, with the signature(s) on the
certificates or stock powers guaranteed as aforesaid. The
method of delivery of all required documents is at the
election and
risk of each tendering shareholder. If delivery is by mail,
registered mail with return receipt requested, properly
insured, is recommended.
To prevent United States federal income tax
backup withholding with respect to the purchase price of
Shares purchased pursuant to the Offer, a shareholder who
does not otherwise establish an exemption from such backup
withholding must provide the Depository with his
correct taxpayer identification number and certify that
he is not subject to backup withholding by completing the
Substitute Form W-9 included in the Letter of Transmittal.
Foreign shareholders who have not previously submitted a Form W-8
to the Fund must do so in order to avoid backup withholding.
See Section 5.
All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for
payment of any tender of Shares will be determined by the
Fund, in its sole discretion, which determination shall be
final and binding. The Fund reserves the absolute right to reject
any and all tenders of Shares it determines not to be in proper
form or the acceptance for payment of which may, in the
opinion of its counsel, be unlawful. The Fund also reserves
the
absolute right to waive any of the conditions of the Offer or
any
defect or irregularity in the tender of any Shares. No tender
of Shares will be deemed to have been validly made until all
defects and irregularities have been cured or waived. None of
the Fund,
the Investment Adviser, the Depository or any other person will
be under any duty to give notification of any defects or
irregularities in
tenders or will incur any liability for failure to give any
such notification. The Fund's interpretation of the terms
and conditions of the Offer (including the Letter of
Transmittal and instructions thereto) will be final and
binding.
In all cases, payment for Shares tendered and
accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depository of certificates for such
Shares (unless such Shares are held in uncertificated form),
properly completed and duly executed Letter(s) of
Transmittal (or facsimile(s) thereof) and any other required
documents.
The tender of Shares pursuant to any of the
procedures described above will constitute an agreement
between the tendering shareholder and the Fund upon the terms and
subject to the conditions of the Offer.
-5-
4. Rights of Withdrawal. Tenders of Shares made
pursuant to the Offer are irrevocable except that Shares
tendered pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date, and, unless therefore accepted
for payment by the Fund pursuant to the Offer, may also be
withdrawn at any time after June 3, 1997.
To be effective, a written, telegraphic, telex
or facsimile transmission notice of withdrawal must be
timely received by the Depository at one of its addresses set
forth on page 17 of this Offer to Purchase. Any notice of
withdrawal must specify the name of the person having tendered
the Shares to be withdrawn, the number of Shares to be
withdrawn and the names in which the Shares to be
withdrawn are registered. The signature(s) on the notice of
withdrawal must be guaranteed by an Eligible Institution. If
certificates have been delivered to the Depository, the name
of the registered holder and the serial numbers of the
particular certificates evidencing the Shares withdrawn must
also be furnished to the Depository as aforesaid prior to
the physical release of such certificates. All questions as
to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by the Fund, in its sole
discretion, which determination shall be final and binding.
None of the Fund, the Investment Adviser, the Depository, or
any other person will be under any duty to give notification
of any defects or irregularities in any notice of withdrawal
or incur any liability for failure to give such notification.
Any Shares properly withdrawn will be deemed not to have
been validly tendered for purposes of the Offer. However,
withdrawn Shares may be retendered by following the
procedures described in Section 3 at any time prior to the
Expiration Date.
If the Fund is delayed in its acceptance for payment
of Shares, or is unable to accept for payment Shares
tendered pursuant to the Offer, for any reason, then, without
prejudice to the Fund's rights under this Offer, the
Depository may, nevertheless, on behalf of the Fund, retain
tendered
Shares, and such Shares may not be withdrawn except to the
extent
that tendering shareholders are entitled to withdrawal rights
as set forth in this Section 4.
5. Certain United States Federal Income Tax
Consequences of the Offer. The discussion below is a summary
of the material United States federal income tax consequences
of a sale of Shares pursuant to the Offer. Certain
shareholders (including insurance companies, tax-exempt
organizations and financial institutions or broker-dealers)
may be subject to special rules not discussed below.
-6-
The sale of Shares pursuant to the Offer will
be treated as a "sale or exchange" if the sale (a) is
"not essentially equivalent to a dividend" with respect
to the shareholder, (b) is "substantially disproportionate"
with respect to the shareholder, or (c) results in a "complete
termination" of all of the shareholder's interest in the
Fund. In determining whether any of these tests is met, Xxxxxx
considered to be owned by the shareholder by reason of
certain constructive ownership rules, as well as Shares
actually owned, will be taken into account. Thus,
a shareholder may be deemed to own Shares
actually owned, and in some cases constructively owned,
by certain related individuals and certain entities in which
the shareholder has an interest (or which have an interest
in the shareholder) and Shares which such shareholder has the
right to acquire by exercise of an option. In addition, each
shareholder should be aware that, under certain
circumstances, a sale or purchase of Shares contemporaneous
with the Offer may be taken into account in determining
whether any of the tests is satisfied.
Whether a sale will be "not essentially equivalent to
a dividend" with respect to any shareholder will depend on
the shareholder's facts and circumstances and on the
response of other shareholders to the Offer, but will, in any
event, require a "meaningful reduction" in a shareholder's
interest in the Fund. The sale of Shares by a shareholder
will be "substantially disproportionate" with respect to such
shareholder if after the sale (i) the percentage of the
outstanding Shares that the shareholder actually and
constructively owns is less than 80% of the percentage of
the outstanding Shares actually and
constructively owned by such shareholder immediately before
the sale, and (ii) the shareholder owns less than 50%
of the outstanding Shares. Finally, if a shareholder sells
all the Shares actually owned by him, such shareholder may be
eligible to waive certain constructive ownership provisions
and, thus, meet the requirements for a "complete termination"
of his interest in the Fund.
If any of the above tests is satisfied, the
shareholder will recognize gain (or loss) in the amount by
which the purchase price received by the shareholder
pursuant to the Offer is greater (or less) than the
shareholder's tax basis in the Shares sold. Such gain (or
loss) will be capital gain (or loss) if the Shares are held
as a capital asset and will be long-term capital gain (or
loss) if the Shares have been held for more than one year.
However, any such loss will be treated as a long-term
capital loss to the extent of any long-term capital
gain dividends and undistributed long-term capital gains
included in income by the shareholder with respect to such
Shares, if the Shares have been held for 6 months or less.
-7-
Additionally, any such loss will be disallowed to the extent
the Shares sold are replaced within the 61-day period
beginning 30 days before the Shares are sold, and the
disallowed loss will be reflected in an adjustment to the
basis of the Shares acquired.
If none of the above tests is satisfied, (i)
the shareholder will be treated as having received a dividend
in the amount of the cash received for the Shares sold
pursuant to the Offer, assuming that the Fund's current or
accumulated earnings and profits equal or exceed the cash
paid to shareholders which is treated as a dividend and (ii)
the shareholder's tax basis in the Shares sold to the Fund
will be transferred to any remaining Shares held by the
shareholder. If the shareholder does not actually own any
remaining
Shares, such shareholder may be permitted to transfer such
basis to
Shares owned by a related person or may lose such basis
entirely. The amount treated as a dividend will not be eligible
for
the dividends-received deduction allowed to domestic
corporate
shareholders.
The Depository may be required to backup
withhold United States federal income tax at the rate of 31% of
the gross payment made pursuant to the Offer to shareholders
who fail to provide their correct taxpayer identification
number or to make required certifications, or who have
been notified by the Internal Revenue Service that they
are subject to backup withholding. Corporate shareholders
and certain other shareholders are exempt from
such backup withholding. Any amounts withheld may be credited
against a shareholder's United States federal income tax
liability.
The Depository will withhold 30% of the gross
payment to a shareholder that is a nonresident alien
individual, fiduciary of a foreign trust or estate, foreign
corporation or foreign partnership (a "foreign shareholder")
unless the Depository determines that a reduced rate of
withholding or an exemption from withholding is applicable
pursuant to
an applicable income tax treaty. (Exemption from backup
withholding does not exempt a foreign shareholder from the 30%
withholding). The Depository will determine a shareholder's
status as a foreign shareholder and eligibility for a
reduced rate of, or an exemption from, withholding, by
reference to the shareholder's address and to any valid
certificates or statements concerning eligibility for a
reduced rate of, or exemption from, withholding, unless
facts and circumstances indicate that such reliance is not
warranted. A foreign shareholder that has not previously
submitted the appropriate certificates or statements with
respect to a reduced rate of, or exemption from, withholding
for which such shareholder may be eligible should consider
doing so in
-8-
order to avoid over-withholding. A foreign shareholder may be
eligible to obtain a refund of tax withheld if such
shareholder meets one of the three tests for sale or exchange
treatment
described above or is otherwise able to establish that no tax,
or a reduced amount of tax, was due.
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION
SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION
ONLY. SHAREHOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE SALE
OF SHARES PURSUANT TO THE OFFER, INCLUDING THE APPLICATION
AND EFFECT OF STATE, LOCAL, FOREIGN OR OTHER TAX LAWS AND
ANY POSSIBLE CHANGES IN TAX LAWS.
6. Price Range of Shares; Dividends. The Shares
are not currently publicly traded. During the past two years
the NAVs per Share as of 5:00 P.M. on the last day of each
of the Fund's fiscal quarters are as follows:
March 31, 1995 $57.82
June 30, 1995 $68.06
September 30, 1995 $73.96
December 31, 1995 $64.14
March 31, 1996 $40.92
June 30, 1996 $50.25
September 30, 1996 $53.90
December 31, 1996 $52.72
March 31, 1997 $56.80
The NAV per Share as of 5:00 P.M., April 4, 1997 was
$59.52 per Share.
IT IS ANTICIPATED THAT NO CASH DIVIDEND WILL
BE DECLARED BY THE BOARD OF DIRECTORS WITH A RECORD DATE
OCCURRING BEFORE THE EXPIRATION OF THE OFFER AND THAT,
ACCORDINGLY, HOLDERS OF SHARES PURCHASED PURSUANT TO THE
OFFER WILL NOT RECEIVE ANY SUCH DIVIDEND WITH RESPECT TO
SUCH SHARES. THE AMOUNT AND FREQUENCY OF DIVIDENDS IN THE
FUTURE WILL DEPEND ON CIRCUMSTANCES EXISTING AT THAT TIME.
7. Purpose of the Offer; Certain Effects of the
Offer. The purpose of the Offer is to fulfill the Fund's
obligation pursuant to Article Eleventh. Article Eleventh
provides for so long as the Shares are not listed on a stock
exchange, the Fund must make a tender offer, on the Monday
following the first Friday of each of
-9-
January, April, July and October, to purchase all of the
outstanding Shares at a price per Share equal to the NAV per
Share.
Pursuant to Article Eleventh, in the event that 50% or more of
the then
outstanding Shares are tendered in any one tender offer, the
Fund shall not purchase any Shares in the tender offer and
the Fund's Board of Directors shall convene a shareholders'
meeting to consider a resolution to liquidate the Fund.
Any Shares acquired by the Fund pursuant to the
Offer will become treasury Shares and will be available for
issuance by the Fund without further shareholder action
(except as required by applicable law or the rules of national
securities exchanges on which the Shares are listed).
NEITHER THE FUND NOR ITS BOARD OF DIRECTORS NOR
THE INVESTMENT ADVISER NOR ITS BOARD OF DIRECTORS MAKES
ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO WHETHER TO TENDER
OR REFRAIN FROM TENDERING ANY OR ALL OF SUCH SHAREHOLDER'S
SHARES AND NONE OF SUCH PERSONS HAS AUTHORIZED ANY PERSON TO
MAKE ANY SUCH RECOMMENDATION. SHAREHOLDERS ARE URGED
TO EVALUATE CAREFULLY ALL INFORMATION IN THE OFFER,
CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR
OWN DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY
SHARES TO TENDER AND AT WHAT PRICE OR PRICES.
8. Source and Amount of Funds. If 514,043.873
Shares were to be purchased pursuant to the Offer, the cost to
the Fund (excluding expenses) would be approximately
$30,595,891.32 based on a NAV per Share of $59.52 as of April
4, 1997. The
actual cost to the Fund cannot be determined at this time
because the number of Shares to be purchased will depend
on the number tendered, and the price will be based on the
NAV per Share on the Expiration Date, which may be more or less
than $59.52.
The monies to be used by the Fund to purchase
Shares pursuant to the Offer will be obtained from cash and
from sales of securities in the investment portfolios of the
Fund and BIFFundo de Investimento-Capital Estrangeiro
(the "Investment Fund"). The selection of which portfolio
securities to sell will be governed by principles of prudent
portfolio management, taking into account investment merit,
relative liquidity and applicable legal requirements. In
accordance with its stated investment policies, the Fund has
concentrated its investments in the equity securities of
companies that are registered with the Commisao de Valores
Mobili xxxx, the Brazilian Securities Commission. The
Brazilian securities markets are subject to price volatility
and limited liquidity. If the Fund must sell a substantial
amount of portfolio
-10-
securities to raise cash, the market prices
of portfolio securities, and hence the Fund's net asset value,
can be expected to decline. If such a decline occurs, the
Fund cannot predict what its magnitude might be, or whether
such a decline would be temporary or continue to the
Expiration Date. Because the Fund's tender offer price is
dependent upon NAV per Share as determined on the Expiration
Date, if such a decline continued to the Expiration Date, the
consideration received by a tendering shareholder would be
reduced.
The Fund will sell portfolio securities during
the pendency of the Offer to raise cash for the purchase of
Shares. Thus, during the pendency of the Offer, and possibly
for a short time thereafter, the Fund will hold a greater
than normal percentage of its net assets in cash and cash
equivalents. The Fund is required by law to pay for tendered
Shares it accepts for payment promptly after the Expiration
Date of this Offer. Because the Fund will not know the number
of Shares tendered until the Expiration Date, the Fund will not
know until the Expiration Date the amount of cash required to
pay for such Shares. If on or prior to the Expiration Date
the Fund does not have, or believes it is unlikely to have,
sufficient cash to pay for all Shares tendered, it may
extend the Offer to allow additional time to sell portfolio
securities and raise sufficient cash. As of April 4, 1997, the
Fund had no position in cash and cash equivalents.
If the Fund purchases a substantial number of
Shares pursuant to the Offer, the net assets of the Fund
would be reduced accordingly. In such case the Fund would
have a higher expense ratio and possibly less investment
flexibility than it currently has.
9. Certain Information Concerning the Fund. The
Fund is a non-diversified, closed-end management investment
company incorporated under the laws of the State of
Maryland and registered under the Investment Company Act
of 1940. Its investment objective is long-term capital
appreciation
through investment primarily in equity securities of Brazilian
companies.
Exhibit A to this Offer contains the Fund's
audited financial statements for the fiscal years ended
December 31, 1994 and December 31, 1995 and December 31, 1996.
The Fund is subject to the information and
reporting requirements of the Investment Company Act of
1940 and in accordance therewith is obligated to file
reports and other information with the Commission
relating to its business, financial condition and other
-11-
matters. The Fund has also filed an Issuer Tender Offer
Statement on Schedule 13E-4 with the Commission. Such
reports and other information should be
available for inspection at the public reference room at
the Commission's office 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxx
Xxxxx, Xxxxxxxxxx, X.X., and also should be available for
inspection and copying at the following regional offices of
the Commission: Northwestern Atrium Center, 000 Xxxx Xxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx; 7 World Trade Center,
New York, New York. Copies may be obtained, by mail, upon
payment of the Commission's customary charges, by writing to
its principal office at 000 Xxxxx Xxxxxx, X.X., Xxxxxxxxx
Xxxxx, Xxxxxxxxxx, X.X. 00000.
10. Interest of Directors and Executive
Officers; Transactions and Arrangements Concerning the Shares.
Neither the Fund nor any subsidiary of the Fund nor, to the
best of the Fund's knowledge, any of the Fund's
executive officers or directors or associates of any of the
foregoing, has effected any transaction in Shares during the
past 40 business days.
Except as set forth in this Offer to Purchase,
neither the Fund, nor, to the best of the Fund's knowledge,
any of the Fund's executive officers or directors, or any of
the executive officers or directors of any of its subsidiaries,
is a party to any contract, arrangement, understanding or
relationship with any other person relating, directly or
indirectly
to the Offer with respect to any securities of the Fund,
including, but
not limited to, any contract, arrangement, understanding or
relationship concerning the transfer or the voting of any
such securities, joint ven tures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties
against loss or the giving or withholding of proxies,
consents or authorizations.
11. Certain Legal Matters; Regulatory Approvals. The
Fund's
investment in Brazilian securities has been registered
as foreign investment with the Central Bank of Brazil, which
has issued a Certificate of Registration for the foreign
currency value of such investment. Based on the Certificate of
Registration, the Fund's current investment in
Brazilian securities may be repatriated in order to permit the
Fund
to purchase Shares in the Offer. The Fund is not aware of
any approval or other action by any government or
governmental, administrative or regulatory authority or
agency, domestic or foreign, that would be required for the
acquisition or ownership of Shares by the Fund as contemplated
herein. Should any such approval or other action be
required, the Fund presently contemplates that such approval or
other
action will be sought. The Fund is unable to predict whether
it may
determine that it is
-12-
required to delay the acceptance for payment of, or
payment for, Shares tendered pursuant to the Offer pending the
outcome of any such matter. There can be no assurance that
any such approval or other action, if needed, would be
obtained without substantial conditions or that the failure
to obtain any such approval or other action might not
result in adverse consequences to the Fund's business. The
Fund's obligations under the Offer to accept for payment
and pay for Shares are subject to certain conditions. See
Section 12.
12. Certain Conditions of the Offer.
Notwithstanding any other provision of the Offer except as
otherwise provided in Section 1, the Fund shall not be
required to accept for payment or pay for any Shares, may
postpone the acceptance for payment of, or payment for,
tendered Shares, and may, in its reasonable discretion,
terminate or amend the Offer as to any Shares not then paid
for if (i) more than 514,043.873 Shares are tendered and not
withdrawn as of the Expiration Date, or (ii) in the
judgment of the Investment Adviser, the assets of the Fund
are not sufficiently liquid to fund the purchase of the Shares
in the Offer, or (iii) the Fund would not be able to liquidate
portfolio securities in a manner that is orderly and
consistent with the Fund's investment objectives and
policies in order to purchase Shares tendered pursuant to the
Offer, or (iv) at or prior to the time of expiration date for
any
such Shares (whether or not any Shares have therefore been
accepted for payment or paid for pursuant to the Offer), any
of the following events shall occur:
(a) there shall be threatened,
instituted or pending any action, proceeding or
application before any court or governmental
authority or other regulatory or administrative
agency or commission, domestic or foreign, by any
government or governmental authority or other
regulatory or administrative agency or commission,
domestic or foreign, or by any other person,
domestic or foreign challenging the acquisition by
the Fund of the Shares or seeking to restrain,
delay or prohibit the making of the Offer, or the
acceptance for payment, purchase of, or payment
for, some or all of the Shares or resulting in a
delay in, or restricting, the ability of the Fund,
or rendering the Fund unable, to accept for
payment, purchase or pay for some or all of the
Shares, or otherwise directly or indirectly
relating in any manner to or affecting the Offer;
or
-13-
(b) any statute, rule, regulation or order
or injunction shall be sought, proposed, enacted,
promulgated, entered, enforced or deemed or
become applicable to the Offer or any other action
shall have been taken, proposed or threatened,
by any government, governmental authority or other
regulatory or administrative agency or commission
or court, or any other person, domestic or
foreign, that, in the reasonable judgment of the
Fund, might, directly or indirectly, result in any
of the consequences referred to in paragraph (a)
above; or
(c) there shall have occurred
(i) any general suspension of, or limitation on
times or prices for, trading in securities on any
national securities exchange or in the over-the
counter market or in any securities exchange in
Brazil, (ii) a declaration of a banking moratorium
or any suspension of payments in respect of banks
in the United States or Brazil, (iii) a
commencement of a war, armed hostilities or other
international or national calamity directly or
indirectly involving the United States or Brazil,
(iv) any limitation (whether or not mandatory) by
any governmental authority on, or any other event
which, in the reasonable judgment of the Fund, might
affect, the extension of credit by banks or other
lending institutions or foreign currency
transactions by such institutions or (v) in the
case of any of the foregoing existing at the time
of the commencement of the Offer, in the reasonable
judgment of the Fund, a material acceleration or
worsening thereof; or
(d) any change (or any condition,
event or development involving a prospective
change) shall have occurred or be threatened in
the general economic, financial, currency exchange
or market conditions in the United States, in Brazil
or abroad that, in the reasonable judgment of the
Fund, has or may have a material adverse effect
upon the value of the assets of the Fund; or
(e) any other event shall have
occurred or condition shall exist which in the
judgment of the Fund would have a material adverse
effect on the Fund, its assets or its shareholders
or any such
-14-
event will occur or such condition shall exist if
the Fund were to purchase Shares in the Offer
which in the sole judgment of the Fund with respect to each and
every matter referred to above and regardless of the circum
stances (including any action or inaction by the Fund) giving
rise to any such condition, makes it inadvisable to proceed with
the Offer or with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of
the Fund and may be asserted by the Fund regardless of the circum
stances (including any action or inaction by the Fund) giving
rise to any such conditions or may be waived by the Fund in whole
or in part at any time and from time to time in its sole
discretion. The failure by the Fund at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which
may be asserted at any time and from time to time. Any
determination by the Fund concerning the events described in this
Section shall be final and binding on all parties.
A public announcement shall be made of a material
change in, or waiver of, such conditions, and the Offer may, in
certain circumstances, be extended in connection with any such
change or waiver.
13. Fees and Expenses. The Depository is not charging
compensation for its services in connection with the Offer. The
Fund has agreed to indemnify the Depository against certain
liabilities and expenses in connection with the Offer, including
liabilities under the federal securities laws. Brokers, dealers,
commercial banks and trust companies will be reimbursed by the
Fund for customary mailing and handling expenses incurred by them
in forwarding material to their customers.
Chase Global Funds Services Company, which is the
Depository for the Offer, is an affiliate of The Chase Manhattan
Bank ("Chase"), which provides administrative services to
the Fund pursuant to an Administration Agreement. As part of
such
agreement, the Fund has agreed to pay to Chase an annual fee
of $75,000 plus .08% of the average weekly net assets of the
Fund, computed weekly and payable monthly.
14. Miscellaneous. The Offer is not being made to
(nor will tenders be accepted from or on behalf of) holders of
Shares in any jurisdiction in which the making of the Offer or
the acceptance thereof would not be in compliance with the laws
of such
-15-
jurisdiction. The Fund may, in its sole discretion, take
such action as it may deem necessary to make the Offer in any
such jurisdiction.
The Fund is not aware of any jurisdiction in which the
making of the Offer or the acceptance of Shares in connection
therewith would not be in compliance with the laws of such
jurisdiction. Consequently, the Offer is currently being made to
all holders of Shares. However, the Fund reserves the right to
exclude shareholders in any jurisdiction in which it is asserted
that the Offer cannot lawfully be made. So long as the Fund
makes a good faith effort to comply with any state law deemed
applicable to the Offer, the Fund believes that the exclusion of
shareholders residing in such jurisdiction is permitted under
Rule 13e-4(f)(9) promulgated under the Exchange Act.
The Fund has filed with the Commission an Issuer Tender
Offer Statement on Schedule l3E-4 pursuant to Section 13(e)(1) of
the Exchange Act and Rule l3e-4 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional
information with respect to the Offer, and may file amendments
thereto. Such Statement and any amendments thereto, including
exhibits, may be examined and copies may be obtained from the
principal office of the Commission in Washington, D.C. in the
manner set forth in Section 9.
No person has been authorized to give any information
or make any representation on behalf of the Fund not contained in
this Offer to Purchase or in the Letter of Transmittal and, if
given or made, such information or representation must not be
relied upon as having been authorized.
THE BRAZILIAN INVESTMENT FUND, INC.
April 7, 1997
-16-
Facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for the Shares
and any other required documents should be sent by each
shareholder of the Fund or his broker-dealer, commercial bank,
trust company or other nominee to the Depository as follows:
The Depository for the Offer is:
--------------------------------
Chase Global Funds Services Company
By Mail, Overnight Courier or Hand:
-----------------------------------
73 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
By Facsimile Transmission: Confirm by Telephone:
-------------------------- ---------------------
(000) 000-0000 (000) 000-0000
Any questions or requests for assistance or additional
copies of the Offer to Purchase and the Letter of Transmittal may
be directed to Xxxxx Xxxxxxxx at the Depository at the following
telephone number: (000) 000-0000. You may also contact your
broker, dealer, commercial bank or trust company or other nominee
for assistance concerning the Offer.
-17-
The Brazilian Investment Fund, Inc.
Investment Summary as of December 31, 1996 (Unaudited)
-----------------------------------------------------------------
---------------
-----------------------------------------------------------------
---------------
HISTORICAL
INFORMATION
TOTAL RETURN (%)
----------------------------------------
----------------
NET ASSET VALUE (2)
INDEX (1)(3)
--------------------------- -----------
----------------
AVERAGE
AVERAGE
CUMULATIVE ANNUAL CUMULATIVE
ANNUAL
--------------------------- -----------
----------------
ONE YEAR 48.54% 48.54%
34.36% 34.36%
FIVE YEAR 176.40 22.55 264.10
29.49
SINCE INCEPTION* 249.98 25.17 276.79
26.77
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
-----------------------------------------------------------------
---------------
RETURNS AND PER SHARE INFORMATION
A BAR CHART REFLECTING THE DATA BELOW IS REFLECTED HERE.
YEARS ENDED DECEMBER 31:
1991* 1992 1993
1994 1995 1996
Net Asset Value Per Share $ 63.31 $ 55.28 $ 83.58 $
129.97 $ 64.14 $ 52.72
Income Dividends - - -
$ 1.80 - $ 0.02
Capital Gains Distributions - - $ 7.06
$ 6.65 $ 37.73 $ 30.75
Fund Total Return (2) 26.62% -12.68% 72.52%
68.32% -26.61% 48.54%
Index Total Return (1)(3) 3.48% 0.32% 99.45%
69.83% -20.24% 34.36%
(1) Assumes dividends and distributions, if any, were reinvested.
(2) Total investment return based on net asset value per share
reflects the
effects of changes in net asset value on the performance of
the Fund during
each period, and assumes dividends and distributions, if any,
were
reinvested. The Fund's shares are issued in a private
placement and not
traded; therefore, market value total investment return is
not calculated.
(3) The IFC Total Return Index for Brazil is an unmanaged index
of common
stocks.
* The Fund commenced operations on June 4, 1991.
4
The Brazilian Investment Fund, Inc.
Portfolio Summary as of December 31, 1996 (Unaudited)
-----------------------------------------------------------------
---------------
-----------------------------------------------------------------
---------------
PORTFOLIO INVESTMENTS DIVERSIFICATION
XXXXX REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Equity Securities 97.0%
Short-Term Investments 3.0%
-----------------------------------------------------------------
---------------
SECTORS
XXXXX REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Banking 4.1%
Broadcasting & Publishing 4.2%
Electrical & Electronics 2.1%
Energy Sources 4.1%
Food & Household Products 2.7%
Merchandising 22.0%
Metals - Non-Ferrous 4.9%
Telecommunications 30.0%
Textiles & Apparel 4.2%
Utilities 16.5%
Other 5.2%
-----------------------------------------------------------------
---------------
TEN LARGEST HOLDINGS
PERCENT OF NET
ASSETS
---------------
1. Telebras 29.4%
2. Lojas Xxxxxx 15.1
3. CVRD 4.9
4. Eletrobras 4.9
5. Cemig 4.7
PERCENT OF NET
ASSETS
---------------
6. TV Filme, Inc. 4.2%
7. Petrobras 4.1
8. Lojas Arapua 3.5
9. Coteminas 3.2
10. CPFL 2.2
---
76.2%
---
---
-----------------------------------------------------------------
---------------
5
FINANCIAL STATEMENTS
---------
STATEMENT OF NET ASSETS
---------
DECEMBER 31, 1996
VALUE
SHARES
(000)
-----------------------------------------------------------------
-------------
BRAZILIAN INVESTMENT FUND (98.6%)
--------------------------------------------------
----------
BRAZILIAN NON-VOTING PREFERRED
STOCKS (96.5%)
(Unless otherwise noted)
--------------------------------------------------
----------
BANKING (4.1%)
Banco Bradesco 136,000,000 U.S.$
986
*/+Banco Nacional 112,483,664
5
Itaubanco 2,300,000
996
-----
---------
1,987
-----
---------
BEVERAGES & TOBACCO (0.5%)
Xxxxx Xxxx 39,000
256
-----
---------
BROADCASTING & PUBLISHING (4.2%)
+TV Filme, Inc. ADR 162,000
2,065
-----
---------
BUILDING MATERIALS & COMPONENTS (0.5%)
Duratex 5,800,000
218
-----
---------
ELECTRICAL & ELECTRONICS (2.1%)
+Sharp 766,400,000
1,032
-----
---------
ENERGY SOURCES (4.1%)
Petrobras 12,500,000
1,991
-----
---------
FOOD & HOUSEHOLD PRODUCTS (2.7%)
Xxxxxx 45,165,000
1,065
Pao de Acucar GDR 12,950
226
#Pao de Acucar GDR (144A) 2,005
35
-----
---------
1,326
-----
---------
INDUSTRIAL COMPONENTS (0.2%)
+Xxxxxx 7,018,000
118
-----
---------
MACHINERY & ENGINEERING (0.5%)
Weg 535,000
252
-----
---------
MERCHANDISING (22.0%)
+Bompreco GDR 27,650
494
+Casa Anglo Brasiliera 12,652,195
384
+Globex Utiladedes 45,700
743
Lojas Arapua 91,800,000
1,697
Lojas Xxxxxx 160,172,000
7,399
-----
---------
10,717
-----
---------
METALS -- NON-FERROUS (4.9%)
CVRD 125,323
2,412
-----
---------
TELECOMMUNICATIONS (30.0%)
Telebras 153,099,895
11,787
Telebras ADR 8,450
646
Telebras (Common) 26,853,000
1,925
Telesp 245,601
53
Telesp (Common) 1,200,473
260
-----
---------
14,671
-----
---------
TEXTILES & APPAREL (4.2%)
Coteminas 4,859,000
1,551
+Wentex 149,000
473
-----
---------
2,024
-----
---------
-----------------------------------------------------------------
-------------
VALUE
SHARES
(000)
---------------------------------------------------------
------------
UTILITIES -- ELECTRICAL & GAS (16.5%)
+CESP 90 U.S.$
--
CPFL 11,761,000
1,074
Cemig 52,330,000
1,783
Cemig ADR 14,360
489
#/+Celesc (144A) GDR 11,410
1,033
Copel 38,515,000
408
Eletrobras ADR 250
5
Eletrobras 'B' 2,412,000
896
Eletrobras 'B' (Common) 4,206,000
1,506
FLCL (Common) 137,900,000
150
Light 1,356,000
481
+Lightpar 1,000,000
242
-----
---------
8,067
-----
---------
-----------------------------------------------------------------
-------------
TOTAL BRAZILIAN NON-VOTING PREFERRED STOCKS
(Cost U.S. $39,438)
47,136
-----
---------
-----------------------------------------------------------------
-------------
FACE
AMOUNT
(000)
-----------------------------------------------------------------
-------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (2.1%)
Brazilian Real (Cost U.S. $1,052) BRL 1,093
1,052
-----
---------
-----------------------------------------------------------------
-------------
TOTAL BRAZILIAN INVESTMENT FUND
(Cost U.S. $40,490)
48,188
-----
---------
-----------------------------------------------------------------
-------------
SHORT-TERM INVESTMENT (0.8%)
REPURCHASE AGREEMENT (0.8%)
Chase Securities, Inc. 5.95%, dated
12/31/96, due 1/2/97, to be
repurchased at U.S. $386,
collateralized by U.S. $370 United
States Treasury Bonds 7.25%, due
5/15/16, valued at U.S. $394
(Cost U.S. $386) U.S.$ 386
386
-----
---------
-----------------------------------------------------------------
-------------
TOTAL INVESTMENTS (99.4%)
(Cost U.S. $40,876)
48,574
-----
---------
-----------------------------------------------------------------
-------------
OTHER ASSETS (12.9%)
Receivable for Investments Sold 6,227
Dividends Receivable 72
Other Assets 6
6,305
--------------- -----
---------
-----------------------------------------------------------------
-------------
LIABILITIES (-12.3%)
Payable for:
Investments Purchased (5,900)
Professional Fees (39)
Shareholder Reporting Expenses (27)
Investment Advisory Fees (25)
Directors' Fees and Expenses (16)
Administrative Fees (10)
Brazilian Administrative Fees (5)
U.S. Custodian Fees (1)
(6,023)
--------------- -----
---------
-----------------------------------------------------------------
-------------
The accompanying notes are an integral part of the financial
statements.
6
AMOUNT
(000)
---------------------------------------------------------
------------
NET ASSETS (100%)
Applicable to 926,782 issued and outstanding U.S. $.01
par value shares (50,000,000 shares authorized) U.S.$
48,856
-----
---------
-----
---------
-----------------------------------------------------------------
-------------
NET ASSET VALUE PER SHARE U.S.$
52.72
-----
---------
-----
---------
-----------------------------------------------------------------
-------------
AT DECEMBER 31, 1996, NET ASSETS CONSISTED OF:
-----------------------------------------------------------------
Common Stock U.S.$
9
Capital Surplus
33,812
Undistributed Net Investment Income
679
Accumulated Net Realized Gain
6,660
Unrealized Appreciation on Investments
and Foreign Currency Translations
7,696
-----------------------------------------------------------------
-------------
TOTAL NET ASSETS U.S.$
48,856
-----
---------
-----
---------
-----------------------------------------------------------------
-------------
+ -- Non-income producing.
* -- Security valued at fair value -- see Note A-1 to
financial statements.
# -- 144A Security -- certain conditions for public sale may
exist.
ADR -- American Depositary Receipt.
GDR -- Global Depositary Receipt.
December 31, 1996 exchange rate-Brazilian Real (BRL) 1.03910 =
U.S. $1.00
The accompanying notes are an integral part of the financial
statements.
7
YEAR ENDED
DECEMBER 31, 1996
STATEMENT OF OPERATIONS
(000)
-----------------------------------------------------------------
----------------------------------------------
INVESTMENT INCOME:
Dividends........................................................
....................... U.S.$ 1,760
Interest.........................................................
....................... 17
Less: Foreign Taxes
Withheld.........................................................
... (161)
-----------------------------------------------------------------
----------------------------------------------
Total
Income...........................................................
............... 1,616
-----------------------------------------------------------------
----------------------------------------------
EXPENSES
Investment Advisory
Fees.............................................................
... 425
U.S. Administrative Fees and Transfer Agent
Fees........................................ 126
Professional
Fees.............................................................
.......... 71
Brazilian Administrative and Custodian
Fees............................................. 70
Shareholder Reporting
Expenses.........................................................
. 38
Amortization of Organization
Costs......................................................
38
Directors' Fees and
Expenses.........................................................
... 32
Custodian
Fees.............................................................
............. 4
Other
Expenses.........................................................
................. 60
-----------------------------------------------------------------
----------------------------------------------
Total
Expenses.........................................................
............... 864
-----------------------------------------------------------------
----------------------------------------------
Net Investment
Income...........................................................
.. 752
-----------------------------------------------------------------
----------------------------------------------
NET REALIZED GAIN (LOSS)
Investment Securities
Sold.............................................................
. 6,835
Foreign Currency
Transactions.....................................................
...... (45)
-----------------------------------------------------------------
----------------------------------------------
Net Realized
Gain.............................................................
.... 6,790
-----------------------------------------------------------------
----------------------------------------------
CHANGE IN UNREALIZED APPRECIATION/DEPRECIATION
Appreciation on
Investments......................................................
....... 9,958
Appreciation on Foreign Currency
Translations...........................................
2
-----------------------------------------------------------------
----------------------------------------------
Change in Unrealized
Appreciation/Depreciation....................................
9,960
-----------------------------------------------------------------
----------------------------------------------
Total Net Realized Gain and Change in Unrealized
Appreciation/Depreciation.................. 16,750
-----------------------------------------------------------------
----------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................... U.S.$ 17,502
-----------------------------------------------------------------
----------------------------------------------
-----------------------------------------------------------------
----------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
STATEMENT OF CHANGES IN NET ASSETS
(000) (000)
-----------------------------------------------------------------
----------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Income
(Loss)........................................ U.S.$ 752
U.S.$ (60)
Net Realized
Gain...................................................
6,790 17,440
Change in Unrealized
Appreciation/Depreciation...................... 9,960
(34,680)
-----------------------------------------------------------------
----------------------------------------------
Net Increase (Decrease) in Net Assets Resulting from
Operations..... 17,502 (17,300)
-----------------------------------------------------------------
----------------------------------------------
Distributions:
Net Investment
Income...............................................
(21) --
Net Realized
Gain...................................................
(17,583) (23,408)
-----------------------------------------------------------------
----------------------------------------------
Total
Distributions.................................................
(17,604) (23,408)
-----------------------------------------------------------------
----------------------------------------------
Capital Share Transactions:
Subscription of Shares (35,440 and 25,702 shares,
respectively)..... 1,525 1,853
Reinvestment of Distributions (446,448 and 286,103 shares,
respectively)....................................................
.. 17,360 23,041
Repurchase of Shares (115,699 and 376,486 shares,
respectively)..... (5,881) (29,496)
-----------------------------------------------------------------
----------------------------------------------
Net Increase (Decrease) in Net Assets Resulting From Capital
Share
Transactions.....................................................
.. 13,004 (4,602)
-----------------------------------------------------------------
----------------------------------------------
Total Increase
(Decrease)...........................................
12,902 (45,310)
Net Assets:
Beginning of
Year...................................................
35,954 81,264
-----------------------------------------------------------------
----------------------------------------------
End of Year (including undistributed net investment income of
U.S.
$679 and U.S. $0,
respectively.)................................... U.S.$ 48,856
U.S.$ 35,954
-----------------------------------------------------------------
----------------------------------------------
-----------------------------------------------------------------
----------------------------------------------
The accompanying notes are an integral part of the financial
statements.
8
FINANCIAL HIGHLIGHTS
YEAR ENDED DECEMBER 31,
---------------------
--------------------------------------------------
SELECTED PER SHARE DATA AND RATIOS: 1996
1995 1994 1993 1992
-----------------------------------------------------------------
--------------------------------------------------
NET ASSET VALUE, BEGINNING OF YEAR...... U.S.$ 64.14
U.S.$129.97 U.S.$ 83.58 U.S.$ 55.28 U.S.$ 63.31
-----------------------------------------------------------------
--------------------------------------------------
Net Investment Income (Loss)............ 0.81
(0.11) (0.71) 1.42 (0.09)
Net Realized and Unrealized Gain (Loss)
on Investments......................... 18.54
(27.99) 55.55 33.94 (7.94)
-----------------------------------------------------------------
--------------------------------------------------
Total from Investment Operations.... 19.35
(28.10) 54.84 35.36 (8.03)
-----------------------------------------------------------------
--------------------------------------------------
Distributions:
Net Investment Income............... (0.02)
-- -- -- --
In Excess of Net Investment
Income............................ --
-- (1.80) -- --
Net Realized Gain................... (30.75)
(37.73) (6.65) (6.89) --
In Excess of Net Realized Gain...... --
-- -- (0.17) --
-----------------------------------------------------------------
--------------------------------------------------
Total Distributions................. (30.77)
(37.73) (8.45) (7.06) --
-----------------------------------------------------------------
--------------------------------------------------
NET ASSET VALUE, END OF PERIOD.......... U.S.$ 52.72 U.S.$
64.14 U.S.$129.97 U.S.$ 83.58 U.S.$ 55.28
-----------------------------------------------------------------
--------------------------------------------------
-----------------------------------------------------------------
--------------------------------------------------
TOTAL INVESTMENT RETURN:
Net Asset Value (1)................. 48.54%
(26.61)% 68.32% 72.52% (12.68)%
-----------------------------------------------------------------
--------------------------------------------------
-----------------------------------------------------------------
--------------------------------------------------
RATIOS, SUPPLEMENTAL DATA:
-----------------------------------------------------------------
--------------------------------------------------
NET ASSETS, END OF YEAR (THOUSANDS)..... U.S.$48,856
U.S.$35,954 U.S.$81,264 U.S.$52,207 U.S.$46,687
-----------------------------------------------------------------
--------------------------------------------------
Ratio of Expenses to Average Net Assets 1.81%
2.07% 1.82% 2.22% 2.27%(2)
Ratio of Net Investment Income (Loss) to
Average Net Assets..................... 1.58%
(0.14)% (0.61)% 1.57% (0.07)%
Portfolio Turnover Rate................. 179%
112% 52% 40% 36%
Average Commission Rate (3)............. $0.0000
N/A N/A N/A N/A
-----------------------------------------------------------------
--------------------------------------------------
(1)Total investment return based on net asset value per share
reflects the
effects of changes in net asset value on the performance of
the Fund during
each period, and assumes dividends and distributions, if any,
were
reinvested. The Fund's shares are issued in a private
placement and are not
traded, therefore market value total investment return is not
calculated.
Total return for the year ended December 31, 1992 would have
been lower were
it not for vouluntary expense limits.
(2)Reflects a voluntary expense limitation in effect during the
period. As a
result of such limitation, expenses of the Fund for the year
ended December
31, 1992 reflect a benefit of U.S. $0.14.
(3)For fiscal years beginning on or after September 1, 1995, a
fund is required
to disclose the average commission rate per share it paid for
portfolio
trades on which commissions were charged. For the year ended
December 31,
1996, the average commission rate paid on trades on which
commissions were
charged was 0.30% of the trade amount.
The accompanying notes are an integral part of the financial
statements.
9
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
---------
The Brazilian Investment Fund, Inc. (the "Fund") was
incorporated on
November 7, 1990, and is registered as a non-diversified, closed-
end management
investment company under the Investment Company Act of 1940, as
amended. The
Fund's common stock is not registered under the Securities Act of
1933. The
Fund's investment objective is long-term capital appreciation
primarily through
investments in equity securities. The Fund makes its investments
in Brazil
through an investment fund established in compliance with
Brazilian law. The
accompanying financial statements are prepared on a consolidated
basis and
present the financial position and results of operations of the
investment fund
and the Fund.
A. The following significant accounting policies are in
conformity with
generally accepted accounting principles for investment
companies. Such policies
are consistently followed by the Fund in the preparation of its
financial
statements. Generally accepted accounting principles may require
management to
make estimates and assumptions that affect the reported amounts
and disclosures
in the financial statements. Actual results may differ from those
estimates.
1. SECURITY VALUATION: In valuing the Fund's assets, all listed
securities,
including purchased options, for which market quotations are
readily
available are valued at the last sales price on the valuation
date, or if
there was no sale on such date, at the mean between the
current bid and
asked prices. Securities which are traded over-the-counter
are valued at the
average of the mean of current bid and asked prices obtained
from reputable
brokers. Short-term securities which mature in 60 days or
less are valued at
amortized cost. Other securities and assets for which market
values are not
readily available (including investments which are subject to
limitations as
to their sale or for which a ready market for the securities
in the
quantities owned by the Fund does not exist) are valued at
fair value as
determined in good faith by the Board of Directors (the
"Board"), although
the actual calculations may be done by others.
2. TAXES: It is the Fund's intention to continue to qualify as
a regulated
investment company and distribute all of its taxable income.
Accordingly, no
provision for U.S. Federal income taxes is required in the
financial
statements.
3. REPURCHASE AGREEMENTS: In connection with transactions in
repurchase
agreements, a bank as custodian for the Fund takes possession
of the
underlying securities, with a market value at least equal to
the amount of
the repurchase transaction, including principal and accrued
interest. To the
extent that any repurchase transaction exceeds one business
day, the value
of the collateral is marked-to-market on a daily basis to
determine the
adequacy of the collateral. In the event of default on the
obligation to
repurchase, the Fund has the right to liquidate the
collateral and apply the
proceeds in satisfaction of the obligation. In the event of
default or
bankruptcy by the counter-party to the agreement, realization
and/or
retention of the collateral or proceeds may be subject to
legal proceedings.
4. FOREIGN CURRENCY TRANSLATION: The books and records of the
Fund are
maintained in U.S. dollars. Amounts denominated in Brazilian
currency are
translated into U.S. dollars at the mean of the bid and asked
prices of such
currency against U.S. dollars last quoted by a major bank as
follows:
- investments, other assets and liabilities at the
prevailing rates of
exchange on the valuation date;
- investment transactions and investment income at the
prevailing rates of
exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the
foreign exchange
rate and market values at the close of the period, the Fund
does not isolate
that portion of the results of operations arising as a result
of changes in
the foreign exchange rates from the fluctuations arising from
changes in the
market prices of the securities held at period end.
Similarly, the Fund does
not isolate the effect of changes in foreign exchange rates
from the
fluctuations arising from changes in the market prices of
securities sold
during the period. Accordingly, realized and unrealized
foreign currency
gains (losses) are included in the reported net realized and
unrealized
gains (losses) on investment transactions and balances.
Net realized gains (losses) on foreign currency transactions
represent net
foreign exchange gains (losses) from sales and maturities of
forward foreign
currency exchange contracts, disposition of foreign currency
and currency
gains or losses realized between the trade and settlement
dates on
securities transactions. Foreign currency gains (losses) also
occur due to
the difference between the amount of investment income and
foreign
withholding taxes recorded on the Fund's books and the U.S.
dollar
equivalent amounts actually received or paid. Net unrealized
currency gains
(losses) from valuing foreign currency denominated assets and
liabilities at
period end exchange rates are reflected as a component of
unrealized
appreciation (depreciation) in the Statement of Net Assets.
The change in
net unrealized currency gains (losses) for the period is
reflected in the
Statement of Operations.
10
5. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS: The Fund may
enter into
forward foreign currency exchange contracts to attempt to
protect securities
and related receivables and payables against changes in
future foreign
exchange rates. A forward foreign currency exchange contract
is an agreement
between two parties to buy or sell currency at a set price on
a future date.
The market value of the contract will fluctuate with changes
in currency
exchange rates. The contract is marked-to-market daily and
the change in
market value is recorded by the Fund as unrealized gain or
loss. The Fund
records realized gains or losses when the contract is closed,
equal to the
difference between the value of the contract at the time it
was opened and
the value at the time it was closed. Risk may arise upon
entering into these
contracts from the potential inability of counterparties to
meet the terms
of their contracts and is generally limited to the amount of
unrealized gain
on the contracts, if any, at the date of default. Risks may
also arise from
unanticipated movements in the value of a foreign currency
relative to the
U.S. dollar.
6. PURCHASED OPTIONS: The Fund may purchase call and put
options on indices or
securities. The Fund may purchase call options to protect
against an
increase in the price of the underlying index or security.
The Fund may
purchase put options on indices or securities to protect
against a decline
in the value of the underlying index or security. Possible
losses from
purchased options cannot exceed the total amount invested.
Realized gains or
losses on purchased options are included with net gain (loss)
on securities
sold in the financial statements.
7. OTHER: Security transactions are accounted for on the date
the securities
are purchased or sold. Realized gains and losses on the sale
of investment
securities are determined on the specific identified cost
basis. Interest
income is recognized on the accrual basis. Dividend income is
recorded on
the ex-dividend date (except certain dividends which may be
recorded as soon
as the Fund is informed of such dividend) net of applicable
withholding
taxes where recovery of such taxes is not reasonably assured.
Distributions
to shareholders are recorded on the ex-date.
The amount and character of income and capital gain
distributions to be paid
are determined in accordance with Federal income tax
regulations which may
differ from generally accepted accounting principles. These
differences are
primarily due to differing book and tax treatments for
foreign currency
transactions and of the timing of the recognition of losses
on securities.
Permanent book and tax basis differences relating to
shareholder
distributions may result in reclassifications to
undistributed net
investment income (loss), accumulated net realized gain
(loss) and capital
surplus.
Adjustments for permanent book-tax differences, if any, are
not reflected in
ending undistributed net investment income (loss) for the
purpose of
calculating net investment income (loss) per share in the
financial
highlights.
X. Xxxxxx Xxxxxxx Asset Management Inc. (the "Adviser") provides
investment
advisory services to the Fund under the terms of an Investment
Advisory
Agreement (the "Agreement"). Under the Agreement, the Adviser is
paid a fee
computed weekly and payable monthly at an annual rate of .90% of
the Fund's
first $50 million of average weekly net assets, .70% of the
Fund's next $50
million of average weekly net assets and .50% of the Fund's
average weekly net
assets in excess of $100 million.
C. The Chase Manhattan Bank, through its affiliate Chase Global
Funds Services
Company (the "U.S. Administrator"), provides administrative and
shareholder
services to the Fund under an Administration Agreement. Under the
Administration
Agreement, the U.S. Administrator is paid a fee computed weekly
and payable
monthly at an annual rate of .08% of the Fund's average weekly
net assets, plus
$75,000 per annum. In addition, the Fund is charged certain out-
of-pocket
expenses by the U.S. Administrator. The Chase Manhattan Bank acts
as custodian
for the Fund's assets held in the United States.
D. Unibanco -- Uniao de Bancos Brasileiras S.A. ("the Brazilian
Administrator
and Custodian") provides Brazilian administrative and custodian
services to the
Fund under the terms of an agreement. Under the agreement, the
Brazilian
Administrator and Custodian is paid a fee computed weekly and
payable monthly at
an annual rate of .15% of the Fund's first $50 million of average
weekly net
assets, .125% of the Fund's next $50 million of average weekly
net assets and
.10% of the Fund's average weekly net assets in excess of $100
million.
E. During the year ended December 31, 1996, the Fund made
purchases and sales
totaling $82,040,000 and $86,368,000, respectively, of investment
securities
other than long-term U.S. Government securities and short term
investments.
There were no purchases and sales of long-term U.S. Government
securities. At
December 31, 1996, the U.S. Federal income tax cost basis of
securities was
$39,876,000 and accordingly, net unrealized appreciation for U.S.
Federal income
tax purposes was $7,646,000, of which $10,490,000 related to
appreciated
securities and $2,844,000 related to depreciated securities. For
the year
11
ended December 31, 1996, the Fund expects to defer to January 1,
1997, for U.S.
Federal income tax purposes, post-October currency losses of
$7,000.
F. In connection with its organization, the Fund incurred
$445,000 of
organization costs which are being amortized on a straight-line
basis over a
five-year period beginning June 4, 1991, the date the Fund
commenced operations.
G. A significant portion of the Fund's net assets consist of
securities
denominated in Brazilian currency. Changes in currency exchange
rates will
affect the value of and investment income from such securities.
Brazilian
securities are subject to greater price volatility, limited
capitalization and
liquidity, and higher rates of inflation than securities of
companies based in
the United States. In addition, Brazilian securities may be
subject to
substantial governmental involvement in the economy and greater
social, economic
and political uncertainty.
H. The Fund's Articles of Incorporation provide that, commencing
April 7,
1992 and on each calendar quarter thereafter, the Fund will make
a tender offer
to repurchase its outstanding shares of Common Stock at a price
equal to the net
asset value per share at the time of repurchase.
During the year ended December 31, 1996, the Fund repurchased
the following
shares:
U.S.
DATE SHARES (000)
-------- ------ ------
2/5/96 15,131 $ 653
5/6/96 7,040 $ 300
8/5/96 2,000 $ 104
11/5/96 91,528 $4,824
I. Shareholders of the Fund may purchase shares of Common Stock
from the Fund
at a price equal to the net asset value at the beginning of the
month. Purchases
are not allowed during each month the Fund makes a tender offer
to repurchase
its outstanding shares. During the year ended December 31, 1996,
the Fund issued
35,440 shares totaling $1,525,000.
X. Each Director of the Fund who is not an officer of the Fund
or an affiliated
person as defined under the Investment Company Act of 1940, as
amended, may
elect to participate in the Directors' Deferred Compensation Plan
(the "Plan").
Under the Plan, such Directors may elect to defer payment of a
percentage of
their total fees earned as a Director of the Fund. These deferred
portions are
treated, based on an election by the Director, as if they were
either invested
in the Fund's shares or invested in U.S. Treasury Bills, as
defined under the
Plan. The deferred fees payable, under the Plan, at December 31,
1996 totaled
$6,000 and are included in Payable for Directors' Fees and
Expenses on the
Statement of Net Assets.
K. During December 1996, the Board declared a distribution of
$6.25 per share,
derived from net realized gains, payable on April 7, 1997, to
Shareholders of
record on December 31, 1996.
-----------------------------------------------------------------
---------------
FEDERAL INCOME TAX INFORMATION (UNAUDITED):
For the year ended December 31, 1996, the Fund designates
$784,000 as
long-term capital gain and expects to pass through to
shareholders foreign tax
credits of approximately $161,000. In addition, for the year
ended December 31,
1996, gross income derived from sources within foreign countries
amounted to
$1,760,000.
12
REPORT OF INDEPENDENT ACCOUNTANTS
---------
To the Shareholders and Board of Directors of
The Brazilian Investment Fund, Inc.
In our opinion, the accompanying statement of net assets
and the related
statements of operations and of changes in net assets and
the financial
highlights present fairly, in all material respects, the
financial position of
The Brazilian Investment Fund, Inc. (the "Fund") at December
31, 1996, 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 five years in the period then ended, in
conformity with
generally accepted accounting principles. 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
generally accepted
auditing standards which require that we plan and perform the
audit to obtain
reasonable assurance about whether the financial statements are
free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting
the amounts and disclosures in the financial statements,
assessing the
accounting principles used and significant estimates made by
management, and
evaluating the overall financial statement presentation. We
believe that our
audits, which included confirmation of securities at
December 31, 1996 by
correspondence with the custodians and brokers and the
application of
alternative auditing procedures where confirmations from
brokers were not
received, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
February 10, 1997
13
The Brazilian Investment Fund, Inc.
Investment Summary as of December 31, 1995
-----------------------------------------------------------------
------------
-----------------------------------------------------------------
------------
HISTORICAL
INFORMATION
TOTAL RETURN (%)
---------------------------------------
-----------
NET ASSET VALUE (2) INDEX
(1)(3)**
----------------------- --------------
-----------
AVERAGE
AVERAGE
CUMULATIVE ANNUAL CUMULATIVE
ANNUAL
----------------------- --------------
-----------
ONE YEAR -26.61% -26.61% -20.24%
-20.24%
SINCE INCEPTION* 135.61 20.59 180.44
25.20
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
-----------------------------------------------------------------
------------
RETURNS AND PER SHARE INFORMATION
XXXXX REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
YEARS ENDED DECEMBER 31:
1991* 1992 1993 1994
1995
Net Asset Value Per Share
$ 63.31 $ 55.28 $ 83.58 $ 129.97 $
64.14
Income Dividends
- - - $ 1.80
-
Capital Gains Distributions
- - $ 7.06 $ 6.65 $
37.73
Total Return (2)
26.62% (12.68%) 72.52% 68.32%
(26.61%)
Index Total Return (3) **
3.48% 0.32% 99.45% 69.83%
(20.24%)
(1) Assumes dividends and distributions, if any, were reinvested.
(2) Total investment return based on per share net asset
value reflects
the effects of changes in net asset value on the performance of
the Fund
during each period, and assumes dividends and
distributions, if
any, were reinvested. The Fund's shares are issued in a
private
placement and not traded; therefore, market value total
investment
return is not calculated.
(3) IFC Total Return Index for Brazil
* The Fund commenced operations on June 4, 1991.
** Unaudited.
4
The Brazilian Investment Fund, Inc.
Portfolio Summary as of December 31, 1995
-----------------------------------------------------------------
------------
-----------------------------------------------------------------
------------
PORTFOLIO INVESTMENTS DIVERSIFICATION
XXXXX REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Equity Securities 99.0%
Short-Term Investments 1.0%
-----------------------------------------------------------------
------------
SECTORS
XXXXX REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Telecommunications 24.9%
Utilities - Electrical &
Gas 20.0%
Beverages & Tobacco 13.9%
Banking 12.1%
Merchandising 7.7%
Metals -- Non-Ferrous 4.0%
Energy Sources 3.9%
Textiles & Apparel 2.3%
Machinery & Engineering 2.1%
Industrial Components 2.0%
Other 7.1%
-----------------------------------------------------------------
------------
TEN LARGEST HOLDINGS
PERCENT OF
NET ASSETS
------------
1. Telebras 17.4%
2. Brahma 14.0
3. Eletrobras (Common) 8.6
4. Lojas Xxxxxx 4.8
5. Banco Bradesco 4.6
PERCENT OF
NET ASSETS
------------
6. CVRD 4.0%
7. Petrobras 4.0
8. Banco do Brasil 3.7
9. Telebras ADR 3.5
10. Banco Itau 3.1
---
67.7%
---
---
5
FINANCIAL STATEMENTS
---------
STATEMENT OF NET ASSETS
---------
DECEMBER 31, 1995
VALUE
SHARES (000)
---------------------------------------------------------
------------
BRAZILIAN INVESTMENT FUND (97.4%)
--------------------------------------------------
----------
BRAZILIAN NON-VOTING PREFERRED STOCKS (96.4%)
(Unless otherwise noted)
---------------------------------------------------------
-------------
APPLIANCES & HOUSEHOLD DURABLES (0.4%)
Refripar 43,520,927 U.S.$ 87
Refripar (Common) 23,893,000 42
-----------
129
-----------
---------------------------------------------------------
-------------
BANKING (12.1%)
Banco Bradesco 187,301,708 1,638
+***Banco Bradesco (Rights) 8,660,218 14
+Banco do Brasil 117,642,000 1,332
Banco Itau 4,032,500 1,124
**Banco Nacional 112,483,664 232
-----------
4,340
-----------
---------------------------------------------------------
-------------
BEVERAGES & TOBACCO (13.9%)
Brahma 12,187,489 5,016
-----------
---------------------------------------------------------
-------------
ENERGY SOURCES (3.9%)
Petrobras 16,640,000 1,421
-----------
---------------------------------------------------------
-------------
FOOD & HOUSEHOLD PRODUCTS (1.3%)
+Xxxxx Toga 461,291 403
+Xxxxx Toga (Receipts) 55,167 48
-----------
451
-----------
---------------------------------------------------------
-------------
INDUSTRIAL COMPONENTS (2.0%)
Xxxxxx 24,570,000 721
-----------
---------------------------------------------------------
-------------
MACHINERY & ENGINEERING (2.1%)
WEG 1,822,000 750
-----------
---------------------------------------------------------
-------------
MERCHANDISING (7.7%)
#+Cia Brasileira ADR 76,450 765
Lojas Americanas 183,270 26
+Lojas Arapua ADR 30,140 256
Lojas Xxxxxx 64,370,000 1,722
-----------
2,769
-----------
---------------------------------------------------------
-------------
METALS -- NON-FERROUS (4.0%)
CVRD 8,700,000 1,432
-----------
---------------------------------------------------------
-------------
METALS -- STEEL (1.8%)
Usiminas 776,700,000 631
-----------
---------------------------------------------------------
-------------
VALUE
SHARES (000)
---------------------------------------------------------
------------
TELECOMMUNICATIONS (24.9%)
Telebras 130,044,895 U.S.$6,262
Telebras ADR 26,200 1,241
Telebras (Common) 28,453,000 1,101
Telesp 1,245,601 183
Telesp (Common) 1,200,500 174
-----------
8,961
-----------
---------------------------------------------------------
-------------
TEXTILES & APPAREL (2.3%)
Coteminas 1,200,000 401
+Wentex 318,000 439
-----------
840
-----------
---------------------------------------------------------
-------------
UTILITIES--ELECTRICAL & GAS (20.0%)
Cemig 46,400,000 1,027
#Cemig ADR 18,357 406
+CESP 90 --
CPFL 22,591,000 604
Eletrobras ADR 15,250 206
Eletrobras 'B' 2,940,000 796
Eletrobras (Common) 11,372,000 3,077
Light (Common) 3,420,000 1,094
-----------
7,210
-----------
---------------------------------------------------------
-------------
TOTAL BRAZILIAN NON-VOTING PREFERRED
STOCKS
(Cost U.S. $36,931) 34,671
-----------
---------------------------------------------------------
-------------
FACE
AMOUNT
(000)
---------------------------------------------------------
------------
FOREIGN CURRENCY ON DEPOSIT WITH
CUSTODIAN (1.0%)
Brazilian Real (Cost U.S.
$344) BRL 334 344
-----------
---------------------------------------------------------
-------------
TOTAL BRAZILIAN INVESTMENT FUND
(Cost U.S. $37,275) 35,015
-----------
---------------------------------------------------------
-------------
TOTAL INVESTMENTS (97.4%)
(Cost U.S. $37,275) 35,015
-----------
---------------------------------------------------------
-------------
The accompanying notes are an integral part of the financial
statements.
6
AMOUNT AMOUNT
(000) (000)
---------------------------------------------------------
------------
OTHER ASSETS (5.3%)
Cash U.S.$ 65
Receivable for Investments
Sold 1,642
Dividends Receivable 145
Deferred Organization Costs 38
Other Assets 7 U.S.$1,897
------------- -----------
---------------------------------------------------------
-------------
LIABILITIES (-2.7%)
Payable for:
Investments Purchased (865)
Professional Fees (39)
Investment Advisory Fees (21)
Shareholder Reporting
Expenses (13)
Administrative and
Transfer Agent Fees (9)
Directors' Fees and
Expenses (6)
Brazilian Administrative
and Custodian Fees (4)
U.S. Custodian Fees (1) (958 )
------------- -----------
---------------------------------------------------------
-------------
NET ASSETS (100%)
Applicable to 560,593
issued and outstanding
U.S. $0.01 par value
shares (50,000,000 shares
authorized) U.S.$35,954
-------------
---------------------------------------------------------
-------------
NET ASSET VALUE PER SHARE U.S.$ 64.14
-------------
---------------------------------------------
---------
+ -- Non-income producing
** -- Security valued at fair value -- see Note A-1 to
financial statements.
*** -- Security valued at fair value as determined based on the
market value of
the underlying security less subscription costs.
# -- 144A security -- certain conditions for public sale may
exist.
ADR -- American Depositary Receipt.
December 31, 1995 exchange rate--Brazilian Real (BRL) 0.9719 =
U.S. $1.00
AMOUNT
(000)
---------------------------------------------------------
------------
AT DECEMBER 31, 1995, NET ASSETS CONSISTED OF:
------------------------------------------------------------
Common Stock U.S.$ 6
Capital Surplus 20,804
Accumulated Net Realized
Gain 17,409
Unrealized Depreciation on
Investments and Foreign
Currency Translations (2,265)
------------------------------------------------------------
TOTAL NET ASSETS U.S.$35,954
-------------
-----------------------------------------------------------------
-------------
The accompanying notes are an integral part of the financial
statements.
7
YEAR ENDED
DECEMBER 31, 1995
STATEMENT OF OPERATIONS
(000)
-----------------------------------------------------------------
--------------
INVESTMENT INCOME:
Dividends...............................................
U.S.$ 909
Interest................................................
25
Less: Foreign Taxes Withheld............................
(129)
-----------------------------------------------------------------
--------------
Total Income..........................................
805
-----------------------------------------------------------------
--------------
EXPENSES
Investment Advisory Fees................................
375
U.S. Administrative and Transfer Agent Fees.............
118
Amortization of Organization Costs......................
89
Brazilian Administrative and Custodian Fees.............
63
Audit Fees..............................................
56
Directors' Fees and Expenses............................
31
Shareholder Reporting Expenses..........................
31
Legal Fees..............................................
22
Custodian Fees..........................................
2
Other Expenses..........................................
78
-----------------------------------------------------------------
--------------
Total Expenses........................................
865
-----------------------------------------------------------------
--------------
Net Investment Loss.................................
(60)
-----------------------------------------------------------------
--------------
NET REALIZED GAIN
Investment Securities Sold..............................
17,408
Foreign Currency Transactions...........................
32
-----------------------------------------------------------------
--------------
Net Realized Gain...................................
17,440
-----------------------------------------------------------------
--------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
Investments.............................................
(34,668)
Foreign Currency Translations...........................
(12)
-----------------------------------------------------------------
--------------
Change in Unrealized Appreciation (Depreciation)....
(34,680)
-----------------------------------------------------------------
--------------
Total Net Realized Gain and Change in Unrealized
Appreciation (Depreciation)................................
(17,240)
-----------------------------------------------------------------
--------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS....
U.S.$(17,300)
-----------------------------------------------------------------
--------------
-----------------------------------------------------------------
--------------
YEAR ENDED
YEAR ENDED
DECEMBER 31, 1995
DECEMBER 31, 1995
STATEMENT OF CHANGES IN NET ASSETS (000)
(000)
-----------------------------------------------------------------
------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Loss...........................
U.S.$ (446) U.S.$
(60)
Net Realized Gain.............................
24,028
17,440
Change in Unrealized Appreciation
(Depreciation)...............................
10,907
(34,680)
-----------------------------------------------------------------
------------
Net Increase (Decrease) in Net Assets
Resulting from Operations....................
34,489
(17,300)
-----------------------------------------------------------------
------------
Distributions:
In Excess of Net Investment Income............
(1,122)
--
Net Realized Gain.............................
(4,148)
(23,408)
-----------------------------------------------------------------
------------
Total Distributions...........................
(5,270)
(23,408)
-----------------------------------------------------------------
------------
Capital Share Transactions:
Subscription of Shares (4,128 and 25,702
shares, respectively)........................
445
1,853
Reinvestment of Distributions (50,471 and
286,103 shares, respectively)................
5,220
23,041
Repurchase of Shares (53,929 and 376,486
shares, respectively)........................
(5,827)
(29,496)
-----------------------------------------------------------------
------------
Net Decrease in Net Assets Resulting From
Capital Share Transactions...................
(162)
(4,602)
-----------------------------------------------------------------
------------
Total Increase (Decrease).....................
29,057
(45,310)
Net Assets:
Beginning of Year.............................
52,207
81,264
-----------------------------------------------------------------
------------
End of Year (including accumulated net
investment loss of U.S. $36 and U.S. $0,
respectively.................................
U.S.$81,264 U.S.$
35,954
-----------------------------------------------------------------
------------
-----------------------------------------------------------------
------------
The accompanying notes are an integral part of the financial
statements.
8
FINANCIAL HIGHLIGHTS
PERIOD FROM
JUNE 4, 1991* TO YEAR ENDED DECEMBER 31,
DECEMBER 31, --------------------------------------
------------
SELECTED PER SHARE DATA AND RATIOS:
1991 1992 1993 1994
1995
-----------------------------------------------------------------
-------------
NET ASSET VALUE, BEGINNING OF PERIOD...........
U.S.$50.00 U.S.$63.31 U.S.$55.28 U.S.$83.58
U.S.$129.97
-----------------------------------------------------------------
-------------
Offering Costs.................................
(0.21) -- -- --
--
-----------------------------------------------------------------
------------
Net Investment Income (Loss)...................
0.84 (0.09) 1.42 (0.71)
(0.11)
Net Realized and Unrealized Gain (Loss) on
Investments...................................
12.68 (7.94) 33.94 55.55
(27.99)
-----------------------------------------------------------------
------------
Total from Investment Operations...........
13.52 (8.03) 35.36 54.84
(28.10)
-----------------------------------------------------------------
------------
Distributions:
In Excess of Net Investment Income.........
-- -- -- (1.80)
--
Net Realized Gain..........................
-- -- (6.89) (6.65)
(37.73)
In Excess of Net Realized Gain.............
-- -- (0.17) --
--
-----------------------------------------------------------------
------------
Total Distributions........................
-- -- (7.06) (8.45)
(37.73)
-----------------------------------------------------------------
------------
NET ASSET VALUE, END OF PERIOD.................
U.S.$63.31 U.S.$55.28 U.S.$83.58 U.S.$129.97
U.S.$64.14
-----------------------------------------------------------------
------------
-----------------------------------------------------------------
------------
TOTAL INVESTMENT RETURN:
Net Asset Value (1)........................
26.62% (12.68)% 72.52% 68.32%
(26.61)%
-----------------------------------------------------------------
------------
-----------------------------------------------------------------
------------
RATIOS, SUPPLEMENTAL DATA:
-----------------------------------------------------------------
------------
NET ASSETS, END OF PERIOD (THOUSANDS)..........
U.S.$51,159 U.S.$46,687 U.S.$52,207 U.S.$81,264
U.S.$35,954
-----------------------------------------------------------------
------------
Ratio of Expenses to Average Net Assets........
2.00%**(2) 2.27%(2) 2.22%
1.82% 2.07%
Ratio of Net Investment Income (Loss) to
Average Net Assets............................
3.49%** (0.07)% 1.57%
(0.61)% (0.14)%
Portfolio Turnover Rate........................
1% 36% 40% 52%
112%
-----------------------------------------------------------------
------------
*Commencement of operations.
**Annualized.
(1)Total investment return based on per share net asset
value
reflects the effects of changes in net asset value on the
performance of
the Fund during each period, and assumes dividends and
distributions, if any, were reinvested. The Fund's shares are
issued
in a private placement and are not traded; therefore, market
value
total investment return is not calculated. Total return for the
periods
ended December 31, 1991 and 1992 would have been lower were it
not for
voluntary expense limits.
(2)Reflects a voluntary expense limitation in effect during the
period.
As a result of such limitation, expenses of the Fund for
the
periods ended December 31, 1991 and 1992 reflect a benefit of
U.S.$0.10
and U.S.$0.14, respectively.
Note: Current period permanent book-tax differences, if any, are
not included
in the calculation of net investment income (loss) per share.
The accompanying notes are an integral part of the financial
statements.
9
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
----------
The Brazilian Investment Fund, Inc. (the "Fund") was
incorporated on
November 7, 1990, and is registered as a non-diversified, closed-
end management
investment company under the Investment Company Act of 1940,
as amended. The
Fund's common stock is not registered under the Securities Act
of 1933. The
Fund's investment objective is long-term capital
appreciation through
investments primarily in equity securities. The Fund makes its
investments in
Brazil through an investment fund established in compliance with
Brazilian law.
The accompanying financial statements are prepared on a
consolidated basis and
present the financial position and results of operations of the
investment fund
and the Fund.
A. The following significant accounting policies are in
conformity with
generally accepted accounting principles for investment
companies. Such policies
are consistently followed by the Fund in the preparation of
its financial
statements. Generally accepted accounting principles may require
management to
make estimates and assumptions that affect the reported amounts
and disclosures
in the financial statements. Actual results may differ from those
estimates.
1. SECURITY VALUATION: In valuing the Fund's
assets, all
listed securities, including purchased options, for which
market quotations
are readily available are valued at the last sales price on
the valuation
date, or if there was no sale on such date, at the mean
between the current
bid and asked prices. Securities which are traded over-
the-counter are
valued at the average of the mean of current bid and asked
prices obtained
from reputable brokers. All non-equity securities as to
which market
quotations are readily available are valued at their
market values.
Short-term securities which mature in 60 days or less
are valued at
amortized cost. Other securities and assets for which market
values are not
readily available (including investments which are subject to
limitations as
to their sale or for which a ready market for the
securities in the
quantities owned by the Fund does not exist) are valued
at fair value as
determined in good faith by the Board of Directors (the
"Board"), although
the actual calculations may be done by others.
2. TAXES: It is the Fund's intention to continue to
qualify as a regulated investment company and distribute all
of its taxable
income. Accordingly, no provision for U.S. Federal income
taxes is required
in the financial statements.
Accumulated undistributed net investment income and
accumulated realized
gain have been adjusted for current and prior period
permanent book-tax
differences. Current period adjustments arose principally
from differing
book-tax treatments for foreign currency transactions and
net operating
losses.
3. REPURCHASE AGREEMENTS: In connection with
transactions in repurchase agreements, a bank as custodian for
the Fund takes
possession of the underlying securities, the value of
which equals or
exceeds the principal amount of the repurchase
transaction, including
accrued interest. To the extent that any repurchase
transaction exceeds one
business day, the value of the collateral is marked-to-
market on a daily
basis to determine the adequacy of the collateral. In the
event of default
on the obligation to repurchase, the Fund has the right
to liquidate the
collateral and apply the proceeds in satisfaction of the
obligation. To the
extent that proceeds from the sale of the underlying
securities are less
than the repurchase price under the agreement, the Fund may
incur a loss. In
the event of default or bankruptcy by the other party to
the agreement,
realization and/or retention of the collateral or proceeds
may be subject to
legal proceedings.
4. FOREIGN CURRENCY TRANSLATION: The books and
records of the Fund are maintained in U.S. dollars. Amounts
denominated in
Brazilian currency are translated into U.S. dollars at the
mean of the bid
and asked prices of such currency against U.S. dollars
last quoted by a
major bank as follows:
- investments, other assets and liabilities at the
prevailing rates of
exchange on the valuation date;
- investment transactions and investment income at the
prevailing rates
of exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the
foreign exchange
rate and market values at the close of the period, the Fund
does not isolate
that portion of the results of operations arising as a
result of changes in
the foreign exchange rates from the fluctuations arising from
changes in the
market prices of the securities held at period end.
Similarly, the Fund does
not isolate the effect of changes in foreign exchange
rates from the
fluctuations arising from changes in the market prices of
securities sold
during the period. Accordingly, realized and unrealized
foreign currency
gains (losses) are included in the reported net realized
and unrealized
gains (losses) on investment transactions and balances.
Net realized gains (losses) on foreign currency transactions
represent net
foreign exchange gains (losses)
10
from sales and maturities of forward foreign currency
contracts, disposition
of foreign currency and currency gains or losses realized
between the trade
and settlement dates on securities transactions. Foreign
currency gains
(losses) also occur due to the difference between the
amount of investment
income and foreign withholding taxes recorded on the Fund's
books and the
U.S. dollar equivalent amounts actually received or paid.
Net unrealized
currency gains (losses) from valuing foreign currency
denominated assets and
liabilities at period end exchange rates are reflected as
a component of
unrealized appreciation (depreciation) in the Statement of
Net Assets. The
change in net unrealized currency gains (losses) for the
period is reflected
in the Statement of Operations.
5. FORWARD FOREIGN CURRENCY CONTRACTS: The Fund
may enter into forward foreign currency contracts to protect
securities and
related receivables and payables against changes in future
foreign exchange
rates. A forward foreign currency contract is an
agreement between two
parties to buy or sell currency at a set price on a future
date. The market
value of the contract will fluctuate with changes in
currency exchange
rates. The contract is marked-to-market daily and the change
in market value
is recorded by the Fund as unrealized gain or loss.
The Fund records
realized gains or losses when the contract is closed equal to
the difference
between the value of the contract at the time it was opened
and the value at
the time it was closed. Risk may arise upon entering into
these contracts
from the potential inability of counterparties to meet the
terms of their
contracts and is generally limited to the amount of
unrealized gain on the
contracts, if any, at the date of default. Risks may
also arise from
unanticipated movements in the value of a foreign currency
relative to the
U.S. dollar.
6. PURCHASED OPTIONS: The Fund may purchase
options. In purchasing a call (put) option, the Fund will seek
to benefit from
an increase (decline) in the market price of the
underlying index or
security. Risks may arise in the event of default by the
counterparty or
unanticipated movements in the market price of the
underlying index or
security, however, the maximum exposure to loss for any
purchased option is
limited to the premium initially paid for the option.
Realized gains or
losses on purchased options are included with net gain
(loss) on securities
sold in the financial statements.
7. OTHER: Security transactions are accounted for on
the date the securities are purchased or sold. Realized gains
and losses on
the sale of investment securities are determined on the
specific identified
cost basis. Interest income is recognized on the accrual
basis. Dividend
income is recorded on the ex-dividend date (except certain
dividends which
may be recorded as soon as the Fund is informed of such
dividend) net of
applicable withholding taxes where recovery of such taxes is
not reasonably
assured. Distributions to shareholders are recorded on the
ex-date. Income
distributions and capital gain distributions are
determined in accordance
with U.S. Federal income tax regulations which may differ
from generally
accepted accounting principles. These differences are
principally due to the
timing of the recognition of losses on securities and
due to permanent
differences described in note A-2.
X. Xxxxxx Xxxxxxx Asset Management Inc. (the "U.S.
Adviser") provides
investment advisory services to the Fund under the terms of
an Investment
Advisory Agreement (the "Agreement"). Under the Agreement, the
U.S. Adviser is
paid a fee computed weekly and payable monthly at an annual rate
of .90% of the
Fund's first $50 million of average weekly net assets, .70% of
the Fund's next
$50 million of average weekly net assets and .50% of the Fund's
average weekly
net assets in excess of $100 million.
C. Effective September 1, 1995, The Chase Manhattan Bank,
N.A., through its
affiliate Chase Global Funds Services Company (the
"Administrator"), (formerly
Mutual Funds Service Company, a wholly owned subsidiary of the
United States
Trust Company of New York), provides administrative and
shareholder services to
the Fund under an Administration Agreement. Under the
Administration Agreement,
the Administrator is paid a fee computed weekly and payable
monthly at an annual
rate of .08% of the Fund's average weekly net assets, plus
$75,000 per annum. In
addition, the Fund is charged certain out of pocket
expenses by the
Administrator. Effective September 1, 1995, The Chase Manhattan
Bank, N.A. acts
as custodian for the Fund's assets held in the United States.
Prior to September
1, 1995, Mutual Funds Service Company and United States Trust
Company of New
York provided administrative and custodian services,
respectively, to the Fund
under the same terms, conditions and fees as stated above.
D. Unibanco - Uniao de Bancos Brasileiras S.A. ("the
Brazilian Administrator
and Custodian") provides Brazilian administrative and custodian
services to the
Fund under the terms of an agreement. Under the agreement,
the Brazilian
Administrator and Custodian is paid a fee computed weekly and
paid monthly at an
annual rate of .15% of the Fund's first $50 million of
average weekly net
11
assets, .125% of the Fund's next $50 million of average weekly
net assets and
.10% of the Fund's average weekly net assets in excess of $100
million.
E. During the year ended December 31, 1995, the Fund made
purchases and sales
totaling $48,108,000 and $77,135,000, respectively, of
investment securities
other than long-term U.S. Government securities and short
term investments.
There were no purchases and sales of long-term U.S. Government
securities. At
December 31, 1995, the U.S. Federal income tax cost basis of
securities was
$37,106,000 and accordingly, net unrealized depreciation for U.S.
Federal income
tax purposes was $2,435,000, of which $2,412,000, related
to appreciated
securities and $4,847,000 related to depreciated securities.
F. In connection with its organization the Fund
incurred $445,000 of
organization costs which are being amortized on a straight-
line basis over a
five year period beginning June 4, 1991, the date the Fund
commenced operations.
G. At December 31, 1995, a significant portion of the Fund's net
assets consist
of securities denominated in Brazilian currency. Changes in
currency exchange
rates will affect the value of and investment income from
such securities.
Brazilian securities are subject to greater price
volatility, limited
capitalization and liquidity, and higher rates of inflation
than securities of
companies based in the United States. In addition, Brazilian
securities may be
subject to substantial governmental involvement in the
economy and greater
social, economic and political uncertainty.
H. The Fund's Articles of Incorporation provide that,
commencing April 7,
1992 and on each calendar quarter thereafter, the Fund will make
a tender offer
to repurchase its outstanding shares of Common Stock at a price
equal to the net
asset value per share at the time of repurchase.
During the year ended December 31, 1995, the Fund repurchased
the following
shares:
U.S.
DATE SHARES (000)
--------- --------- ---------
2/6/95 312,637 $ 24,964
5/5/95 41,019 $ 2,975
8/4/95 2,544 $ 180
11/6/95 20,286 $ 1,377
On February 5, 1996, the Fund repurchased 15,131 shares
totaling $653,000.
I. Shareholders of the Fund may purchase shares of Common
Stock from the Fund
at a price equal to the net asset value at the beginning of the
month. Purchases
are not allowed during each month the Fund makes a tender offer
to repurchase
its outstanding shares. During the year ended December 31, 1995,
the Fund issued
25,702 shares totaling $1,853,000.
X. Each Director of the Fund who is not an officer of the Fund
or an affiliated
person as defined under the Investment Company Act of 1940,
as amended, may
elect to participate in the Directors' Deferred Compensation Plan
(the "Plan").
Under the Plan, such Directors may elect to defer payment of
a percentage of
their total fees earned as a Director of the Fund. These
deferred portions are
treated, based on an election by the Director, as if they were
either invested
in the Fund's shares or invested in U.S. Treasury Bills, as
defined under the
Plan. At December 31, 1995, none of the Directors elected to
participate in the
Plan.
K. During December 1995, the Board declared a distribution of
$29.97 per share,
derived from net realized gains, payable on January 9, 1996, to
shareholders of
record on December 29, 1995.
-----------------------------------------------------------------
---------------
FEDERAL TAX INFORMATION (UNAUDITED):
For the year ended December 31, 1995, the Fund designates
$17,954,000 as
long-term capital gain dividend.
12
REPORT OF INDEPENDENT ACCOUNTANTS
---------
To the Shareholders and Board of Directors of
The Brazilian Investment Fund, Inc.
In our opinion, the accompanying statement of net assets
and the related
statements of operations and of changes in net assets and
the financial
highlights present fairly, in all material respects, the
financial position of
The Brazilian Investment Fund, Inc. (the "Fund") at December
31, 1995, 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 four years in the period then ended and for the
period June 4,
1991 (commencement of operations) through December 31, 1991, in
conformity with
generally accepted accounting principles. 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
generally accepted
auditing standards which require that we plan and perform the
audit to obtain
reasonable assurance about whether the financial statements are
free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting
the amounts and disclosures in the financial statements,
assessing the
accounting principles used and significant estimates made by
management, and
evaluating the overall financial statement presentation. We
believe that our
audits, which included confirmation of securities at December
31, 1995 by
correspondence with the custodians and brokers and the
application of
alternative auditing procedures where confirmations from
brokers were not
received, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
February 9, 1996
FINANCIAL STATEMENTS
---------
STATEMENT OF NET ASSETS
---------
DECEMBER 31, 1994
VALUE
SHARES (000)
---------------------------------------------------------
------------
BRAZILIAN INVESTMENT FUND (98.7%)
--------------------------------------------------
----------
BRAZILIAN PREFERRED STOCKS (96.8%)
(Unless otherwise noted)
---------------------------------------------------------
-------------
APPLIANCES & HOUSEHOLD DURABLES (9.2%)
Brasmotor 4,441,800 U.S.$ 1,799
Continental 2001 7,600,000 205
Multibras 1,274,500 1,670
Refripar 1,143,557,920 3,780
-----------
7,454
-----------
---------------------------------------------------------
-------------
AUTOMOBILES (4.3%)
Iochpe Maxion 4,850,000 3,378
Xxxxxxxxx 'B' 500,000 134
-----------
3,512
-----------
---------------------------------------------------------
-------------
BANKING (11.3%)
Banco Bradesco 360,509,400 3,065
Banco do Brasil 115,000,000 2,267
Banco Nacional 45,653,664 1,159
Banco Nacional (Common) 11,801,600 311
Itaubanco 8,639,000 2,417
-----------
9,219
-----------
---------------------------------------------------------
-------------
BEVERAGES & TOBACCO (1.0%)
Brahma 2,385,700 785
-----------
---------------------------------------------------------
-------------
CHEMICALS (2.9%)
Rhodia-Ster GDR 165,000 2,372
-----------
---------------------------------------------------------
-------------
ENERGY SOURCES (9.1%)
Petrobras 58,477,320 7,387
-----------
---------------------------------------------------------
-------------
FOOD & HOUSEHOLD PRODUCTS (2.5%)
Ceval Alimentos 12,000,000 177
+Xxxxx Lalekla 1,811,290 1,818
-----------
1,995
-----------
---------------------------------------------------------
-------------
INDUSTRIAL COMPONENTS (1.0%)
SECTIONS Xxxxxx 'B' 18,000,000 850
-----------
---------------------------------------------------------
-------------
MERCHANDISING (1.6%)
+Lojas Americanas (Bonus Rights) 183,270 26
+Mesbla 6,982,050 1,253
-----------
1,279
-----------
---------------------------------------------------------
-------------
METALS -- NON-FERROUS (1.5%)
Vale do Rio Doce 6,163,800 1,179
-----------
---------------------------------------------------------
-------------
METALS -- STEEL (7.9%)
Cia Siderurgica Nacional
(Common) 78,800,000 U.S.$ 2,684
+Cosipa 'B' 194,000 564
Usiminas 2,361,123,300 3,206
-----------
6,454
-----------
---------------------------------------------------------
-------------
RECREATION, OTHER CONSUMER GOODS (0.8%)
Manufatura Brinquedos de
Estrela 198,000,000 502
Tec Toy 175,000,000 182
-----------
684
-----------
---------------------------------------------------------
-------------
TELECOMMUNICATIONS (17.8%)
Telebras 168,700,000 7,549
Telebras 'D' 6,323,895 235
Telebras (Common) 80,700,000 3,478
Telesp 22,157,978 3,152
Telesp 'P' 92,602 41
-----------
14,455
-----------
---------------------------------------------------------
-------------
TEXTILES & APPAREL (4.9%)
Brasperola 'A' 1,000,000 1,346
Xxxxxx Xxxxxxxx 261,000 647
SECTIONS Wentex 1,670,000 1,972
-----------
3,965
-----------
---------------------------------------------------------
-------------
UTILITIES -- ELECTRICAL & GAS (21.0%)
Cemig ADR 67,500 1,637
+Centrais Eletricas de Santa Catarina
'B' 1,435,000 1,355
Cia Energetica de Sao Paulo 11,930 16
Cia Energetica de Sao Paulo
(Common) 138,236 180
Cia Paulista de Forca e
Xxx 7,050,000 483
+Cia Paulista de Forca e
Xxx (Common) 26,120,000 2,313
Eletrobras 'B' 21,097,000 7,323
Eletrobras (Common) 9,008,000 3,180
Light (Common) 1,575,000 569
-----------
17,056
-----------
---------------------------------------------------------
-------------
TOTAL BRAZILIAN PREFERRED STOCKS
(Cost U.S. $46,960) 78,646
-----------
---------------------------------------------------------
-------------
PURCHASED OPTIONS (1.9%)
+Cia Paulista de Forca e
Xxx call, expiring
10/16/95, strike price
BRL 70.00 18,700,000 194
+Eletrobras call,
expiring 6/19/95,
strike price BRL 30.58 11,660,000 1,322
-----------
(Cost U.S. $794) 1,516
-----------
---------------------------------------------------------
-------------
The accompanying notes are an integral part of the financial
statements.
4
AMOUNT VALUE
(000) (000)
---------------------------------------------------------
------------
FOREIGN CURRENCY ON DEPOSIT WITH CUSTODIAN (0.0%)
Brazilian Real
(Cost U.S. $28) BRL 23 U.S.$ 28
-----------
---------------------------------------------------------
-------------
TOTAL BRAZILIAN INVESTMENT FUND
(Cost U.S. $47,782) 80,190
-----------
---------------------------------------------------------
-------------
TOTAL INVESTMENTS (98.7%)
(Cost U.S. $47,782) 80,190
-----------
---------------------------------------------------------
-------------
OTHER ASSETS (2.6%)
Receivable for Investments Sold U.S.$1,954
Dividends Receivable 54
Deferred Organization Costs 127
Other Assets 31 2,166
--------- -----------
---------------------------------------------------------
-------------
LIABILITIES (-1.3%)
Payable For:
Bank Overdraft (850)
Investments Purchased (90)
Investment Advisory Fees (52)
Professional Fees (49)
Shareholder Reporting
Expenses (18)
U.S. Administrative Fees (12)
Directors' Fees and Expenses (10)
Brazilian Administrative and
Custodian Fees (9)
U.S. Custodian Fees (2) (1,092)
--------- -----------
---------------------------------------------------------
-------------
NET ASSETS (100%)
Applicable to 625,274 issued and
outstanding U.S. $.01 par value shares
(50,000,000 shares authorized) U.S.$ 81,264
-------------
----------------------------------------------------------------
-------------
NET ASSET VALUE PER SHARE U.S.$ 129.97
-------------
ADR -- American Depositary Receipt
GDR -- Global Depositary Receipt
+ -- Non-income producing
SECTIONS -- Security acquired through an initial public offering
of
shares and
fair valued at cost pending listing -- see Note A-1
to
financial
statements
December 31, 1994 exchange rate--Brazilian Real (BRL) 0.847=U.S.
$1.00
AMOUNT
(000)
--------------------------------------------------------
------------
AT DECEMBER 31, 1994, NET ASSETS CONSISTED OF:
-----------------------------------------------------------------
Common Stock U.S.$ 6
Capital Surplus 25,470
Accumulated Net Investment
Loss (36)
Accumulated Net Realized Gain 23,409
Unrealized Appreciation on
Investments and Foreign
Currency 32,415
-----------------------------------------------------------------
TOTAL NET ASSETS U.S.$ 81,264
----------------------------------------------------------------
----------------------------------------------------------------
The accompanying notes are an integral part of the financial
statements.
5
YEAR
ENDED
DECEMBER
31, 1994
STATEMENT OF OPERATIONS
(000)
-----------------------------------------------------------------
------
----------
INVESTMENT INCOME
Dividends.................................................
U.S.$
969
Interest..................................................
6
Less Foreign Taxes Withheld...............................
(86)
-----------------------------------------------------------------
------
----------
Total Income............................................
889
-----------------------------------------------------------------
------
----------
EXPENSES
U.S. Investment Advisory Fees.............................
607
U.S. Administrative Fees..................................
154
Brazilian Administrative and Custodian Fees...............
103
Brazilian Taxes...........................................
92
Amortization of Organization Costs........................
89
Legal Fees................................................
68
Audit Fees................................................
49
Directors' Fees and Expenses..............................
47
Brazilian Investment Advisory Fees........................
39
Shareholder Reporting Expenses............................
17
Custodian Fees............................................
5
Other Expenses............................................
65
-----------------------------------------------------------------
------
----------
Total Expenses..........................................
1,335
-----------------------------------------------------------------
------
----------
Net Investment Loss...................................
(446)
-----------------------------------------------------------------
------
----------
NET REALIZED GAIN (LOSS)
Investment Securities Sold................................
24,552
Foreign Currency Transactions.............................
(524)
-----------------------------------------------------------------
------
----------
Net Realized Gain.......................................
24,028
-----------------------------------------------------------------
------
----------
UNREALIZED APPRECIATION ON INVESTMENTS AND FOREIGN CURRENCY
Beginning of Year.........................................
21,508
End of Year...............................................
32,415
-----------------------------------------------------------------
------
----------
Change in Unrealized Appreciation.......................
10,907
-----------------------------------------------------------------
------
----------
Total Net Realized Gain and Change in Unrealized
Appreciation.................................................
34,935
-----------------------------------------------------------------
------
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.......
U.S.$
34,489
-----------------------------------------------------------------
------
----------
-----------------------------------------------------------------
------
----------
YEAR
ENDED
YEAR ENDED
DECEMBER 31,
1993
DECEMBER 31, 1994
STATEMENT OF CHANGES IN NET ASSETS (000)
(000)
-----------------------------------------------------------------
------
----------------------
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net Investment Income (Loss).................. U.S.$
851
U.S.$ (446)
Net Realized Gain.............................
10,349
24,028
Change in Unrealized Appreciation.............
18,449
10,907
-----------------------------------------------------------------
------
----------------------
Net Increase in Net Assets Resulting from
Operations...................................
29,649
34,489
-----------------------------------------------------------------
------
----------------------
Distributions:
In Excess of Net Investment Income............
--
(1,122)
Net Realized Gain.............................
(5,821)
(4,148)
In Excess of Net Realized Gain................
(141)
--
-----------------------------------------------------------------
------
----------------------
Total Distributions...........................
(5,962)
(5,270)
-----------------------------------------------------------------
------
----------------------
Capital Share Transactions:
Subscription of Shares (2,355 and 4,128
shares, respectively)........................
196
445
Reinvestment of Distributions (113,719 and
50,471 shares, respectively).................
5,991
5,220
Repurchase of Shares (335,992 and 53,929
shares, respectively)........................
(24,354)
(5,827)
-----------------------------------------------------------------
------
----------------------
Net Decrease in Net Assets Resulting From
Capital Share Transactions...................
(18,167)
(162)
-----------------------------------------------------------------
------
----------------------
Total Increase................................
5,520
29,057
Net Assets:
Beginning of Year.............................
46,687
52,207
-----------------------------------------------------------------
------
----------------------
End of Year (including accumulated net
investment loss of
U.S. $15 and U.S. $36, respectively).........
U.S.$52,207
U.S.$81,264
-----------------------------------------------------------------
------
----------------------
-----------------------------------------------------------------
------
----------------------
The accompanying notes are an integral part of the financial
statements.
6
FINANCIAL HIGHLIGHTS
PERIOD FROM
JUNE 4, 1991* TO
YEAR ENDED DECEMBER 31,
DECEMBER 31, -----
------
---------------------------------------------
SELECTED PER SHARE DATA AND RATIOS: 1991
1992
1993 1994
-----------------------------------------------------------------
------
---------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD.... U.S.$ 50.00
U.S.$63.31
U.S.$ 55.28 U.S.$ 83.58
-----------------------------------------------------------------
------
---------------------------------------------
Offering Costs.......................... (0.21)
--
-- --
-----------------------------------------------------------------
------
---------------------------------------------
Net Investment Income (Loss)............ 0.84
(0.09)
1.42 (0.71)
Net Realized and Unrealized Gain (Loss)
on Investments......................... 12.68
(7.94)
33.94 54.72
-----------------------------------------------------------------
------
---------------------------------------------
Total from Investment Operations.... 13.52
(8.03)
35.36 54.01
-----------------------------------------------------------------
------
---------------------------------------------
Distributions:
In Excess of Net Investment
Income............................. --
--
-- (1.80)
Net Realized Gain................... --
--
(6.89) (6.65)
In Excess of Net Realized Gain...... --
--
(0.17) --
-----------------------------------------------------------------
------
---------------------------------------------
Total Distributions................. --
--
(7.06) (8.45)
-----------------------------------------------------------------
------
---------------------------------------------
Increase in Net Asset Value due to
Shares Issued on Reinvestment of
Distributions.......................... --
--
-- 0.83
-----------------------------------------------------------------
------
---------------------------------------------
NET ASSET VALUE, END OF PERIOD.......... U.S.$ 63.31
U.S.$55.28
U.S.$ 83.58 U.S.$ 129.97
-----------------------------------------------------------------
------
---------------------------------------------
-----------------------------------------------------------------
------
---------------------------------------------
TOTAL INVESTMENT RETURN:
Net Asset Value (1)................. 26.62%
(12.68)%
72.52% 68.32%
-----------------------------------------------------------------
------
---------------------------------------------
-----------------------------------------------------------------
------
---------------------------------------------
RATIOS, SUPPLEMENTAL DATA:
-----------------------------------------------------------------
------
---------------------------------------------
NET ASSETS, END OF PERIOD (THOUSANDS)... U.S.$51,159
U.S.$46,687
U.S.$52,207 U.S.$81,264
-----------------------------------------------------------------
------
---------------------------------------------
-----------------------------------------------------------------
------
---------------------------------------------
Ratio of Expenses to Average Net
Assets................................. 2.00%**(2)
2.27
%(2 2.22% 1.82%
Ratio of Net Investment Income (Loss) to
Average Net Assets..................... 3.49%**
(0.07)% 1.57% (0.61)%
Portfolio Turnover Rate................. 1%
36%
40% 52%
-----------------------------------------------------------------
------
---------------------------------------------
*Commencement of operations
**Annualized
(1)Total investment return based on per share net asset
value
reflects the
effects of changes in net asset value on the performance of
the
Fund during
each period, and assumes dividends and distributions,
if
any, were
reinvested. The Fund's shares are issued in a private
placement and
are not
traded, therefore market value total investment return is not
calculated.
(2)Reflects a voluntary expense limitation in effect during
the
period. As a
result of such limitation, expenses of the Fund for the
periods ended
December 31, 1991 and 1992 reflect a benefit of $.10 and $.14,
respectively.
The accompanying notes are an integral part of the financial
statements.
7
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994
----------
The Brazilian Investment Fund, Inc. (the "Fund") was
incorporated on
November 7, 1990, and is registered as a non-diversified, closed-
end
management
investment company under the Investment Company Act of 1940,
as
amended. The
Fund's common stock is not registered under the Securities Act of
1933.
The Fund
makes its investments in Brazil through an investment fund
established in
compliance with Brazilian law. The accompanying financial
statements are
prepared on a consolidated basis and present the financial
position and
results
of operations of the investment fund and the Fund.
A. The following significant accounting policies are in
conformity with
generally accepted accounting principles for investment
companies. Such
policies
are consistently followed by the Fund in the preparation of
its
financial
statements.
1. SECURITY VALUATION: In valuing the Fund's assets, all
listed
securities,
including purchased options, for which market quotations are
readily
available
are valued at the last sales price on the valuation date, or
if
there was no
sale on such date, at the mean between the current bid and
asked
prices.
Securities which are traded over-the-counter are valued at the
average of the
mean of current bid and asked prices obtained from reputable
brokers. All
non-equity securities as to which market quotations are
readily
available are
valued at their market values. Short-term securities which mature
in 60
days or
less are valued at amortized cost. Other securities and assets
for
which market
values are not readily available (including investments which
are
subject to
limitations as to their sale or for which a ready market for
the
securities in
the quantities owned by the Fund does not exist) are valued at
fair
value as
determined in good faith by the Board of Directors (the
"Board"),
although the
actual calculations may be done by others.
2. TAXES: It is the Fund's intention to continue to qualify
as a
regulated
investment company and distribute all of its taxable income.
Accordingly, no
provision for U.S. Federal income taxes is required in the
financial
statements.
Through December 31, 1993, the Fund was subject to a
Brazilian
repatriation tax with respect to remittances outside of
Brazil
of its
dividend and interest income net of applicable expenses.
Effective
January
1, 1994, this tax on dividend and interest income is being
withheld
at the
source.
Effective January 1, 1994, the Brazilian Government
announced a
0.25%
tax on banking transaction debits (withdrawals). The tax was
subsequently
repealed on January 1, 1995. This tax is included in Brazilian
Taxes on
the
Statement of Operations.
Capital surplus, accumulated net investment loss and
accumulated
realized gain have been adjusted for permanent book-tax
differences.
3. REPURCHASE AGREEMENTS: In connection with transactions
in
repurchase
agreements, a bank as custodian for the Fund takes possession of
the
underlying
securities, the value of which equals or exceeds the principal
amount of the
repurchase transaction, including accrued interest. To the
extent
that any
repurchase transaction exceeds one business day, the value of the
collateral is
marked-to-market on a daily basis to determine the adequacy of
the
collateral.
In the event of default on the obligation to repurchase, the Fund
has
the right
to liquidate the collateral and apply the proceeds in
satisfaction of the
obligation. To the extent that proceeds from the sale of
the
underlying
securities are less than the repurchase price under the
agreement, the
Fund may
incur a loss. In the event of default or bankruptcy by the
other
party to the
agreement, realization and/or retention of the collateral or
proceeds may be
subject to legal proceedings.
4. FOREIGN CURRENCY TRANSLATION: The books and records of
the
Fund are
maintained in U.S. dollars. Amounts denominated in
Brazilian
currency are
translated into U.S. dollars at the mean of the bid and asked
prices
of such
currency against U.S. dollars last quoted by a major bank as
follows:
- investments, other assets and liabilities at the
prevailing
rates of
exchange on the valuation date;
- investment transactions and investment income at the
prevailing rates
of exchange on the dates of such transactions.
Although the net assets of the Fund are presented at the
foreign
exchange
rate and market values at the close of the period, the Fund does
not
isolate
that portion of the results of operations arising as a result of
changes in
the foreign exchange rates from the fluctuations arising from
changes
in the
market prices of the securities held at period end. Similarly,
the Fund
does
not isolate the effect of changes in foreign exchange
rates
from the
fluctuations arising from changes in the market prices of
securities
sold
during the period. Accordingly, realized and unrealized
foreign
currency
gains (losses) are included in the reported net realized and
unrealized
gains (losses) on investment transactions and balances.
Net realized gains (losses) on foreign currency
transactions
represent
net foreign exchange gains
8
(losses) from sales and maturities of forward currency
contracts,
disposition of foreign currency and currency gains or losses
realized
between the trade and settlement dates on securities
transactions.
Foreign currency gains (losses) also occur due to the difference
between the
amount of investment income and foreign withholding taxes
recorded on
the
Fund's books and the U.S. dollar equivalent amounts actually
received
or
paid. Net unrealized currency gains (losses) from valuing foreign
currency
denominated assets and liabilities at period end exchange
rates are
reflected as a component of unrealized appreciation
(depreciation).
5. FORWARD FOREIGN CURRENCY CONTRACTS: The Fund may enter into
forward foreign
currency contracts to protect securities and related
receivables and
payables
against changes in future foreign exchange rates. A forward
currency
contract is
an agreement between two parties to buy or sell currency at a
set
price on a
future date. The market value of the contract will fluctuate
with
changes in
currency exchange rates. The contract is marked-to-market daily
and
the change
in market value is recorded by the Fund as unrealized gain or
loss.
The Fund
records realized gains or losses when the contract is
closed
equal to the
difference between the value of the contract at the time it was
opened
and the
value at the time it was closed. Risk may arise upon
entering
into these
contracts from the potential inability of counterparties to
meet the
terms of
their contracts and is generally limited to the amount of
unrealized
gain on the
contracts, if any, at the date of default. Risks may
also
arise from
unanticipated movements in the value of a foreign currency
relative to
the U.S.
dollar.
6. PURCHASED OPTIONS: The Fund may purchase options. In
purchasing a
call (put)
option, the Fund will seek to benefit from an increase (decline)
in
the market
price of the underlying index or security. Risks may arise
in the
event of
default by the counterparty or unanticipated movements in the
market
price of
the underlying index or security, however, the maximum exposure
to
loss for any
purchased option is limited to the premium initially paid
for the
option.
Realized gains or losses on purchased options are included with
net
gain (loss)
on securities sold in the financial statements.
7. OTHER: Security transactions are accounted for on the date the
securities are
purchased or sold. Realized gains and losses on the sale
of
investment
securities are determined on the specific identified cost basis.
Interest income
is recognized on the accrual basis. Dividend income and
distributions to
shareholders are recorded on the ex-date. Income distributions
and
capital gain
distributions are determined in accordance with U.S.
Federal
income tax
regulations which may differ from generally accepted
accounting
principles.
These differences are primarily due to differing treatments for
foreign
currency
transactions and deferral of post-October losses.
X. Xxxxxx Xxxxxxx Asset Management Inc. (the "U.S.
Adviser")
provides
investment advisory services to the Fund under the terms of
an
Investment
Advisory Agreement (the "Agreement"). Under the Agreement, the
U.S.
Adviser is
paid a fee computed weekly and payable monthly at an annual rate
of
.90% of the
Fund's first $50 million of average weekly net assets, .70% of
the
Fund's next
$50 million of average weekly net assets and .50% of the Fund's
average weekly
net assets in excess of $100 million.
C. For the period January 1, 1994 to June 14, 1994, Unibanco
Consulatoria de
Investmentos S/C Ltda. (the "Brazilian Adviser") provided
investment
advice,
research and assistance on behalf of the Fund to Xxxxxx Xxxxxxx
Asset
Management
Inc. under terms of a contract. Under the contract, the
Brazilian
Adviser was
paid a fee computed weekly and paid monthly at an annual rate
of
.15% of the
Fund's first $50 million of average weekly net assets, .125% of
the
Fund's next
$50 million of average weekly net assets and .10% of the Fund's
average weekly
net assets in excess of $100 million. On June 14, 1994, the
contract
expired and
was not renewed. The Brazilian Adviser is a subsidiary of
Unibanco-
Uniao de
Bancos Brasileiros S.A., a Brazilian bank and the Fund's
Brazilian
Administrator
and Custodian.
During the period from January 1, 1994 to June 6, 1994,
the
Fund made
purchases and sales of $8,746,000 and $8,929,000, respectively,
of UBB
Financial
Fund, which is sponsored by Unibanco-Uniao de Bancos
Brasileiros
S.A. (the
"Brazilian Administrator and Custodian"), an affiliate of the
Brazilian
Adviser.
During the same period, the Fund earned income of $487,000 from
UBB
Financial
Fund which was offset by foreign currency losses of $571,000.
The
net loss of
$84,000 is included in net realized loss on foreign currency
transactions.
D. The United States Trust Company of New York ("U.S.
Trust"),
through its
wholly owned subsidiary Mutual Funds Service Company, provides
administrative
and shareholder services to the Fund under an Administration
Agreement. Under
the Administration Agreement, U.S. Trust is paid a fee
computed
weekly and
payable monthly at an annual rate of .08% of the Fund's
average
weekly net
assets, plus $75,000 per annum. Effective May 15, 1994,
9
U.S. Trust replaced Xxxxxx Guaranty Trust Company of New York
as
custodian for
the Fund's assets held in the United States.
E. The Brazilian Administrator and Custodian provides Brazilian
administrative
and custodian services to the Fund under the terms of an
agreement.
Under the
agreement, the Brazilian Administrator and Custodian is paid
a fee
computed
weekly and paid monthly at an annual rate of .15% of the
Fund's
first $50
million of average weekly net assets, .125% of the Fund's next
$50
million of
average weekly net assets and .10% of the Fund's average
weekly net
assets in
excess of $100 million.
During the period from January 1, 1994 to June 14, 1994, the
Fund
incurred
$5,000 in brokerage commission fees to Unibanco Corretora de
Valores
Mobiliarios
S.A., a subsidiary of the Brazilian Administrator and Custodian.
F. During the year ended December 31, 1994, the Fund made
purchases
and sales
totaling $37,250,000 and $43,938,000, respectively, of
investment
securities
other than U.S. Government securities and short term
investments. At
December
31, 1994, the U.S. Federal income tax cost basis of securities
was the
same as
that for financial reporting purposes and accordingly,
net
unrealized
appreciation for U.S. Federal income tax purposes was
$32,408,000,
of which
$33,332,000 related to appreciated securities and
$924,000
related to
depreciated securities. For the year ended December 31, 1994,
the Fund
expects
to defer, to January 1, 1995 for U.S. Federal income tax
purposes,
post-October
currency losses of $36,000.
G. In connection with its organization the Fund
incurred
$445,000 of
organization costs which are being amortized on a straight-
line
basis over a
five year period beginning June 4, 1991, the date the Fund
commenced
operations.
H. At December 31, 1994, 98.7% of the Fund's net assets consist
of
securities
denominated in Brazilian currency. Changes in currency
exchange
rates will
affect the value of and investment income from such
securities.
Brazilian
securities are subject to greater price volatility, limited
capitalization and
liquidity, and higher rates of inflation than securities of
companies
based in
the United States.
I. The Fund's Articles of Incorporation provide that,
commencing
January 6,
1992 and on each calendar quarter thereafter, the Fund will make
a
tender offer
to repurchase its outstanding shares of Common Stock at a price
equal
to the net
asset value per share at the time of repurchase.
During the year ended December 31, 1994, the Fund
repurchased the
following
shares:
U.S.
DATE SHARES (000)
---------- -------- ----------
2/4/94 45,452 $5,017
4/30/94 7,501 $ 678
8/1/94 242 $ 26
11/7/94 734 $ 106
On February 13, 1995 the Fund repurchased 312,637
shares
totaling
$24,964,000.
J. Shareholders of the Fund may purchase shares of common
stock from
the Fund
at a price equal to the net asset value at the beginning of the
month.
Purchases
are not allowed during each month the Fund makes a tender offer
to
repurchase
its outstanding shares. During the year ended December 31, 1994,
the
Fund issued
4,128 shares totaling $445,000.
K. During December 1994, the Board declared a distribution of
$34.88
per share,
derived from net realized gains, payable on January 10, 1995, to
shareholders of
record on December 30, 1994.
-----------------------------------------------------------------
------
---------
FEDERAL TAX INFORMATION: (UNAUDITED)
For the year ended December 31, 1994, the Fund designates
$15,921,000
as
long-term capital gain.
10
REPORT OF INDEPENDENT ACCOUNTANTS
---------
To the Shareholders and Board of Directors of
The Brazilian Investment Fund, Inc.
In our opinion, the accompanying statement of net assets
and
the related
statements of operations and of changes in net assets and
the
financial
highlights present fairly, in all material respects, the
financial
position of
The Brazilian Investment Fund, Inc. (the "Fund") at December
31,
1994, 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 three years in the period then ended and for the
period
June 4,
1991 (commencement of operations) through December 31, 1991, in
conformity with
generally accepted accounting principles. 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
generally
accepted
auditing standards which require that we plan and perform the
audit
to obtain
reasonable assurance about whether the financial statements are
free of
material
misstatement. An audit includes examining, on a test basis,
evidence
supporting
the amounts and disclosures in the financial statements,
assessing the
accounting principles used and significant estimates made by
management, and
evaluating the overall financial statement presentation. We
believe
that our
audits, which included confirmation of securities at December
31,
1994 by
correspondence with the custodians and brokers and the
application of
alternative auditing procedures where confirmations from
brokers
were not
received, provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
0000 Xxxxxx xx xxx Xxxxxxxx
New York, New York 10036
February 17, 1995
11
