<PAGE>
[LOGO] THE CHILE FUND, INC.
- ------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
August 16, 1995
DEAR SHAREHOLDERS:
We are pleased to report on the activities of The Chile Fund, Inc. (the "Fund")
for the six months ended June 30, 1995.
At June 30, 1995, investments in securities listed principally on the Bolsa de
Comercio de Santiago totaled $424 million, as compared to $359 million on
December 31, 1994. In addition, at June 30, 1995, the Fund had invested $13
million in non-equity investments, principally in Chilean time deposits and
mutual funds, as compared to $9 million at December 31, 1994. Net asset value
per share at June 30, 1995 was $62.12 per share, as compared to $52.52 per share
at December 31, 1994.
For the six months ended June 30, 1995 the IGPA index, an unmanaged index of
listed Chilean equities, gained 20.4% in dollar terms. The Fund's total return,
based on net asset value, was 18.3% for the same period. The Fund's total return
based on market value was 19.2% for the six months ended June 30, 1995.
POLITICAL AND ECONOMIC DEVELOPMENTS
The past six months have been a turbulent time in the Latin American markets.
Pulled dramatically downward by the economic convulsion in Mexico, all Latin
American markets performed poorly during the first quarter. The Chilean market
declined during the first quarter, but it was by far the best performer in Latin
America. Markets throughout the region experienced a substantial bounce during
the second quarter, again led by Mexico, which took back nearly all of its
significant first quarter losses. During the second quarter, the Chilean equity
market produced a strongly positive return that dwarfed the relatively small
decline it experienced in the first quarter. In U.S. dollar terms, Chile was
among the best performing major equity markets worldwide during the second
quarter of 1995.
The dominant factor in the performance of emerging equity markets worldwide so
far in 1995, of course, has been the collapse of the Mexican peso, which has had
wide-ranging repercussions throughout the developing world. The crisis began a
few days before Christmas, as the government responded to Mexico's expanding
current account deficit and deteriorating currency reserves with a devaluation
of approximately 15% in the value of the peso. Within days, however, severe
selling pressure forced the Mexican government to float the currency, the value
of which immediately collapsed. Although the government took a series of steps
in the ensuing months to restore the confidence in the market, both the peso and
the Mexican equity market declined substantially during the first quarter of
1995. In the second half of March, however, the Mexican market began to display
strong signs of recovery, and in the second quarter Mexico was one of the best-
performing markets in the world, taking back nearly all of its substantial first
quarter losses.
The impact of this crisis upon the South American markets has been profound. The
extent to which markets declined in sympathy to Mexico's largely depended upon
two variables, which, as it turns out, often go hand
1
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THE CHILE FUND, INC.
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in hand. The first is the importance, within each market, of foreign investors,
which depends upon both the domestic savings rate and the restrictions imposed
upon foreign investment. As Mexico's troubles drained liquidity out of the
emerging markets, the BOLSAS that are dominated by foreigners felt substantially
more selling pressure than those where domestic investors control the
preponderance of shares. The second factor is the country's similarity, in
economic terms, to Mexico. Of the major markets in the region, Chile was the
chief beneficiary of this calculus. In the Chilean market, the savings rate is
high, foreign investment is strictly regulated, the currency is fairly valued,
the current account balance is healthy, and economic reform has been a sterling
success.
The strong performance of the Chilean stock market during the first half of
1995, relative to other Latin American markets, came in spite of a brief
political crisis that was the worst since the re-establishment of democracy in
1990. The conviction of two senior military figures for involvement in the
assassination of a political opposition figure in 1976 led to what threatened to
be a major confrontation between the civilian government and the military
establishment. During the last two weeks of June, however, the crisis was
largely defused, as the military handed over one of the convicted generals while
the other resorted to the court system in order to seek a medical reprieve from
a prison sentence. Although General Pinochet, Chile's former dictator and still
head of the military, made some defiant statements during the course of the
confrontation, the upshot of this crisis is likely to be a strengthening of the
country's democratic structure.
The Chilean economy continues to be one of the strongest in the region, and
Chile's transformation during the first half of this decade remains a model for
other emerging markets both within and outside of the region. Earnings growth in
1994 was an impressive 48%, and the 24% earnings growth projected for 1995 is
still very respectable. Meanwhile, the economy continues to grow at a healthy
pace. From 1993 to 1994, GDP growth in Chile slowed from a rate of 6.3% to 4.2%;
we anticipate that in 1995 economic growth will return at least to 1993 levels,
if not slightly higher. At the same time, inflation continues gradually to
decline, from an annual rate of nearly 13% in 1993 to a current rate that is
approaching 8%. We believe that by the end of 1996, Chilean inflation could come
down as low as 7% or 7 1/2%.
The essential strength of the Chilean economy and political structure was
reinforced during the quarter by Moody's upgrading of Chile's sovereign credit
rating. Since the Chilean government is not a participant in the international
bond market, the real impact of this upgrade is on Chilean companies, the
strongest of which should see their own credit automatically upgraded to match
that of the government. (Rating agency conventions require that a company's
credit can be rated no higher than that of the country in which the company is
domiciled.) The imminent availability of cheaper credit terms to Chilean
companies is, of course, good news for equity investors, as was a drop in
Chilean interest rates during the first half.
Up until the onset of the Mexican currency crisis last December, meaningful
progress was being made toward Chile's inclusion in a free trade agreement with
the United States and other countries. This culminated in the announcement made
during December's Summit of the Americas that Chile would commence negotiations
in January with Canada, Mexico and the U.S. to enter into the NAFTA framework,
with a view toward reaching an agreement in the spring or summer of 1996. At the
same time, Chile is also being considered for "associate membership" in the
European Union, with the formal support of Belgium, Luxembourg, Spain, Italy and
Germany. Of course, the crisis in Mexico has necessarily placed these issues on
2
<PAGE>
THE CHILE FUND, INC.
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the back burner for awhile, but it is anticipated that progress will resume as
the year progresses. Nonetheless, the trade picture in Chile is positive, with a
trade surplus that has been driven largely by commodity exports. Chile's economy
has been buoyed during recent months by persistently high prices in the world
markets for copper (which accounts for over 40% of Chilean exports) and wood
pulp; the continued strength of the peso, however, has put export-oriented
manufacturing companies at a significant competitive disadvantage in the world
market. The economy's robust growth, therefore, has been driven mainly by
consumption, rather than by production sectors.
The Chilean government continues to follow through on its long-term program for
infrastructure investment. In 1995, public investment will increase by
approximately 8%, approaching an annual total of $2 billion. The government
estimates that more than $10 billion, about a third of which will come from
private sector sources, will be invested in infrastructure projects over the
next five years, including energy projects, highway and urban road building
programs, water treatment plants, airport improvements and port expansions.
Nearly a billion dollars of this total will be devoted to building and upgrading
schools, hospitals, and police stations. Upgrading the country's housing stock
has also been made a priority. In addition, foreign investment has been flowing
into Chile at a record pace, exceeding $4.6 billion during 1994 and continuing
at levels at least that high so far this year, despite the Mexican crisis.
MARKET DEVELOPMENTS AND THE PORTFOLIO
Of the major Latin American markets, Chile felt the least impact from the
Mexican debacle. Chile's limited vulnerability to external events is largely
attributable to her high domestic savings rate. Laws governing foreign
investment in Chile also place strict time guidelines for repatriation of
capital, which by definition makes investing in Chile fit only for long-term
investors. This also makes Chilean investments less sensitive to speculative
investment flows. In addition, much investment in Chile is concentrated in the
natural resources sector, particularly in mining and forestry, which tends to
have a low correlation to the more growth-oriented characteristics of other
Latin American markets.
At present, the Chilean equity market is trading at a price/earnings ratio of 18
times estimated 1995 earnings and 16 times projected 1996 earnings. We believe
that the market will in the medium term be buoyed by infusions of liquidity from
local pension funds, which are still underinvested and continue gradually to
move into equities.
The Fund's long-term objective is to buy securities of well managed, profitable
and cash generating companies. We believe that we have made significant progress
in meeting this objective while diversifying our holdings across sectors. Our
ten largest holdings at June 30, 1995 were:
<TABLE>
<S> <C>
- - Empresa Nacional de Electricidad S.A. - Embotelladora Andina S.A.
- - Compania de Telefonos de Chile S.A. - Chilgener S.A.
- Compania Manufacturera Papeles Y
- - Chilectra S.A. Cartones
- - Compania de Petreoleos de Chile - CTI
- - Enersis S.A. - Emelsa
</TABLE>
3
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THE CHILE FUND, INC.
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We wish to remind shareholders whose shares are registered in their own name
that they automatically participate in the Fund's dividend reinvestment program.
The automatic Dividend Reinvestment Plan can be of value to shareholders in
maintaining their proportional ownership interest in the Fund in an easy and
convenient way. A shareholder whose shares are held in the name of a
broker/dealer or nominee should contact that party for details about
participating in the Plan. The Fund also offers shareholders a voluntary Cash
Purchase Plan. The Plan and the Cash Purchase Program are described on pages 17
through 19 of this report.
We appreciate your interest in the Fund and would be pleased to respond to your
questions or comments.
Respectfully,
[LOGO]
Emilio Bassini
President*
*Emilio Bassini, who is a member of the Executive Committee of BEA Associates
and holds the offices of Chief Financial Officer and Executive Director of BEA
Associates, is primarily responsible for management of the Fund's assets. He has
served the Fund in such capacity since the commencement of the Fund's
operations. Mr. Bassini joined BEA Associates (formerly Basic Appraisals, Inc.
and BEA Associates Inc.) in 1984. Mr. Bassini is a Director, Chairman of the
Board, President, and Chief Investment Officer of the Fund and is also a
Director, Chairman of the Board, President and Chief Investment Officer of The
Emerging Markets Infrastructure Fund, Inc., The Emerging Markets
Telecommunications Fund, Inc., The First Israel Fund, Inc., The Latin America
Equity Fund, Inc., The Latin America Investment Fund, Inc., and The Portugal
Fund, Inc. He is also a Director, Chairman of the Board, President and
Investment Officer of The Brazilian Equity Fund, Inc., as well as the President
and Secretary of The Indonesia Fund, Inc.
4
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THE CHILE FUND, INC.
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SCHEDULE OF INVESTMENTS
JUNE 30, 1995
(unaudited)
<TABLE>
<CAPTION>
VALUE
NO. OF SHARES DESCRIPTION (NOTE A)
- --------------------------------------------------------------------------------------------- ------------
<C> <S> <C>
COMMON STOCK--97.59%
CHILE - 95.83%
AGRICULTURE--0.09%
1,003,524 Inversiones Agricolas e Industriales S.A...................................... $ 371,277
------------
BANKING--1.44%
721,628 Banco de Credito e Inversiones................................................ 5,678,226
117,258 Bicecorp S.A. Series B........................................................ 581,575
------------
6,259,801
------------
BASIC METALS--1.65%
316,132 Ceramicas Cordillera S.A...................................................... 2,542,617
2,430,030 Forestal Terranova............................................................ 4,658,100
------------
7,200,717
------------
BOTTLER--0.62%
6,294,376 Embotelladora Arica**......................................................... 2,677,318
------------
CONSTRUCTION MATERIALS--2.41%
427,764 Besalco S.A.*................................................................. 1,032,138
51,502 Cemento Polpaico S.A.......................................................... 2,927,192
26,609 Compania Industrial El Volcan S.A............................................. 110,574
98,267 Empresas Pizarreno S.A........................................................ 184,415
9,316,048 MASISA........................................................................ 5,894,336
18,400 MASISA ADS.................................................................... 345,000
------------
10,493,655
------------
CONSUMER DURABLES--0.06%
778,550 Companias CIC S.A............................................................. 246,297
------------
CONSUMER PRODUCTS--3.54%
3,581,557 Bata Chile S.A................................................................ 672,142
203,162,821 Compania Tecno Industrial S.A................................................. 14,706,156
------------
15,378,298
------------
ELECTRIC DISTRIBUTORS--21.66%
273,343 Chilquinta S.A................................................................ 1,648,852
4,931,691 Compania Chilena de Electricidad S.A.......................................... 25,134,436
113,200 Compania Chilena de Electricidad S.A. ADR ***................................. 5,716,600
1,540,000 Compania de Inversiones Los Almendros Series A................................ 611,045
1,502,814 Compania General de Electricidad S.A.......................................... 8,460,883
<CAPTION>
VALUE
NO. OF SHARES DESCRIPTION (NOTE A)
- --------------------------------------------------------------------------------------------- ------------
<C> <S> <C>
512,964 Emelsa S.A.................................................................... $ 14,440,005
380,447 Empresa Electrica de Antofagasta S.A.......................................... 265,191
6,241,491 Empresa Electrica de Arica S.A................................................ 2,376,117
5,913,829 Empresa Electrica de Iquique S.A.............................................. 3,584,763
50,637,422 Enersis S.A................................................................... 29,730,819
84,081 Sociedad Austral de Electricidad S.A.......................................... 2,186,557
------------
94,155,268
------------
ELECTRIC GENERATORS--16.00%
2,570,395 Chilgener S.A................................................................. 20,397,772
1,758,084 Empresa Eletrica Pilmaiquen S.A............................................... 2,710,183
52,527,708 Empresa Nacional de Electricidad S.A.......................................... 46,444,070
------------
69,552,025
------------
FERTILIZER--1.86%
1,446,507 Sociedad Quimica y Minera de Chile S.A. Class A............................... 6,864,121
257,273 Sociedad Quimica y Minera de Chile S.A. Class B............................... 1,220,840
------------
8,084,961
------------
FINANCIAL SERVICES--4.27%
102,600 Administradora de Fondos de Pensiones Provida S.A. ADR........................ 2,748,141
493,805 Antarchile-A S.A.............................................................. 2,780,135
302,021 Antarchile-C S.A.............................................................. 1,701,196
1,540,000 Compania de Inversiones Luz y Fuerza S.A...................................... 615,174
746,303 Elecmetal S.A................................................................. 5,442,210
1,594,008 Invercap S.A.................................................................. 3,504,254
3,599,892 Maritima de Inversiones S.A................................................... 830,002
691,164 Quemchi S.A................................................................... 815,314
45,274 Sipsa Sociedad Anonima........................................................ 115,309
------------
18,551,735
------------
FISHING--0.74%
1,518,489 Empresa Pesquera Eperva S.A.*................................................. 997,399
3,707,617 Pesquera Itata S.A............................................................ 1,073,519
26,609 Pesquera San Jose S.A......................................................... 6,420
1,293,879 Sociedad Pesquera Coloso...................................................... 1,144,718
------------
3,222,056
------------
</TABLE>
5
<PAGE>
THE CHILE FUND, INC.
- ------------------------
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SCHEDULE OF INVESTMENTS (unaudited) (continued)
<TABLE>
<CAPTION>
VALUE
NO. OF SHARES DESCRIPTION (NOTE A)
- --------------------------------------------------------------------------------------------- ------------
FOOD AND BEVERAGE--10.48%
<C> <S> <C>
85,000 Compania Cervecerias Unidas ADR............................................... $ 2,263,125
2,258,304 Compania Cervecerias Unidas, S.A.............................................. 12,048,930
3,952,506 Embotelladora Andina S.A...................................................... 23,100,437
4,801,231 Embotelladora Polar S.A....................................................... 1,737,711
10,859,154 Industria Azucarera Nacional S.A.............................................. 3,304,327
3,148,050 Jugos Concentrados S.A........................................................ 219,435
2,486,850 Vina Santa Carolina, S.A...................................................... 2,900,214
------------
45,574,179
------------
FORESTRY--13.39%
635,009 Compania Chilena de Fosforos S.A.............................................. 2,672,826
1,047,197 Compania Manufaturera Papales Y Cartones...................................... 19,231,366
4,863,505 Compania de Petreoleos de Chile S.A........................................... 30,771,774
302,327 Forestal Cholguan............................................................. 316,917
9,385,866 Industrias Forestales S.A.*................................................... 3,661,243
3,292,764 Prensadas Cholguan S.A........................................................ 1,537,800
------------
58,191,926
------------
HOLDING COMPANIES--2.31%
1,594,008 Compania de Aceros del Pacifico S.A........................................... 10,042,678
------------
HOSPITALS - 0.87%
8,266,362 Banmedica S.A................................................................. 3,767,511
------------
INSURANCE--0.21%
818,209 Cia. de Seguros La Prevision Vida S.A......................................... 921,308
------------
MACHINERY AND ELECTRIC--0.38%
109,324 Madeco S.A.................................................................... 316,541
45,800 Madeco S.A. ADR............................................................... 1,316,750
------------
1,633,291
------------
MANUFACTURING--0.10%
475,002 Cintac S.A.................................................................... 417,696
------------
MINING--0.43%
486,098 Mantos Blancos S.A............................................................ 1,433,533
30,415 Minera Lo Valdes Ltda......................................................... 5,055
2,423 Sociedad Punta del Cobre S.A.-A............................................... 447,573
------------
1,886,161
------------
<CAPTION>
VALUE
NO. OF SHARES DESCRIPTION (NOTE A)
- --------------------------------------------------------------------------------------------- ------------
<C> <S> <C>
PACKAGING--0.45%
3,735,331 Contenedores Redes y Envases S.A.............................................. $ 1,432,044
940,909 Envases del Pacifico S.A...................................................... 529,734
------------
1,961,778
------------
PHARMACEUTICALS--0.26%
1,235,566 Laboratorios Chile S.A........................................................ 1,151,097
------------
REAL ESTATE--0.19%
407,310 Inmobiliaria Urbana S.A....................................................... 824,448
------------
RETAIL TRADE--0.07%
210,413 Santa Isabel S.A.............................................................. 287,696
------------
SHIPPING--0.68%
1,632,577 Compania Sud Americana de Vapores S.A......................................... 1,137,989
8,212,350 Portuaria Puchoco S.A......................................................... 792,613
76,440 Puerto de Lirquen S.A......................................................... 92,220
112,988 Puerto Ventanas S.A........................................................... 219,009
5,922,480 Sociedad Anonima de Navegacion Petrolera...................................... 698,630
------------
2,940,461
------------
TELECOMMUNICATIONS--11.06%
7,515,737 Compania de Telefonos de Chile S.A. Class A................................... 36,168,225
287,490 Compania de Telefonos de Chile S.A. Class B................................... 1,271,739
14,600 Compania de Telefonos de Chile S.A. ADS....................................... 1,186,250
951 Compania Nacional de Telefonos................................................ 1,415
890,731 Empresa Nacional de Telecommunicaciones, S.A.................................. 9,432,674
------------
48,060,303
------------
TEXTILES--0.13%
1,100,000 Coats Cadena S.A.............................................................. 283,110
1,496,767 Zalaquett S.A................................................................. 300,959
------------
584,069
------------
TOBACCO--0.45%
222,137 Empresas CCT S.A.............................................................. 1,977,198
------------
WHOLESALE--0.03%
289,797 Zona Franca de Iquique S.A.................................................... 124,310
------------
TOTAL CHILE (Cost $107,975,639)................................................. 416,539,518
------------
</TABLE>
6
<PAGE>
THE CHILE FUND, INC.
- ------------------------
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- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (unaudited) (concluded)
<TABLE>
<CAPTION>
VALUE
NO. OF SHARES DESCRIPTION (NOTE A)
- --------------------------------------------------------------------------------------------- ------------
UNITED KINGDOM--1.76%
<C> <S> <C>
MINING--1.76%
1,508,500 Antofagasta Holdings P.L.C.
(Cost $2,591,192)............................................................ $ 7,675,248
------------
TOTAL COMMON STOCK (Cost $110,566,831).......................................... 424,214,766
------------
<CAPTION>
UNITS
- -------------
<C> <S> <C>
PARTICIPATION CONTRACT FOR METAL/ MINING EXTRACTION--0.03%
CHILE--0.03%
100,557 La Pepa Mines
(Cost $340,392)**............................................................ 113,463
------------
SHORT-TERM INVESTMENTS--3.12%
CHILEAN MUTUAL FUNDS--0.28%
55,743 Fondo Mutuo Operacional BanChile.............................................. 587,923
47,606 Banco Santander............................................................... 286,503
21,419 Fondo Mutuo Banosono Global................................................... 82,196
51,340 Fondo Mutuo Security Premium.................................................. 276,613
------------
TOTAL CHILEAN MUTUAL FUNDS (Cost $1,182,086).................................... 1,233,235
------------
<CAPTION>
PAR
(000)
- -------------
<C> <S> <C>
CHILEAN INFLATION ADJUSTED TIME
DEPOSITS--2.71%
12,912 Banco Bice, 5.90%, 08/08/95................................................... 406,184
2,063 Banco Bice, 5.90%, 08/18/95................................................... 64,877
17,385 Banco Bice, 5.90%, 08/23/95................................................... 546,851
51,677 Banco de Edwards, 5.90%, 08/07/95............................................. 1,625,352
17,213 Banco de Edwards, 5.90%, 08/09/95............................................. 541,469
<CAPTION>
PAR VALUE
(000) DESCRIPTION (NOTE A)
- --------------------------------------------------------------------------------------------- ------------
<C> <S> <C>
5,385 Banco de Edwards, 5.55%, 09/12/95............................................. $ 169,496
25,940 Banco Santander, 6.02%, 07/18/95.............................................. 816,196
8,645 Banco Santander, 6.02%, 07/19/95.............................................. 272,009
30,222 Banco Santander, 6.03%, 07/25/95.............................................. 950,820
79,579 Republic, 5.90%, 07/31/95..................................................... 2,504,240
14,303 Santiago, 5.50% , 08/29/95.................................................... 450,400
5,192 Security Pacific, 6.00%, 07/21/95............................................. 163,292
86,208 Security Pacific, 5.85%, 07/31/95............................................. 2,713,145
12,913 Security Pacific, 5.85%, 08/07/95............................................. 406,193
3,043 Security Pacific, 5.50%, 08/29/95............................................. 95,780
1,494 Security Pacific, 5.60%, 09/20/95............................................. 47,067
------------
TOTAL CHILEAN INFLATION ADJUSTED TIME DEPOSITS
(Cost $11,336,948)............................................................. 11,773,371
------------
GRAND CAYMAN--0.13%
US$ 570 Brown Brothers Hariman & Co. Call Account, 5.00%
(Cost $570,000)#............................................................. 570,000
------------
TOTAL SHORT-TERM INVESTMENTS (Cost $13,089,034)................................. 13,576,606
------------
TOTAL INVESTMENTS (NOTES A, D) (Cost $123,996,257).......................100.74% 437,904,835
LIABILITIES IN EXCESS
OF OTHER ASSETS.........................................................(0.74)% (3,225,369)
------------
NET ASSETS...............................................................100.00% $434,679,466
------------
------------
</TABLE>
- ------------------------------
* Non-income producing.
** Not readily marketable security.
*** SEC Rule 144A security. Such securities have limited primary and secondary
markets in that they are traded only among "qualified institutional
buyers".
# Variable rate account. Rates reset on a monthly basis; amounts available
generally on the same business day requested.
See accompanying notes to financial statements.
7
<PAGE>
THE CHILE FUND, INC.
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STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
(unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments, at value (Cost $123,996,257) (Note A) $437,904,835
Cash (including $140,620 of foreign currency holdings with a cost of
$136,855) 194,600
Receivables:
Investments sold 1,675,213
Dividends 268,231
Interest 94,883
Prepaid insurance 63,910
-----------
Total Assets 440,201,672
-----------
LIABILITIES:
Payables:
Investments purchased 2,938,004
Accrued repatriation tax 1,354,534
Due to investment adviser (Note B) 1,064,401
Due to administrators (Note B) 132,317
Other accrued expenses 32,950
-----------
Total Liabilities 5,522,206
-----------
NET ASSETS (applicable to 6,997,644 shares of common stock outstanding) (Note
C) $434,679,466
-----------
-----------
NET ASSET VALUE PER SHARE ($434,679,466 DIVIDED BY 6,997,644) $ 62.12
-----------
-----------
Net assets consist of:
Capital stock, $0.001 par value; 6,997,644 shares issued and outstanding
(100,000,000 shares authorized) $ 6,998
Paid-in capital 114,134,179
Undistributed net investment income 5,918,479
Net realized gain on investments and foreign currency related transactions 698,772
Net unrealized appreciation in value of investments and other assets and
liabilities denominated in foreign currency 313,921,038
-----------
$434,679,466
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
THE CHILE FUND, INC.
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income (Note A):
Dividends (net of taxes withheld of $111,274) $7,465,071
Interest 290,982
----------
Total Investment Income 7,756,053
----------
Expenses:
Investment advisory fees (Note B) 1,973,364
Administration fees (Note B) 321,175
Custody fees (Note B) 192,761
Insurance 51,630
Audit fees 25,092
Transfer agent fees 23,564
Printing 23,308
Legal fees 14,917
Directors' fees 8,213
Other 14,876
----------
Total Expenses 2,648,900
----------
Net Investment Income 5,107,153
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY RELATED
TRANSACTIONS:
Net realized gain from:
Investments 1,419,033
Foreign currency related transactions 701,237
Net change in unrealized appreciation in value of investments and translation
of other assets and liabilities denominated in foreign currency 60,023,542
----------
Net realized and unrealized gain on investments and foreign currency related
transactions 62,143,812
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $67,250,965
----------
----------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
THE CHILE FUND, INC.
- ------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEAR
JUNE 30, 1995 ENDED
(UNAUDITED) DECEMBER 31, 1994
-------------- -----------------
<S> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS:
Operations:
Net investment income $ 5,107,153 $ 5,832,102
Net realized gain on investments and foreign currency related transactions 2,120,270 2,595,637
Net change in unrealized appreciation in value of investments and
translation of assets and liabilities denominated in foreign currencies 60,023,542 84,570,750
-------------- -----------------
Net increase in net assets resulting from operations 67,250,965 92,998,489
-------------- -----------------
Dividends to shareholders from:
Net investment income ($0.00 and $0.93 per share, respectively) -- (6,500,073)
Net realized gains and foreign currency related transactions ($0.00 and
$0.13 per share, respectively) -- (908,612)
-------------- -----------------
-- (7,408,685)
-------------- -----------------
Capital Share Transaction (Note C):
Proceeds from 8,318 and 9,793 shares, respectively, issued in reinvestment
of dividends 381,620 426,485
-------------- -----------------
Net increase in net assets 67,632,585 86,016,289
NET ASSETS
Beginning of period 367,046,881 281,030,592
-------------- -----------------
End of period (including undistributed net investment income of $5,918,479
and $811,326, respectively) $ 434,679,466 $ 367,046,881
-------------- -----------------
-------------- -----------------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
THE CHILE FUND, INC.
- ------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below is per share operating performance data for a share of common
stock outstanding, total investment return, ratios to average net assets and
other supplemental data for each period indicated. This information has been
derived from information provided in the financial statements and market price
data for the Fund's shares.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEAR ENDED DECEMBER 31,
MONTHS ENDED ----------------------------------------------------------------------------------
JUNE 30, 1995
(UNAUDITED) 1994 ++ 1993 1992 1991 1990
-------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE:
Net asset value, beginning of
period $52.52 $40.26 $31.10 $29.68 $17.44 $14.79
-------------- -------------- -------------- -------------- -------------- --------------
Net investment income 0.73 0.83 0.70 0.77 0.97 1.55
Net realized and unrealized
gain on investments and
foreign currency related
transactions 8.87 12.49 11.92 3.87 14.43 2.35
-------------- -------------- -------------- -------------- -------------- --------------
Net increase in net assets
resulting from operations 9.60 13.32 12.62 4.64 15.40 3.90
-------------- -------------- -------------- -------------- -------------- --------------
Dividends and distributions to
shareholders from:
Net investment income -- (0.93) (0.61) (0.77) (0.98) (1.25)
Net realized gains and foreign
currency related transactions -- (0.13) (0.52) (2.45) (2.18) --
In excess of net realized
gains -- -- (0.32) -- -- --
-------------- -------------- -------------- -------------- -------------- --------------
Total distributions to
shareholders (1.06) (1.45) (3.22) (3.16) (1.25)
-------------- -------------- -------------- -------------- -------------- --------------
Dilution due to capital share
rights offering -- -- (2.01) -- -- --
-------------- -------------- -------------- -------------- -------------- --------------
Net asset value, end of period $62.12 $52.52 $40.26 $31.10 $29.68 $17.44
-------------- -------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- -------------- --------------
Market value, end of period $53.75 $46.125 $44.500 $33.125 $23.875 $15.500
-------------- -------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- -------------- --------------
Total investment return+++ 19.22% 7.11% 41.17% 62.46% 67.86% 1.47%
-------------- -------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- -------------- --------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000
omitted) $434,679 $367,047 $281,031 $168,580 $160,360 $93,744
Ratio of expenses to average
net assets 1.44%** 1.39% 1.72% 1.71%+ 1.75%+ 2.04%
Ratio of net investment income
to average net assets 2.77%** 1.74% 2.47% 2.61%+ 3.97%+ 9.56%
Portfolio turnover .98%* .86% 11.29% 6.29% 19.32% 12.63%
<FN>
- --------------------------
+ Ratios do not include effect of repatriation tax. The ratios of expenses to
average net assets and net investment income to average net assets would
have been 2.15% and 2.17% for the year ended December 31, 1992; and 2.13%
and 3.41% for the year ended December 31, 1991, respectively, with the
inclusion of the repatriation tax.
++ Based on average shares outstanding.
+++ Total investment return at market value is based on the changes in market
price of a share during the period and assumes reinvestment of
distributions at actual prices pursuant to the Fund's divident reinvestment
plan. Total investment return does not reflect brokerage commissions or
initial underwriting discounts and has not been annualized.
* Not annualized.
** Annualized.
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
THE CHILE FUND, INC.
- ------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
NOTE A. The Chile Fund, Inc. (the "Fund") was incorporated in Maryland on
January 30, 1989 and commenced operations on September 27, 1989. The Fund is
registered under the Investment Company Act of 1940, as amended, as a
closed-end, non-diversified management investment company. Significant
accounting policies are as follows:
PORTFOLIO VALUATION: Investments are stated at value in the accompanying
financial statements. All equity securities for which market quotations are
readily available are valued at the last sales price or lacking any sales, at
the closing price last quoted for the securities (but if bid and asked
quotations are available, at the mean between the current bid and asked prices).
Securities that are traded over-the-counter are valued at the mean between the
current bid and the asked prices. All other securities and assets are valued as
determined in good faith by the Board of Directors. Short-term investments
having a maturity of 60 days or less are valued on the basis of amortized cost.
The net asset value per share of the Fund is calculated weekly and at the end of
each month.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
income tax purposes. Interest income is recorded on an accrual basis; dividend
income is recorded on the ex-dividend date.
TAXES: No provision is made for U.S. federal income or excise taxes as it is the
Fund's intention to qualify as a regulated investment company and to make the
requisite distributions to its shareholders which will be sufficient to relieve
it from all or substantially all federal income and excise taxes.
Net investment income and realized capital gains differ for financial statement
and tax purposes primarily because of the deferral of wash sale losses and due
to the fact that repatriation taxes are expensed for book purposes when
incurred, but not expensed for tax purposes until paid. The character of
distributions made during the year from net investment income or net realized
gains may differ from their ultimate characterization for federal income tax
purposes due to U.S. generally accepted accounting principles/tax differences in
the character of income and expense recognition.
The Fund will be subject to and accrues a 10% Chilean repatriation tax with
respect to all known and estimated remittances from Chile. The Fund does not
accrue repatriation tax with respect to all net unrealized gains on Chilean
securities since there is no assurance that such gains will ultimately be
realized and repatriated based on current investment strategies and the
availability of non-Chilean currency and securities. If all unrealized gains on
Chilean securities had been realized and repatriated at June 30, 1995, the Fund
would have had to pay a repatriation tax of approximately $31,000,000 or $4.43
per share.
FOREIGN CURRENCY TRANSLATION: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(I) market value of investment securities, assets and liabilities at the
current rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at the
relevant rates of exchange prevailing on the respective dates of such
transactions.
12
<PAGE>
THE CHILE FUND, INC.
- ------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
The Fund does not isolate that portion of gains and losses in investments in
equity securities which is due to changes in the foreign exchange rates from
that which is due to changes in market prices of equity securities.
The Fund reports certain foreign currency related transactions as components of
realized gains for financial reporting purposes, whereas such components are
treated as ordinary income for Federal income tax purposes.
DISTRIBUTIONS OF INCOME AND GAINS: The Fund distributes at least annually to
shareholders, substantially all of its investment income and expects to
distribute annually any net long-term capital gains in excess of net short-term
capital losses. An additional distribution may be made to the extent necessary
to avoid the payment of a 4% federal excise tax.
OTHER: Securities denominated in currencies other than U.S. dollars are subject
to changes in value due to fluctuations in exchange rates.
The Chilean securities markets are substantially smaller, less liquid and more
volatile than the major securities markets in the United States. Consequently,
acquisition and disposition of securities by the Fund may be inhibited. A
significant proportion of the aggregate market value of equity securities listed
on the Santiago Exchange are held by a small number of investors and are not
publicly traded. This may limit the number of shares available for acquisition
or disposition by the Fund.
NOTE B. BEA Associates serves as the Fund's investment adviser. As compensation
for its advisory services, BEA Associates receives from the Fund an annual fee,
calculated monthly and paid quarterly, equal to 1.20% of the first $50 million
of the Fund's average weekly net assets, 1.15% of the next $50 million of the
Fund's average weekly net assets, and 1.10% of amounts over $100 million. In
addition, BEA receives from the Fund an administration fee which represents a
reimbursement of certain Fund expenses. For the six months ended June 30, 1995,
advisory and administration fees amounted to $1,842,734 and $6,411 respectively.
Celfin Agente de Valores Limitada ("Celfin") serves as the Fund's Chilean
sub-adviser. In return for its services, Celfin is paid a fee, out of the
advisory fee payable to BEA Associates, computed monthly and paid quarterly at
an annual rate of .15 of 1.00% of the first $50 million of the Fund's average
weekly net assets, .10 of 1.00% of the next $50 million of the Fund's average
weekly net assets and .05 of 1.00% of amounts over $100 million. For the six
months ended June 30, 1995, these sub-advisory fees amounted to $130,630.
PFPC Inc. ("PFPC") acts as the Fund's U.S. administrator. The Fund pays PFPC a
fee that is computed monthly and paid quarterly at an annual rate of .10% of the
value of the Fund's first $250 million in average weekly net assets and .075% of
the next $250 million in average weekly net assets, with a minimum annual fee.
For the six months ended June 30, 1995, $169,291 was paid or accrued to PFPC for
administrative services.
Effective August 25, 1995, the Fund expects to transfer the administration
function to Bear Stearns Funds Management Inc. and the fund accounting function
to Brown Brothers Harriman & Co. On or about September 5, 1995, the Bank of
Boston will assume the transfer agency and registrar function of the Fund.
13
<PAGE>
THE CHILE FUND, INC.
- ------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
Through June 12, 1995, Citibank, N.A. served as the custodian for the Fund's
Chilean and U.K. assets. Through June 15, 1995, PNC Bank N.A. served as the
custodian for the U.S. assets of the Fund. Effective June 13, 1995, Brown
Brothers Harriman & Co. serves as the custodian for the Fund's Chilean and U.K.
assets and effective June 16, as the custodian for the U.S. assets.
BEA Administration, Administradora de Fondos de Inversion de Capital Extranjero
S.A. serves as the Fund's Chilean administrator. For its services, the Chilean
administrator is paid a fee, out of the advisory fee payable to BEA Associates,
that is calculated monthly and paid quarterly at an annual rate of .05 of 1.00%
of the value of the Fund's average weekly net assets, a supplemental
administration fee that is calculated and paid quarterly of 2,000 Chilean pesos
multiplied by the monthly U.F. rate and an accounting fee that is calculated and
paid quarterly of 205.32 Chilean pesos multiplied by the monthly U.F. rate which
the Chilean administrator pays to Celfin for certain administrative services.
For the six months ended June 30, 1995, the administration fees, supplemental
administration fee, and accounting fee amounted to $98,699, $43,844 and $2,930,
respectively.
The Fund pays each of its Directors who is not a director, officer or employee
of BEA Associates, Celfin, the U.S. Administrator or the Chilean Administrator
or any affiliate thereof an annual fee of $5,000 plus $500 for each Board of
Directors meeting attended. In addition, the Fund will reimburse these Directors
and, if their attendance is requested by BEA Associates, personnel of Celfin for
travel and out-of-pocket expenses incurred in connection with Board of Directors
meetings.
NOTE C. The authorized capital stock of the Fund is 100,000,000 shares of common
stock, $0.001, par value. Of the 6,997,644 shares outstanding at June 30, 1995,
BEA Associates owned 7,308 shares.
NOTE D. For U.S. federal income tax purposes, the cost of securities owned at
June 30, 1995 was $125,374,100. Accordingly, the net unrealized appreciation of
investments (including investments denominated in foreign currencies) of
$312,530,735, was composed of gross appreciation of $314,333,007 for those
investments having an excess of value over cost and gross depreciation of
$1,802,272 for those investments having an excess of cost over value.
Purchases and sales of securities, other than short-term obligations, aggregated
$6,745,073 and $3,588,499, respectively, for the six months ended June 30, 1995.
NOTE E. The Fund, along with 15 other U.S. registered investment companies for
which BEA serves as investment adviser, has a credit agreement with The First
National Bank of Boston. The agreement provides that each fund is permitted to
borrow an amount equal to the lesser of $50,000,000 or 25% of the net assets of
the fund. However, at no time shall the aggregate outstanding principal amount
of all loans to any of the 16 funds exceed $50,000,000. The line of credit will
bear interest at (i) the greater of the bank's prime rate or the Federal Funds
Effective Rate plus 0.50% or (ii) the Adjusted Eurodollar Rate plus 1.50%. The
Fund had no amounts outstanding under the line of credit agreement at June 30,
1995.
14
<PAGE>
THE CHILE FUND, INC.
- ------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited) (continued)
NOTE F. The Board of Directors of the Fund approved a two-for-one stock split on
May 16, 1995. The record date, payment date, and ex-date were set for July 5,
1995, July 12, 1995, and July 17, 1995, respectively. For each share held of
record, including shares held through the Fund's dividend reinvestment and cash
purchase plan, a shareholder received one additional share of the Fund's common
stock, par value $.001 per share. Shareholders holding fractional shares
received a cash payment for their fractional share interest based on the
reported closing price of the common stock on the New York Stock Exchange on the
ex-distribution date. Certificates were first mailed to shareholders on or about
July 14, 1995. Shareholders holding shares through the Fund's dividend
reinvestment and cash purchase plan did not receive certificates evidencing such
additional shares but instead had such additional shares credited to their plan
account.
NOTE G. Quarterly Results of Operations:
<TABLE>
<CAPTION>
NET GAIN/(LOSS) NET INCREASE/
ON INVESTMENT AND (DECREASE)
FOREIGN CURRENCY IN NET ASSETS
INVESTMENT NET INVESTMENT DENOMINATED RESULTING
INCOME INCOME (LOSS) TRANSACTIONS FROM OPERATIONS
-------------------- -------------------- --------------------- ---------------------
TOTAL TOTAL TOTAL TOTAL
QUARTER ENDED (000) PER SHARE (000) PER SHARE (000) PER SHARE (000) PER SHARE
- ------------------------------------ --------- --------- --------- --------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31, 1995...................... $ 1,900 $ 0.27 $ 682 $ 0.10 $ (22,160) $ (3.18) $ (21,478) $ (3.08)
June 30, 1995....................... 5,856 0.84 4,425 0.63 84,304 12.05 88,729 12.68
--------- --------- --------- --------- ---------- --------- ---------- ---------
$ 7,756 $ 1.11 $ 5,107 $ 0.73 $ 62,144 $ 8.87 $ 67,251 $ 9.60
--------- --------- --------- --------- ---------- --------- ---------- ---------
--------- --------- --------- --------- ---------- --------- ---------- ---------
March 31, 1994...................... $ 1,624 $ 0.23 $ 447 $ 0.07 $ 3,413 $ 0.50 $ 3,860 $ 0.57
June 30, 1994....................... 3,959 0.57 2,829 0.40 31,927 4.57 34,756 4.97
September 30, 1994.................. 2,748 0.39 1,719 0.24 45,144 6.46 46,863 6.70
December 31, 1994................... 2,184 0.31 837 0.12 6,682 0.96 7,519 1.08
--------- --------- --------- --------- ---------- --------- ---------- ---------
Totals.............................. $ 10,515 $ 1.50 $ 5,832 $ 0.83 $ 87,166 $ 12.49 $ 92,998 $ 13.32
--------- --------- --------- --------- ---------- --------- ---------- ---------
--------- --------- --------- --------- ---------- --------- ---------- ---------
March 31, 1993...................... $ 1,646 $ 0.31 $ 894 $ 0.17 $ 4,251 $ 0.78 $ 5,145 $ 0.95
June 30, 1993....................... 3,190 0.58 2,072 0.38 5,419 1.00 7,491 1.38
September 30, 1993.................. 1,503 0.24 (40) 0.00 18,946 2.75 18,906 2.75
December 31, 1993................... 2,200 0.16 2,108 0.15 50,428 7.39 52,536 7.54
--------- --------- --------- --------- ---------- --------- ---------- ---------
Totals.............................. $ 8,539 $ 1.29 $ 5,034 $ 0.70 $ 79,044 $ 11.92 $ 84,078 $ 12.62
--------- --------- --------- --------- ---------- --------- ---------- ---------
--------- --------- --------- --------- ---------- --------- ---------- ---------
</TABLE>
15
<PAGE>
THE CHILE FUND, INC.
- ------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS
On April 25, 1995, the Fund's Annual Meeting of Shareholders was held and
the following matters were voted upon:
(1) To re-elect two directors to the Board of Directors of the Fund.
<TABLE>
<CAPTION>
BROKER
NAME OF DIRECTOR VOTES FOR VOTES AGAINST VOTES WITHHELD NON-VOTES
- --------------------------------------------------------- ---------- ----------------- --------------- ----------
<S> <C> <C> <C> <C>
George Landau............................................ 4,736,310 -- 15,006 2,246,328
Daniel Sigg.............................................. 4,729,115 -- 22,201 2,246,328
</TABLE>
In addition to the directors elected at the meeting, Emilio Bassini, James
Cattano and Jose Luiz Ibanez continue to serve as directors of the Fund.
(2) To ratify the selection of Coopers & Lybrand L.L.P. as independent public
accountants for the year ending December 31, 1995.
<TABLE>
<CAPTION>
BROKER
VOTES FOR VOTES AGAINST VOTES WITHHELD NON-VOTES
- ---------- --------------- --------------- ----------
<S> <C> <C> <C>
4,739,628 5,931 5,757 2,246,328
</TABLE>
16
<PAGE>
THE CHILE FUND, INC.
- ------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DESCRIPTION OF THE FUND'S DIVIDEND REINVESTMENT AND
CASH PURCHASE PLAN
Pursuant to the Fund's Dividend Reinvestment and Cash Purchase Plan (the
"Plan"), each shareholder will be deemed to have elected, unless the Fund's
transfer agent as the Plan Agent (the "Plan Agent"), is otherwise instructed by
the shareholder in writing, to have all dividends and distributions, net of any
applicable U.S. withholding tax, automatically reinvested in additional shares
of the Fund. Shareholders who do not participate in the Plan will receive all
dividends and distributions in cash, net of any applicable U.S. withholding tax,
paid in dollars by check mailed directly to the shareholder by the Plan Agent,
as dividend-paying agent. Shareholders who do not wish to have dividends and
distributions automatically reinvested should notify the Plan Agent for the
Fund, at the address set forth below. Dividends and distributions with respect
to shares registered in the name of a broker-dealer or other nominee (i.e., in
"street name") will be reinvested under the Plan unless such service is not
provided by the broker or nominee or the shareholder elects to receive dividends
and distributions in cash. A shareholder whose shares are held by a broker or
nominee that does not provide a dividend reinvestment program may be required to
have his shares registered in his own name to participate in the Plan. Investors
who own shares of the Fund's common stock registered in street name should
contact the broker or nominee for details concerning participation in the Plan.
Certain distributions of cash attributable to (a) some of the dividends and
interest amounts paid to the Fund and (b) certain capital gains earned by the
Fund that are derived from securities of certain foreign issuers are subject to
taxes payable by the Fund at the time amounts are remitted. Such taxes, if any,
will be borne by the Fund and allocated to all shareholders in proportion to
their interests in the Fund.
The Plan Agent serves as agent for the shareholders in administering the Plan.
If the Board of Directors of the Fund declares an income dividend or a capital
gains distribution payable either in the Fund's common stock or in cash, as
shareholders may have elected, nonparticipants in the Plan will receive cash and
participants in the Plan will receive common stock to be issued by the Fund. If
the market price per share on the valuation date equals or exceeds net asset
value per share on that date, the Fund will issue new shares to participants
valued at net asset value or, if the net asset value is less than 95% of the
market price on the valuation date, then valued at 95% of the market price. If
net asset value per share on the valuation date exceeds the market price per
share on that date, participants in the Plan will receive shares of stock from
the Fund valued at the market price.
The valuation date is the dividend or distribution payment date or, if that date
is not a New York Stock Exchange trading day, the next preceding trading day. If
the Fund should declare an income dividend or capital gains distribution payable
only in cash, the Plan Agent will, as agent for the participants, buy Fund
shares in the open market, on the New York Stock Exchange or elsewhere, for the
participants' accounts on, or shortly after, the payment date.
Participants in the Plan have the option of making additional cash payments to
the Plan Agent, semiannually, in any amount from $100 to $3,000, for investment
in the Fund's common stock. The Plan Agent will use all funds received from
participants to purchase Fund shares in the open market on or about February 15
and August 15 of each year. Any voluntary cash payments received more than 30
days prior to these dates will be
17
<PAGE>
THE CHILE FUND, INC.
- ------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
returned by the Plan Agent and interest will not be paid on any uninvested cash
payments. To avoid unnecessary cash accumulations, and also to allow ample time
for receipt and processing by the Plan Agent, it is suggested that participants
send in voluntary cash payments to be received by the Plan Agent approximately
10 days before February 15 or August 15, as the case may be. A participant may
withdraw a voluntary cash payment by written notice, if the notice is received
by the Plan Agent not less than 48 hours before the payment is to be invested. A
participant's tax basis in his shares acquired through his optional investment
right will equal his cash payments to the Plan, including any cash payments used
to pay brokerage commissions allocable to his acquired shares.
The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in the account, including information
needed by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in the name of the
participant and each shareholder's proxy will include those shares purchased
pursuant to the Plan.
In the case of a shareholder, such as a bank, broker or nominee, that holds
shares for others who are the beneficial owners, the Plan Agent will administer
the Plan on the basis of the number of shares certified from time to time by the
shareholder as representing the total amount registered in the shareholder's
name and held for the account of beneficial owners who are to participate in the
Plan.
There is no charge to participants for reinvesting dividends or capital gains
distributions payable in either stock or cash. The Plan Agent's fees for the
handling of reinvestment of such dividends and capital gains distributions will
be paid by the Fund. There will be no brokerage charges with respect to shares
issued directly by the Fund as a result of dividends or capital gains
distributions payable either in stock or in cash. However, each participant will
be charged by the Plan Agent a pro rata share of brokerage commissions incurred
with respect to the Plan Agent's open market purchases in connection with
voluntary cash payments made by the participant or the reinvestment of dividends
or capital gains distributions payable only in cash. Brokerage charges for
purchasing small amounts of stock for individual accounts through the Plan are
expected to be less than the usual brokerage charges for such transactions
because the Plan Agent will be purchasing stock for all participants in blocks
and prorating the lower commission thus obtainable. Brokerage commissions will
vary based on, among other things, the broker selected to effect a particular
purchase and the number of participants on whose behalf such purchase is being
made. The Fund cannot predict, therefore, whether the cost to a participant who
makes a voluntary cash payment will be less than if a participant were to make
an open market purchase on the Fund's common stock on his own behalf.
The receipt of dividends and distributions in stock under the Plan will not
relieve participants of any income tax (including withholding tax) that may be
payable on such dividends or distributions.
Experience under the Plan may indicate that changes in the Plan are desirable.
Accordingly the Fund and the Plan Agent reserve the right to terminate the Plan
as applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to notice of the termination sent to the members of the Plan at
least 30 days before the semiannual contribution date, in the case of voluntary
cash payments, or the record date for dividends or distributions. The Plan also
may be amended by the Fund or the Plan Agent, but (except when necessary or
appropriate to comply with applicable law, rules or policies of a regulatory
authority) only by at least 30 days' written notice to members of the Plan. All
correspondence concerning the Plan should be directed as follows: Inquiries made
before September 5, 1995 should be directed to PNC Bank, National
18
<PAGE>
THE CHILE FUND, INC.
- ------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Association c/o PFPC, Inc., 400 Bellevue Parkway, Wilmington, Delaware 19809 or
by telephone at 1-800-852-4750. Inquiries made on or after September 5, 1995,
should be directed to Bank of Boston, Investor Relations Department, P.O. Box
644 Mail Stop 45-02-09 Boston, Massachusetts 02102-0644 or by telephone at
1-800-730-6001.
19
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
[LOGO] THE CHILE FUND, INC.
BEA Associates
------------------------
New York, New York
ADMINISTRATOR
Bear Stearns Funds Management Inc.
New York, New York
TRANSFER AGENT AND REGISTRAR
PNC Bank, N.A.
Philadelphia, Pennsylvania
CUSTODIAN
Brown Brothers Harriman & Co.
Boston, Massachusetts
INDEPENDENT
ACCOUNTANTS
THE CHILE FUND, INC.
Coopers & Lybrand L.L.P.
SEMI-ANNUAL REPORT
Philadelphia, Pennsylvania
JUNE 30, 1995
(UNAUDITED)
This report including the financial statements herein, is sent to the
shareholders of the Fund for their information. The financial information
included herein is taken from the records of the Fund without examination by
independent accountants who do not express an opinion thereon. It is not a
prospectus, circular or representation intended for use in the purchase or sale
of shares of the Fund or of any securities mentioned in this report.
