<PAGE>
[PHOTO]
-----------------------------
The Chile Fund, Inc.
-----------------------------
ANNUAL REPORT
DECEMBER 31, 1999
-----------------------------
<PAGE>
CONTENTS
Letter to Shareholders ........................................................1
Portfolio Summary .............................................................6
Schedule of Investments .......................................................7
Statement of Assets and Liabilities ...........................................9
Statement of Operations ......................................................10
Statement of Changes in Net Assets ...........................................11
Financial Highlights .........................................................12
Notes to Financial Statements ................................................13
Report of Independent Accountants ............................................17
Results of Annual Meeting of Shareholders ....................................18
Tax Information ..............................................................18
Description of InvestLink-SM- Program ........................................19
Recent Developments ..........................................................22
PICTURED ON THE COVER IS A SCENIC VIEW OF THE ANDES MOUNTAINS LOCATED IN CHILE.
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<PAGE>
LETTER TO SHAREHOLDERS
January 31, 2000
DEAR SHAREHOLDER:
I am writing to report on the activities of The Chile Fund, Inc. (the "Fund")
for the year ended December 31, 1999.
At December 31, 1999, the Fund's net assets were $218.0 million. The Fund's net
asset value ("NAV") was $15.22 per share (net of dividends and distributions
paid of $0.65 per share), as compared to $12.59 at December 31, 1998.
PERFORMANCE: HURT MOST BY FORESTRY AND BEVERAGES
For the year ended December 31, 1999, the Fund's total return, based on NAV and
assuming the reinvestment of dividends and distributions, was 28.0%. By
comparison, Morgan Stanley Capital International's Chile Index (the "Index")*
rose 39.0% during the same period.
I attribute the Fund's underperformance of its Index benchmark to
ineffectiveness in industry sector weightings and, to a lesser extent, stock
selection.
The most negative influence on overall results came from our allocation to the
forestry sector. Chilean diversification requirements for foreign investors kept
us from overweighting the shares of Compania de Petroleos de Chile S.A.
("Copec")--the nation's largest private-sector company of any kind and the
Fund's second-largest position--as much as we would have liked. Performance thus
suffered when Copec and other Chilean forest products names were some of the
best performers in the entire Chilean market during 1999.
In food and beverages, stock selection was the culprit. We chose to overweight
Embotelladora Andina S.A. ("Andina"), the largest Chilean soft-drink bottler and
the Fund's eighth-largest position, relative to Compania Cervecerias Unidas S.A.
("CCU") (Chile's biggest brewer and the Fund's fourth-largest position) for much
of the year. Unfortunately for performance, Andina underperformed CCU.
Additional negatives included our retention of the Fund's biggest position in
Compania de Telecomunicaciones de Chile S.A. ("CTC"), Chile's national
telecommunications giant, which disappointed investors and underperformed
accordingly; our underweight (I.E., compared to the Index) in retailers, which
fared very well; and our decision to hold some cash in reserve even as the
market rose.
To be sure, the Fund also had some bright spots, as we enjoyed strong relative
performance in two sectors. The first was mining, in which we reaped the double
benefits of an overweight allocation and good stock selection. The second was
utilities, in which our stock selection and underweight stance for much of the
year paid off when the sector's return was among the lowest in the entire
Chilean market.
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1
<PAGE>
LETTER TO SHAREHOLDERS
THE MARKET: A FOURTH-QUARTER TURNAROUND
The fourth quarter of 1999 was, without question, the best quarter that Chile
experienced in quite some time, both in terms of the equity market and economy.
A number of factors were notably favorable and may well foreshadow even further
gains as 2000 unfolds:
- - RISING COMMODITY PRICES. The Chilean economy is heavily dependent on
commodities (E.G., copper and pulp), which account for over 50% of the
country's exports. Copper alone represents approximately 40% of such
exports and is a major source of government revenues. During 1999, the
prices of copper and pulp rose 33% and 20%, respectively.
Largely as a result of these and other improvements in commodity prices,
Chile's trade balance experienced a dramatic turnaround and was expected
to close the year with a surplus of $1.8 billion. The current account
deficit vastly improved as well, with an expected year-end balance of
zero.
- - STRONGER ECONOMY. Economic growth shot upward, making the fourth quarter
the only quarterly period of positive economic growth in the entire year. I
expect to see real fourth-quarter gross domestic product (GDP) growth of
4.0% or so, which would raise the full-year GDP figure to -1.0%.
The depreciation of the Chilean peso halted, furthermore, and should not
continue if data for foreign accounts remain positive. Inflation in Chile
ended 1999 at an annualized rate of 2.3% (the lowest such rate since
1938), and interest rates should stay steady, too. All in all, the
macroeconomic climate appears poised to nurture significant growth in
corporate earnings going forward.
- - PENSION FUNDS' RETURN TO DOMESTIC EQUITIES. A major breakthrough during the
quarter occurred when Chilean pension funds (known by their Spanish
acronym, AFPs) returned to the market and increased their holdings in
domestic equities. In past quarters, AFPs-which are Chile's largest
institutional investors-had become net equity sellers and invested most of
the proceeds in foreign stocks. That this highly conservative investment
group should begin to embrace local equities bodes well for the market's
near- and longer-term prospects.
Additional positives included the end of a long-lasting drought, which
had played havoc with hydroelectric energy prices (a major contributor to
Chile's energy supplies); and renewed confidence on the part of local
investors, who have helped to lead the market higher in recent weeks.
- --------------------------------------------------------------------------------
2
<PAGE>
LETTER TO SHAREHOLDERS
PORTFOLIO STRATEGY: EMPHASIZING RESOURCE-INTENSIVE AND DOMESTIC-FOCUSED
COMPANIES
TOP 10 HOLDINGS, BY ISSUER *
<TABLE>
<CAPTION>
% OF
HOLDING SECTOR NET ASSETS
------- ------ ----------
<S> <C> <C>
1. CTC Telecom. 12.6
2. Copec Forestry 11.4
3. Chilectra Electric Dist. 9.8
4. CCU Food & Bev. 6.7
5. Endesa Electric Gen. 6.1
6. Cartones Forestry 5.7
7. Antofagasta Mining 4.3
8. Andina Food & Bev. 4.2
9. Soquimich Fertilizer 3.4
10 Paris Cnsmr. Durables 3.3
----
Total 67.5
----
----
</TABLE>
- -----------------
* Company names and sectors are abbreviations of those found in the chart on
page 6.
SECTOR BREAKDOWN
(% of net assets)
[CHART]
<TABLE>
<S> <C>
Electric Dist. 9.82
Electric Gen. 8.97
Fertilizer 3.43
Food/Bev. 15.56
Forestry 17.48
Mining 5.13
Telecom. 13.83
Retail 3.19
Other* 15.92
Banking 3.38
Consumer durables 3.29
</TABLE>
- -------------
*Includes basic metals, diversified operations, engineering & construction,
financial services, fishery, health care, infrastructure, insurance,
investment advisory services, investment companies, machinery & electric,
pharmaceuticals, real estate investment & management, steel, textiles,
Chilean mutual funds and liabilities in excess of cash and other assets.
I continue to be very optimistic about Chile's outlook for 2000, so much so
that I have put nearly all of the Fund's cash reserves to work in the
portfolio.
My overall strategy is to emphasize two types of industries: 1)
resource-intensive sectors, such as forestry and mining (especially copper),
which should continue to perform well if commodity prices keep improving; and
2) domestic-focused businesses, such as retailing, which should benefit from
the growth in consumer demand that I anticipate during the coming year.
Among resource-intensive sectors, I have built up positions to the degree I
am legally permitted in forestry and copper-related names. I would like to
overweight more stocks like these, but as previously noted, Chilean
diversification requirements do not allow the Fund to increase certain
positions.
As for domestic-focused businesses, an anticipated boost in domestic consumption
should drive large earnings gains for Chilean consumer-oriented companies,
especially when compared to their relatively weak results in 1999. Retailers
should fare best, with consumption expected to increase at double-digit levels
during the year's second half. In addition, the supply glut in new retail
properties that developed during the 1997-99 period should finally be absorbed
by pent-up consumer demand, thus providing further momentum for earnings
expansion in the property sector.
In general, there will likely be significant sales increases by department
stores, beverage companies, supermarkets, shopping malls and other retailers. I
am emphasizing in the portfolio those that should not encounter serious foreign
competition.
- --------------------------------------------------------------------------------
3
<PAGE>
LETTER TO SHAREHOLDERS
Elsewhere, I continue to underweight telecoms and electric utilities, as all
should feel the negative impact of a currently unfavorable regulatory
environment. And I am optimistic about construction, which should benefit from
rising GDP. I have thus added to the portfolio the shares of a construction
company, a steel producer and a diversified supplier to the construction sector.
The final sector of note is banks, in which I remain underweight as their fairly
high valuations are offsetting an otherwise positive atmosphere. This is
especially true when compared both to other Latin American banks and other
Chilean sectors more generally. In my view, the upside potential for the banks
is limited, whether by the little scope I see for their price/earnings multiples
to expand, or the fact that current prices already reflect expected increases in
earnings.
OUTLOOK: BULLISH
As I look back and reflect upon the major achievements of the Chilean economy
and equity market during 1999, the question I now must ponder is, "Will there be
enough good news in 2000 to drive the market further upward?" My response is,
"yes."
In support, I offer the following scenario for Chile during 2000:
- - Our analysis concludes that economic expansion should continue throughout
the year, with GDP rising by close to 6.0%. This should greatly stimulate
domestic consumption and, as a result, consumption-driven equities.
- - With the price of copper projected to remain above 80 cents per pound (high
by recent standards), I would expect to see deficits in the nation's trade
and current accounts fall to negligible levels. (Note: it helps in this
regard that the largest copper company in Chile is state-owned). The price
of pulp, another important Chilean export product, is also recuperating and
should do so for some time. In all, we should see excellent foreign account
numbers during 2000.
- - Corporate earnings may increase by over 40% during 2000, compared to 1999.
- - The newly elected president, Ricardo Lagos, has provided clear signs that
he will maintain the market-oriented economic approach of his predecessors
over the past decade. This has helped to bolster the confidence of
international investors in Chile. Major infusions of foreign capital,
combined with well-above-average foreign accounts, should work to stabilize
the peso currency at current levels. This suggests that there should also
be little or no exchange-rate risk.
- - Should the peso hold steady, inflationary pressures should become minimal,
and the central bank will not have to raise interest rates much beyond
current levels.
As one who has followed Chile for a number of years, I would venture to say that
the present investment environment is one of the best--if not the best--I have
ever seen there. And I anticipate that it will be as good, if not better, in the
near future.
Yet we must be ever-vigilant for the potentially negative impact of major
external events on emerging markets as a whole. The old bugaboos of rising
global interest rates or a serious correction in the U.S. equity market are
still very much with us and must be monitored closely. Be assured that, just as
deeply as we investigate the opportunities in the Chilean marketplace, so too do
we scrutinize its risks.
- --------------------------------------------------------------------------------
4
<PAGE>
LETTER TO SHAREHOLDERS
Overall, I remain highly optimistic and believe that investors in Chilean
equities have not fully valued the market. I therefore anticipate plenty of
upside for Chilean equities going forward, a prospect of which I hope to take
advantage as the year progresses.
Sincerely yours,
/s/ Richard W. Watt
Richard W. Watt
President and Chief Investment Officer**
FROM CREDIT SUISSE ASSET MANAGEMENT, LLC:
I. Effective January 12, 1999, the Fund's investment adviser, BEA Associates,
changed its name to Credit Suisse Asset Management, LLC ("CSAM"). In making
the announcement, the firm said that it expected the new name to enhance
its recognition as a global asset manager. CSAM is the investment division
of Credit Suisse Group, one of the world's largest financial organizations,
with $600 billion in assets under management.
II. All business units of Credit Suisse Group have successfully completed their
year end processing and reported ready for business without incident. In
addition, our systems have been incident-free with no material Y2K issues.
III. We wish to remind shareholders whose shares are registered in their own
name that they automatically participate in the Fund's dividend
reinvestment program which is known as the InvestLink-SM- Program (the
"Program"). The Program 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 the Fund's Transfer Agent for details about
participating in the Program. The Program also provides for additional
share purchases. The Program is described on pages 19 through 21 of this
report.
- --------------------------------------------------------------------------------
* The Morgan Stanley Capital International Chile Index is an unmanaged index
(with no defined investment objective) of Chilean equities that includes
reinvestment of dividends, and is the exclusive property of Morgan Stanley
Capital International Inc.
** Richard W. Watt, who is a Managing Director of Credit Suisse Asset
Management, LLC ("CSAM"), is primarily responsible for management of the Fund's
assets. He joined CSAM on August 2, 1995. Mr. Watt formerly was associated with
Gartmore Investment Limited in London, where he was head of emerging markets
investments and research. Before joining Gartmore Investment Limited in 1992,
Mr. Watt was a Director of Kleinwort Benson International Investments in London,
where he was responsible for research, analysis and trading of equities in Latin
America and other regions. Mr. Watt is President, Chief Investment Officer and a
Director of the Fund. He also is President, Chief Investment Officer and a
Director of The Emerging Markets Infrastructure Fund, Inc., The Emerging Markets
Telecommunications Fund, Inc., and The First Israel Fund, Inc. He is President
and a Director of The Brazilian Equity Fund, Inc., The Latin America Equity
Fund, Inc., and The Latin America Investment Fund, Inc.
and President and Chief Investment Officer of The Portugal Fund, Inc.
- --------------------------------------------------------------------------------
5
<PAGE>
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THE CHILE FUND, INC.
PORTFOLIO SUMMARY--AS OF DECEMBER 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
SECTOR ALLOCATION
AS A PERCENT OF NET ASSETS
[CHART]
<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
<S> <C> <C>
Banking 3.38 2.29
Consumer Durables 3.29 1.64
Electric Distribution 9.82 16.72
Electric Generation 8.97 13.05
Engineering & Construction 1.43 0.72
Fertilizer 3.43 3.41
Financial Services 1.65 2.74
Food & Beverages 15.56 17.21
Forestry 17.48 10.75
Infrastructure 2.00 2.42
Mining 5.13 2.26
Real Estate Investment & Management 2.98 2.37
Retail 3.19 1.11
Steel 2.04 2.12
Telecommunications 13.83 17.12
Other 5.82 4.07
</TABLE>
TOP 10 HOLDINGS, BY ISSUER
<TABLE>
<CAPTION>
Percent of
Holding Sector Net Assets
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Compania de Telecomunicaciones de Chile S.A. Telecommunications 12.6
- ---------------------------------------------------------------------------------------------------------
2. Compania de Petroleos de Chile S.A. Forestry 11.4
- ---------------------------------------------------------------------------------------------------------
3. Chilectra S.A. Electric Distribution 9.8
- ---------------------------------------------------------------------------------------------------------
4. Compania Cervecerias Unidas S.A. Food & Beverages 6.7
- ---------------------------------------------------------------------------------------------------------
5. Empresa Nacional de Electricidad S.A. Electric Generation 6.1
- ---------------------------------------------------------------------------------------------------------
6. Empresas CMPC S.A. Forestry 5.7
- ---------------------------------------------------------------------------------------------------------
7. Antofagasta Holdings plc Mining 4.3
- ---------------------------------------------------------------------------------------------------------
8. Embotelladora Andina S.A. Food & Beverages 4.2
- ---------------------------------------------------------------------------------------------------------
9. Sociedad Quimica y Minera de Chile S.A. Fertilizer 3.4
- ---------------------------------------------------------------------------------------------------------
10. Empresas Almacenes Paris S.A. Consumer Durables 3.3
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
THE CHILE FUND, INC.
SCHEDULE OF INVESTMENTS - AS OF DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
- ---------------------------------------------------------------------------
<S> <C> <C>
EQUITY OR EQUITY-LINKED SECURITIES-99.97%
BANKING-3.38%
Banco de Credito e Inversiones .............. 833,132 $ 6,762,563
SM-Chile, Class B ........................... 7,021,498 616,328
-----------
7,378,891
-----------
BASIC METALS-0.63%
Ceramicas Cordillera S.A. ................... 316,132 1,372,541
-----------
CONSUMER DURABLES-3.29%
Empresas Almacenes Paris S.A. ............... 5,851,259 7,179,459
-----------
DIVERSIFIED OPERATIONS-1.10%
Quinenco S.A. ............................... 2,121,403 2,402,722
-----------
ELECTRIC DISTRIBUTION-9.82%
Chilectra S.A. .............................. 3,885,531 19,803,556
Chilectra S.A. ADR++ ........................ 78,500 1,600,222
-----------
21,403,778
-----------
ELECTRIC GENERATION-8.97%
Empresa Nacional de
Electricidad S.A. ......................... 28,208,546 13,312,197
Enersis S.A. ................................ 13,324,963 6,238,019
-----------
19,550,216
-----------
ENGINEERING & CONSTRUCTION-1.43%
Besalco S.A. ................................ 702,964 1,963,920
Masisa S.A. ................................. 2,587,873 1,157,765
-----------
3,121,685
-----------
FERTILIZER-3.43%
Sociedad Quimica y Minera de
Chile S.A., Class A ....................... 1,563,126 5,045,673
Sociedad Quimica y Minera de
Chile S.A., Class B ....................... 772,022 2,433,746
-----------
7,479,419
-----------
FINANCIAL SERVICES-1.65%
Invercap S.A. ............................... 7,314,215 3,589,799
-----------
FISHERY-0.21%
Pesquera Itata S.A. ......................... 7,936,619 $ 449,455
-----------
FOOD & BEVERAGES-15.56%
Compania Cervecerias Unidas S.A. ............ 2,309,528 14,648,446
Distribucion y Servicio D&S S.A. ............ 490,030 627,636
Embotelladora Andina S.A. PNA ............... 1,681,773 5,079,446
Embotelladora Andina S.A. PNB ............... 1,681,773 4,063,557
Embotelladora Arica S.A. .................... 4,664,877 3,786,498
Embotelladora Polar S.A. .................... 2,903,337 1,671,577
Empresas Iansa S.A. ......................... 7,669,421 600,813
Vina Concha y Toro S.A. ..................... 4,349,433 3,448,347
-----------
33,926,320
-----------
FORESTRY-17.48%
Compania Chilena de
Fosforos S.A. ............................. 762,465 841,986
Compania de Petroleos de
Chile S.A. ................................ 5,606,206 24,869,437
Empresas CMPC S.A. .......................... 1,200,000 12,390,750
-----------
38,102,173
-----------
HEALTH CARE-0.85%
Banmedica S.A. .............................. 7,030,511 1,857,992
-----------
INFRASTRUCTURE-2.00%
Infra Structura 2000*+ ...................... 19,568,922 4,364,868
-----------
INSURANCE-0.23%
Compania de Seguros La Prevision
Vida S.A.+ ................................ 818,209 509,691
-----------
INVESTMENT ADVISORY SERVICES-0.45%
Administradora de Fondos de
Pensiones Provida S.A. .................... 672,690 971,416
-----------
INVESTMENT COMPANIES-0.24%
Banvida S.A. ................................ 7,030,511 517,584
-----------
MACHINERY & ELECTRIC-0.99%
Madeco S.A. NPV ............................. 1,946,100 2,149,067
-----------
- --------------------------------------------------------------------------------
7
<PAGE>
<CAPTION>
- --------------------------------------------------------------------------------
THE CHILE FUND, INC.
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1999 (CONTINUED)
- ---------------------------------------------------------------------------
No. of Value
Description Shares (Note A)
- ---------------------------------------------------------------------------
<S> <C> <C>
MINING-5.13%
Antofagasta Holdings plc .................... 1,338,500 $ 9,374,934
Empresa Minera de Mantos
Blancos S.A. .............................. 1,115,372 1,810,703
-----------
11,185,637
-----------
PHARMACEUTICALS-1.03%
Laboratorio Chile S.A. ...................... 2,456,182 2,248,699
-----------
REAL ESTATE INVESTMENT & MANAGEMENT-2.98%
Parque Arauco S.A. .......................... 12,068,000 6,492,459
-----------
RETAIL-3.19%
Santa Isabel S.A. ........................... 2,509,176 1,728,833
Sociedad Anonima Comercial e
Industrial Falabella ...................... 4,662,465 5,236,747
-----------
6,965,580
-----------
STEEL-2.04%
Compania Acero del Pacifico S.A. ............ 2,414,293 4,443,484
-----------
TELECOMMUNICATIONS-13.83%
Compania de Telecomunicaciones
de Chile S.A., Class A .................... 6,062,937 27,467,766
Empresa Nacional de
Telecomunicaciones S.A. ................... 461,259 2,681,789
-----------
30,149,555
-----------
TEXTILES-0.06%
Zalaquett S.A.+ ............................. 1,496,767 $ 141,271
-----------
TOTAL EQUITY OR EQUITY-LINKED
SECURITIES (Cost $118,210,942) ........................ 217,953,761
-----------
SHORT-TERM INVESTMENTS-0.31%
CHILEAN MUTUAL FUNDS-0.31%
Fondo Mutuo Security Check
(Cost $686,250) ........................... 152,157 685,391
-----------
TOTAL INVESTMENTS-100.28%
(Cost $118,897,192) (Notes A,D) ....................... 218,639,152
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS-(0.28)% .............................. (612,267)
-----------
NET ASSETS-100.00% ...................................... $218,026,885
-----------
-----------
</TABLE>
- ---------------
* Not readily marketable security.
+ Security is non-income producing.
++ SEC Rule 144A security. Such securities are traded only among "qualified
institutional buyers."
ADR American Depositary Receipts.
PNA Preferred Shares, Class A
PNB Preferred Shares, Class B.
- --------------------------------------------------------------------------------
8 See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
THE CHILE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost $118,897,192) (Note A) ........................................................... $218,639,152
Cash (including $2,828 of foreign currencies with a cost of $2,828) (Note A) ................................. 1,240,251
Dividends receivable ......................................................................................... 13,552
Prepaid expenses and other assets ............................................................................ 6,002
------------
Total Assets ................................................................................................. 219,898,957
------------
LIABILITIES
Payables:
Investment advisory fees (Note B) ......................................................................... 596,890
Administration fees (Note B) .............................................................................. 17,612
Other accrued expenses .................................................................................... 157,570
Chilean repatriation taxes (Note A) ....................................................................... 1,100,000
------------
Total Liabilities ............................................................................................ 1,872,072
------------
NET ASSETS (applicable to 14,327,901 shares of common stock outstanding) (Note C) ............................ $218,026,885
------------
------------
NET ASSET VALUE PER SHARE ($218,026,885 DIVIDED BY 14,327,901) ............................................... $15.22
------------
------------
NET ASSETS CONSIST OF
Capital stock, $0.001 par value; 14,327,901 shares issued and outstanding (100,000,000 shares authorized) .... $ 14,328
Paid-in capital .............................................................................................. 118,910,972
Undistributed net investment income .......................................................................... 32,116
Accumulated net realized loss on investments and foreign currency related transactions ....................... (672,596)
Net unrealized appreciation in value of investments and translation of other assets and liabilities
denominated in foreign currencies .......................................................................... 99,742,065
------------
Net assets applicable to shares outstanding .................................................................. $218,026,885
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements. 9
<PAGE>
- --------------------------------------------------------------------------------
THE CHILE FUND, INC.
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Income (Note A):
Dividends ................................................................... $ 5,511,284
Interest .................................................................... 157,494
Less: Foreign taxes withheld ................................................ (32,369)
------------
Total Investment Income ..................................................... 5,636,409
------------
Expenses:
Investment advisory fees (Note B) ........................................... 2,326,241
Custodian fees .............................................................. 349,412
Administration fees (Note B) ................................................ 209,750
Printing .................................................................... 110,000
Accounting fees ............................................................. 101,588
Audit and legal fees ........................................................ 99,998
Directors' fees ............................................................. 38,001
Transfer agent fees ......................................................... 36,085
NYSE listing fees ........................................................... 24,290
Insurance ................................................................... 13,213
Other ....................................................................... 25,980
Chilean repatriation taxes (Note A) ......................................... 1,055,676
------------
Total Expenses .............................................................. 4,390,234
------------
Net Investment Income ....................................................... 1,246,175
------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY
RELATED TRANSACTIONS
Net realized gain/(loss) from:
Investments ................................................................. 14,489,664
Foreign currency related transactions ....................................... (262,749)
Net change in unrealized appreciation in value of investments and translation
of other assets and liabilities denominated in foreign currencies ............ 31,509,809
------------
Net realized and unrealized gain on investments and foreign currency related
transactions ................................................................. 45,736,724
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................... $46,982,899
------------
------------
</TABLE>
- --------------------------------------------------------------------------------
10 See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
THE CHILE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Years Ended
December 31,
----------------------------------------
1999 1998
------------- --------------
<S> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS
Operations:
Net investment income ...................................................... $ 1,246,175 $ 5,489,706
Net realized gain/(loss) on investments and foreign currency related
transactions ............................................................. 14,226,915 (799,130)
Net change in unrealized appreciation in value of investments and
translation of other assets and liabilities denominated in foreign
currencies ............................................................... 31,509,809 (95,516,454)
------------- --------------
Net increase/(decrease) in net assets resulting from operations .......... 46,982,899 (90,825,878)
------------- --------------
Dividends and distributions to shareholders (Note A):
Net investment income ...................................................... (1,002,953) (4,584,928)
Net realized gain on investments ........................................... (8,310,183) (31,276,134)
------------- --------------
Total dividends and distributions to shareholders ....................... (9,313,136) (35,861,062)
------------- --------------
Capital share transactions (Note C):
Proceeds from 260,948 shares issued in reinvestment of dividends ........... -- 3,100,355
------------- --------------
Total increase/(decrease) in net assets ................................. 37,669,763 (123,586,585)
------------- --------------
NET ASSETS
Beginning of year ............................................................. 180,357,122 303,943,707
------------- --------------
End of year (including undistributed net investment income of $32,116
for the year ended December 31, 1999) ....................................... $218,026,885 $ 180,357,122
------------- --------------
------------- --------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements. 11
<PAGE>
- --------------------------------------------------------------------------------
THE CHILE FUND, INC.
FINANCIAL HIGHLIGHTS-SECTION-
- --------------------------------------------------------------------------------
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 Years Ended December 31,
-------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994 1993
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning
of year ........................... $12.59 $21.61 $22.59 $26.45 $26.26 $20.13 $15.55
-------- -------- --------- -------- -------- -------- ---------
Net investment income ............... 0.09 0.38 0.10 0.47 0.65 0.42+ 0.35
Net realized and unrealized
gain/(loss) on investments
and foreign currency
related transactions++ ............ 3.19 (6.88) 2.32 (3.44) 0.41 6.24 5.96
-------- -------- --------- -------- -------- -------- ---------
Net increase/(decrease) in
net assets resulting from
operations ........................ 3.28 (6.50) 2.42 (2.97) 1.06 6.66 6.31
-------- -------- --------- -------- -------- -------- ---------
Dividends and distributions
to shareholders:
Net investment income ............ (0.07) (0.32) -- (0.47) (0.65) (0.47) (0.31)
Net realized gain on
investments and foreign
currency related
transactions .................... (0.58) (2.20) (3.40) (0.26) (0.22) (0.06) (0.26)
In excess of net
investment income ............... -- -- -- (0.16) -- -- --
In excess of net realized
gains on investments and
foreign currency related
transactions .................... -- -- -- -- -- -- (0.16)
-------- -------- --------- -------- -------- -------- ---------
Total dividends and distributions
to shareholders ................... (0.65) (2.52) (3.40) (0.89) (0.87) (0.53) (0.73)
-------- -------- --------- -------- -------- -------- ---------
Dilution due to capital share
rights offering ................... -- -- -- -- -- -- (1.00)
-------- -------- --------- -------- -------- -------- ---------
Net asset value, end of year ........ $15.22 $12.59 $21.61 $22.59 $26.45 $26.26 $20.13
-------- -------- --------- -------- -------- -------- ---------
-------- -------- --------- -------- -------- -------- ---------
Market value, end of year ........... $11.250 $9.063 $17.813 $20.875 $26.000 $23.063 $22.250
-------- -------- --------- -------- -------- -------- ---------
-------- -------- --------- -------- -------- -------- ---------
Total investment return (a) ......... 31.45% (33.00)% 3.56% (16.43)% 16.66% 6.05% 38.82%
-------- -------- --------- -------- -------- -------- ---------
-------- -------- --------- -------- -------- -------- ---------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year
(000 omitted) ..................... $218,027 $180,357 $303,944 $317,012 $370,275 $367,047 $281,031
Ratio of expenses to average
net assets, including taxes (b) ... 2.16% -- 3.34% 1.96% -- -- --
Ratio of expenses to average
net assets, excluding taxes ....... 1.64% 1.62% 1.50% 1.48% 1.46% 1.39% 1.72%
Ratio of net investment income
to average net assets (b) ......... 0.61% 2.29% 0.38% 1.79% 2.39% 1.74% 2.47%
Portfolio turnover rate ............. 12.01% 5.39% 35.59% 4.82% 2.38% 0.86% 11.29%
<CAPTION>
For the Years Ended December 31,
--------------------------------------
1992 1991 1990
--------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning
of year ........................... $14.84 $8.72 $7.40
-------- ------- --------
Net investment income ............... 0.39 0.49 0.78
Net realized and unrealized
gain/(loss) on investments
and foreign currency
related transactions++ ............ 1.93 7.21 1.17
-------- ------- --------
Net increase/(decrease) in
net assets resulting from
operations ........................ 2.32 7.70 1.95
-------- ------- --------
Dividends and distributions
to shareholders:
Net investment income ............ (0.39) (0.49) (0.63)
Net realized gain on
investments and foreign
currency related
transactions .................... (1.22) (1.09) --
In excess of net
investment income ............... -- -- --
In excess of net realized
gains on investments and
foreign currency related
transactions .................... -- -- --
-------- ------- --------
Total dividends and distributions
to shareholders ................... (1.61) (1.58) (0.63)
-------- ------- --------
Dilution due to capital share
rights offering ................... -- -- --
-------- ------- --------
Net asset value, end of year ........ $15.55 $14.84 $8.72
-------- ------- --------
-------- ------- --------
Market value, end of year ........... $16.563 $11.938 $7.750
-------- ------- --------
-------- ------- --------
Total investment return (a) ......... 53.80% 71.05% 7.07%
-------- ------- --------
-------- ------- --------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year
(000 omitted) ..................... $168,580 $160,360 $93,744
Ratio of expenses to average
net assets, including taxes (b) ... 2.15% 2.13% --
Ratio of expenses to average
net assets, excluding taxes ....... 1.71% 1.75% 2.04%
Ratio of net investment income
to average net assets (b) ......... 2.17% 3.41% 9.56%
Portfolio turnover rate ............. 6.29% 19.32% 12.63%
</TABLE>
- --------------------------------------------------------------------------------
SECTION Per share amounts prior to July 17, 1995 have been restated to reflect
a two-for-one stock split on July 17, 1995.
+ Based on average shares outstanding.
++ Includes a $0.08 and $0.01 per share decrease to the Fund's net asset
value per share resulting from the dilutive impact of shares issued
pursuant to the Fund's automatic Dividend Reinvestment Plan in 1998
and 1995, respectively.
(a) Total investment return at market value is based on the changes in
market price of a share during the period and assumes reinvestment of
dividends and distributions, if any, at actual prices pursuant to the
Fund's dividend reinvestment program. Total investment return does not
reflect brokerage commissions and has not been annualized.
(b) Ratios include effect of repatriation taxes.
- --------------------------------------------------------------------------------
12 See accompanying notes to financial statements.
<PAGE>
- --------------------------------------------------------------------------------
THE CHILE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
NOTE A. SIGNIFICANT ACCOUNTING POLICIES
The Chile Fund, Inc. (the "Fund") was incorporated in Maryland on January 30,
1989 and commenced investment 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:
MANAGEMENT ESTIMATES: The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make certain
estimates and assumptions that may affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
PORTFOLIO VALUATION: Investments are stated at value in the accompanying
financial statements. All 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, if available. All other securities and assets are valued
at fair value 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 Board of Directors has established general guidelines for
calculating fair value of not readily marketable securities. At December 31,
1999, the Fund held 2.00% of its net assets in securities valued in good faith
by the Board of Directors with an aggregate cost of $4,384,163 and fair value of
$4,364,868. The net asset value per share of the Fund is calculated on each
business day, with the exception of those days on which the New York Stock
Exchange is closed.
CASH: Deposits held at Brown Brothers Harriman & Co., the Fund's custodian, in a
variable rate account are classified as cash. At December 31, 1999, the interest
rate was 3.50%, which resets on a daily basis. Amounts on deposit are generally
available on the same business day.
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 continue to qualify as a regulated investment company and to
make the requisite distributions to its shareholders which will be sufficient to
relieve it from all or substantially all U.S. federal income and excise taxes.
For U.S. federal income tax purposes, realized foreign currency losses and net
realized capital losses from investments incurred after October 31, 1999, within
the Fund's current fiscal year, are deemed to arise on the first day of the
following fiscal year. The Fund incurred and elected to defer realized foreign
currency losses of $63,554.
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 unrealized gains on Chilean
securities, as the Fund does not intend to realize and remit such unrealized
gains in the foreseeable future. If all unrealized gains on Chilean securities
had been realized and repatriated at December 31, 1999, the Fund would have to
pay a repatriation tax of approximately $9,184,273 or $0.64 per share.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
THE CHILE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATIONS: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:
(I) market value of investment securities, assets and liabilities at the
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.
The Fund does not isolate that portion of gains and losses in investments in
equity securities which is due to changes in the foreign exchange rates from
that which is due to changes in market prices of equity securities. Accordingly,
realized and unrealized foreign currency gains and losses with respect to such
securities are included in the reported net realized and unrealized gains and
losses on investment transactions balances.
The Fund reports certain foreign currency related transactions as components of
realized gains for financial reporting purposes, whereas such components are
treated as ordinary income for U.S. federal income tax purposes.
Net currency gains from valuing foreign currency denominated assets and
liabilities at period end exchange rates are reflected as a component of net
unrealized appreciation/depreciation in the value of investments and translation
of other assets and liabilities denominated in foreign currencies.
Net realized foreign exchange losses represent foreign exchange gains and losses
from transactions in foreign currencies and forward foreign currency contracts,
exchange gains or losses realized between the trade date and settlement dates on
security transactions, and the difference between the amounts of interest and
dividends recorded on the Fund's books and the U.S. dollar equivalent of the
amounts actually received.
DISTRIBUTIONS OF INCOME AND GAINs: The Fund distributes at least annually to
shareholders, substantially all of its net investment income and net realized
short-term capital gains, if any. The Fund determines annually whether to
distribute any net realized long-term capital gains in excess of net realized
short-term capital losses, including capital loss carryovers, if any. An
additional distribution may be made to the extent necessary to avoid the payment
of a 4% U.S. federal excise tax. Dividends and distributions to shareholders are
recorded by the Fund on the ex-dividend date.
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for U.S.
federal income tax purposes due to U.S. generally accepted accounting
principles/tax differences in the character of income and expense recognition.
At December 31, 1999, the Fund reclassified within the composition of net assets
permanent book/tax differences from accumulated net realized loss on investments
and foreign currency related transactions relating to foreign currency losses of
$211,106 to undistributed net investment income.
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
- --------------------------------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
THE CHILE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
are not publicly traded. This may limit the number of shares available for
acquisition or disposition by the Fund. The Fund, subject to local investment
limitations, may invest up to 20% of its assets in non-publicly traded equity
securities, which may involve a high degree of business and financial risk and
may result in substantial losses. Because of the current absence of any liquid
trading market for these investments, the Fund may take longer to liquidate
these positions than would be the case for publicly traded securities. Although
these securities may be resold in privately negotiated transactions, the prices
realized on such sales could be less than those originally paid by the Fund or
the current carrying values. Further, companies whose securities are not
publicly traded may not be subject to the disclosure and other investor
protection requirements applicable to companies whose securities are publicly
traded.
Investments in Chile may involve certain considerations and risks not typically
associated with investments in the United States including the possibility of
future political and economic developments and the level of Chilean governmental
supervision and regulation of its securities markets.
The Fund may enter into repurchase agreements on U.S. Government securities with
primary government securities dealers recognized by the Federal Reserve Bank of
New York and member banks of the Federal Reserve System and on securities issued
by the governments of foreign countries, their instrumentalities and with
creditworthy parties in accordance with established procedures. Repurchase
agreements are contracts under which the buyer of a security simultaneously buys
and commits to resell the security to the seller at an agreed upon price and
date. Repurchase agreements are deposited with the Fund's custodian and,
pursuant to the terms of the repurchase agreement, the collateral must have an
aggregate market value greater than or equal to the repurchase price plus
accrued interest at all times. If the value of the underlying securities fall
below the value of the repurchase price plus accrued interest, the Fund will
require the seller to deposit additional collateral by the next business day. If
the request for additional collateral is not met, or the seller defaults on its
repurchase obligation, the Fund maintains the right to sell the underlying
securities at market value and may claim any resulting loss against the seller;
collectibility of such claims may be limited. At December 31, 1999 the Fund had
no such agreements.
NOTE B. AGREEMENTS
Credit Suisse Asset Management, LLC ("CSAM"), formerly known as BEA Associates,
serves as the Fund's investment adviser with respect to all investments. As
compensation for its advisory services, CSAM receives from the Fund an annual
fee, calculated weekly 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.
For the year ended December 31, 1999, CSAM earned $2,326,241 for advisory
services. CSAM also provides certain administrative services to the Fund and is
reimbursed by the Fund for costs incurred on behalf of the Fund (up to $20,000
per annum). For the year ended December 31, 1999, CSAM was reimbursed $20,000
for administrative services rendered to the Fund.
Celfin Servicios Financieros 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 CSAM, computed weekly and paid quarterly at an annual
rate of 0.15% of the first $50 million of the Fund's average weekly net assets,
0.10% of the next $50 million of the Fund's average weekly net assets and 0.05%
of amounts over $100 million. For the year ended December 31, 1999, these
sub-advisory fees amounted to $176,636.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
THE CHILE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Bear Stearns Funds Management Inc. ("BSFM") serves as the Fund's U.S.
administrator. The Fund pays BSFM a monthly fee that is computed weekly at an
annual rate of 0.08% of the first $100 million of the Fund's average weekly net
assets, 0.06% of the next $50 million of the Fund's average weekly net assets
and 0.04% of amounts in excess of $150 million. For the year ended December 31,
1999, BSFM earned $131,333 for administrative services.
CSAM Administration, Administradora de Fondos de Inversion de Capital Extranjero
S.A. ("AFICE") serves as the Fund's Chilean administrator. For its services,
AFICE is paid a fee, out of the advisory fee payable to CSAM, that is calculated
weekly and paid quarterly at an annual rate of 0.05% of the value of the Fund's
average weekly net assets and an annual reimbursement of out-of-pocket expenses.
In addition, AFICE receives a supplemental administration fee and an accounting
fee. Such fees are paid by AFICE to Celfin for certain administrative services.
For the year ended December 31, 1999, the administration fees, supplemental
administration fees and accounting fees amounted to $115,939, $58,417 and
$5,589, respectively.
NOTE C. CAPITAL STOCK
The authorized capital stock of the Fund is 100,000,000 shares of common stock,
$0.001, par value. Of the 14,327,901 shares outstanding at December 31, 1999,
CSAM owned 14,615 shares.
NOTE D. INVESTMENT IN SECURITIES
For U.S. federal income tax purposes, the cost of securities owned at December
31, 1999 was $119,904,665. Accordingly, the net unrealized appreciation of
investments (including investments denominated in foreign currencies) of
$98,734,487, was composed of gross appreciation of $107,942,645 for those
investments having an excess of value over cost and gross depreciation of
$9,208,158 for those investments having an excess of cost over value.
For the year ended December 31, 1999, purchases and sales of securities, other
than short-term investments, were $23,227,723 and $29,252,820, respectively.
NOTE E. CREDIT AGREEMENTS
The Fund, along with 10 other U.S. regulated investment companies for which CSAM
serves as investment adviser, had a credit agreement with BankBoston, N.A. The
agreement provided that each fund was permitted to borrow an amount equal to the
lesser of $25,000,000 or 25% of the net assets of the fund. However, at no time
was the aggregate outstanding principal amount of all loans to any of the 11
funds to exceed $25,000,000. The line of credit bore 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 above credit agreement was
terminated as of June 30, 1999.
Effective December 15, 1999, the Fund, together with other funds advised by
CSAM, established a $250 million committed, unsecured, line of credit facility
("Credit Facility") with Deutsche Bank AG as administrative agent, State Street
Bank and Trust Company as operations agent, Bank of Nova Scotia as syndication
agent as well as certain other lenders, for temporary or emergency purposes.
Under the terms of the Credit Facility, the funds with access to the Credit
Facility pay an aggregate commitment fee at a rate of 0.075% per annum on the
average daily balance of the Credit Facility that is undisbursed and uncancelled
during the preceding quarter allocated among the participating funds in such
manner as is determined by the governing Boards of the various funds. In
addition, the participating Funds will pay interest on borrowing at the Federal
Funds rate plus 0.50%. At December 31, 1999 and during the year ended December
31, 1999, the Fund had no borrowings under the credit agreements.
- -------------------------------------------------------------------------------
16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of The Chile Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, 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 Chile Fund, Inc. (the "Fund")
at December 31, 1999, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for each of the ten years in the period then ended, in
conformity with accounting principles generally accepted in the United States.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States 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, 1999 by correspondence with the custodian, provide
a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 15, 2000
- --------------------------------------------------------------------------------
17
<PAGE>
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
On May 11, 1999, the annual meeting of shareholders of The Chile Fund, Inc. (the
"Fund") was held and the following matters were voted upon:
(1) To re-elect two directors to the Board of Directors of the Fund.
<TABLE>
<CAPTION>
NAME OF DIRECTOR FOR WITHHELD NON-VOTES
- ---------------- --------- -------- ---------
<S> <C> <C> <C>
James J. Cattano 9,581,155 875,449 3,871,297
Richard W. Watt 9,576,314 880,290 3,871,297
</TABLE>
In addition to the directors re-elected at the meeting, Dr. Enrique R. Arzac,
Jorge E. Desormeaux,* George W. Landau and William W. Priest, Jr. continue to
serve as directors of the Fund.
*Effective December 6, 1999, Jorge E. Desormeaux resigned as a director of the
Fund.
(2) To ratify the selection of PricewaterhouseCoopers LLP as independent public
accountants for the year ending December 31, 1999.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN NON-VOTES
---------- ------- ------- ---------
<S> <C> <C> <C>
10,101,856 308,747 46,001 3,871,297
</TABLE>
TAX INFORMATION (UNAUDITED)
The Fund is required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise its shareholders within 60 days of the Fund's year end
(December 31, 1999) as to the U.S. federal tax status of dividends and
distributions received by the Fund's shareholders in respect of such year. Of
the $0.65 per share distribution paid in respect of such year, $0.07 was derived
from net investment income and $0.58 was derived from net realized long-term
capital gains. There were no distributions which qualified for the dividend
received deduction available to corporate shareholders.
The Fund does not intend to make an election under Section 853 to pass through
foreign taxes paid by the Fund to its shareholders. This information is given to
meet certain requirements of the Internal Revenue Code of 1986, as amended.
Shareholders should refer to their Form 1099-DIV to determine the amount
includable on their respective tax returns for 1999.
Notification for calendar year 1999 was mailed in January 2000. The notification
along with Form 1099-DIV reflects the amount to be used by calendar year
taxpayers on their U.S. federal income tax returns.
Foreign shareholders will generally be subject to U.S. withholding tax on the
amount of their distribution. They will generally not be entitled to a foreign
tax credit or deduction for the withholding taxes paid by the Fund.
In general, distributions received by tax-exempt recipients (e.g., IRAs and
Keoghs) need not be reported as taxable income for U.S. federal income tax
purposes. However, some retirement trusts (e.g., corporate, Keogh and 403(b)(7)
plans) may need this information for their annual information reporting.
Shareholders are advised to consult their own tax advisers with respect to the
tax consequences of their investment in the Fund.
- --------------------------------------------------------------------------------
18
<PAGE>
DESCRIPTION OF INVESTLINK-SM-* PROGRAM
The InvestLink-SM- Program is sponsored and administered by BankBoston, N.A.,
not by The Chile Fund, Inc. (the "Fund"). BankBoston, N.A. will act as program
administrator (the "Program Administrator") of the InvestLink-SM- Program (the
"Program"). The purpose of the Program is to provide interested investors with a
simple and convenient way to invest funds and reinvest dividends in shares of
the Fund's common stock ("Shares") at prevailing prices, with reduced brokerage
commissions and fees.
An interested investor may join the Program at any time. Purchases of Shares
with funds from a participant's cash payment or automatic account deduction will
begin on the next day on which funds are invested. If a participant selects the
dividend reinvestment option, automatic investment of dividends generally will
begin with the next dividend payable after the Program Administrator receives
his enrollment form. Once in the Program, a person will remain a participant
until he terminates his participation or sells all Shares held in his Program
account, or his account is terminated by the Program Administrator. A
participant may change his investment options at any time by requesting a new
enrollment form and returning it to the Program Administrator.
A participant will be assessed certain charges in connection with his
participation in the Program. First-time investors will be subject to an initial
service charge which will be deducted from their initial cash deposit. All
optional cash deposit investments will be subject to a service charge. Sales
processed through the Program will have a service fee deducted from the net
proceeds, after brokerage commissions. In addition to the transaction charges
outlined above, participants will be assessed per share processing fees (which
include brokerage commissions). Participants will not be charged any fee for
reinvesting dividends.
The number of Shares to be purchased for a participant depends on the amount of
his dividends, cash payments or bank account or payroll deductions, less
applicable fees and commissions, and the purchase price of the Shares. The
Program Administrator uses dividends and funds of participants to purchase
Shares of the Fund's common stock in the open market. Such purchases will be
made by participating brokers as agent for the participants using normal cash
settlement practices. All Shares purchased through the Program will be allocated
to participants as of the settlement date, which is usually three business days
from the purchase date. In all cases, transaction processing will occur within
30 days of the receipt of funds, except where temporary curtailment or
suspension of purchases is necessary to comply with applicable provisions of the
Federal Securities laws or when unusual market conditions make prudent
investment impracticable. In the event the Program Administrator is unable to
purchase Shares within 30 days of the receipt of funds, such funds will be
returned to the participants.
The average price of all Shares purchased by the Program Administrator with all
funds received during the time period from two business days preceding any
investment date up to the second business day preceding the next investment date
shall be the price per share allocable to a participant in connection with the
Shares purchased for his account with his funds or dividends received by the
Program Administrator during such time period. The average price of all Shares
sold by the Program Administrator pursuant to sell orders received during such
time period shall be the price per share allocable to a participant in
connection with the Shares sold for his account pursuant to his sell orders
received by the Program Administrator during such time period.
BankBoston, N.A., as Program Administrator, administers the Program for
participants, keeps records,
- --------------------------------------------------------------------------------
19
<PAGE>
DESCRIPTION OF INVESTLINK-SM-* PROGRAM (CONTINUED)
sends statements of account to participants and performs other duties relating
to the Program.
Each participant in the Program will receive a statement of his account
following each purchase of Shares. The statements will also show the amount of
dividends credited to such participant's account (if applicable), as well as the
fees paid by the participant. In addition, each participant will receive copies
of the Fund's annual and semi-annual reports to shareholders, proxy statements
and, if applicable, dividend income information for tax reporting purposes.
If the Fund is paying dividends on the Shares, a participant will receive
dividends through the Program for all Shares held on the dividend record date on
the basis of full and fractional Shares held in his account, and for all other
Shares of the Fund registered in his name. The Program Administrator will send
checks to the participants for the amounts of their dividends that are not to be
automatically reinvested at no cost to the participants.
Shares of the Fund purchased under the Program will be registered in the name of
the accounts of the respective participants. Unless requested, the Fund will not
issue to participants certificates for Shares of the Fund purchased under the
Program. The Program Administrator will hold the Shares in book-entry form until
a Program participant chooses to withdraw his Shares or terminate his
participation in the Program. The number of Shares purchased for a participant's
account under the Program will be shown on his statement of account. This
feature protects against loss, theft or destruction of stock certificates.
A participant may withdraw all or a portion of the Shares from his Program
account by notifying the Program Administrator. After receipt of a participant's
request, the Program Administrator will issue to such participant certificates
for the whole Shares of the Fund so withdrawn or, if requested by the
participant, sell the Shares for him and send him the proceeds, less applicable
brokerage commissions, fees, and transfer taxes, if any. If a participant
withdraws all full and fractional Shares in his Program account, his
participation in the Program will be terminated by the Program Administrator. In
no case will certificates for fractional Shares be issued. The Program
Administrator will convert any fractional Shares held by a participant at the
time of his withdrawal to cash.
Participation in any rights offering, dividend distribution or stock split will
be based upon both the Shares of the Fund registered in participants' names and
the Shares (including fractional Shares) credited to participants' Program
accounts. Any stock dividend or Shares resulting from stock splits with respect
to Shares of the Fund, both full and fractional, which participants hold in
their Program accounts and with respect to all Shares registered in their names
will be automatically credited to their accounts.
All Shares of the Fund (including any fractional share) credited to his account
under the Program will be voted as the participant directs. The participants
will be sent the proxy materials for the annual meetings of shareholders. When a
participant returns an executed proxy, all of such Shares will be voted as
indicated. A participant may also elect to vote his Shares in person at the
Shareholders' meeting.
A participant will receive tax information annually for his personal records and
to help him prepare his U.S. federal income tax return. The automatic
reinvestment of dividends does not relieve him of any income tax which may be
payable on dividends. For further information as to tax consequences of
participation in the Program, participants should consult with their own tax
advisors.
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20
<PAGE>
DESCRIPTION OF INVESTLINK-SM-* PROGRAM (CONTINUED)
The Program Administrator in administering the Program will not be liable for
any act done in good faith or for any good faith omission to act. However, the
Program Administrator will be liable for loss or damage due to error caused by
its negligence, bad faith or willful misconduct. Shares held in custody by the
Program Administrator are not subject to protection under the Securities
Investors Protection Act of 1970.
The participant should recognize that neither the Fund nor the Program
Administrator can provide any assurance of a profit or protection against loss
on any Shares purchased under the Program. A participant's investment in Shares
held in his Program account is no different than his investment in directly held
Shares in this regard. The participant bears the risk of loss and the benefits
of gain from market price changes with respect to all of his Shares. Neither the
Fund nor the Program Administrator can guarantee that Shares purchased under the
Program will, at any particular time, be worth more or less than their purchase
price. Each participant must make an independent investment decision based on
his own judgment and research.
While the Program Administrator hopes to continue the Program indefinitely, the
Program Administrator reserves the right to suspend or terminate the Program at
any time. It also reserves the right to make modifications to the Program.
Participants will be notified of any such suspension, termination or
modification in accordance with the terms and conditions of the Program. The
Program Administrator also reserves the right to terminate any participant's
participation in the Program at any time. Any question of interpretation arising
under the Program will be determined in good faith by the Program Administrator
and any such good faith determination will be final.
Any interested investor may participate in the Program. To participate in the
Program, an investor who is not already a registered owner of the Shares must
make an initial investment of at least $250.00. All other cash payments or bank
account deductions must be at least $100.00, up to a maximum of $100,000.00
annually. An interested investor may join the Program by reading the Program
description, completing and signing the enrollment form and returning it to the
Program Administrator. The enrollment form and information relating to the
Program (including the terms and conditions) may be obtained by calling the
Program Administrator at one of the following telephone numbers: First Time
Investors-(800) 337-1944; Current Shareholders-(800) 730-6001. All
correspondence regarding the Program should be directed to: BankBoston, N.A.,
InvestLink Program, P.O. Box 8040, Boston, MA 02266-8040.
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* InvestLink is a service mark of Boston EquiServe Limited Partnership.
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<PAGE>
RECENT DEVELOPMENTS (UNAUDITED)
Recently, the Securities and Exchange Commission (the "SEC") amended Rule
14a-4(c) under the Securities Exchange Act of 1934 (the "1934 Act"), which
governs the Fund's use of discretionary proxy voting authority with respect to
shareholder proposals that are not being included in the Fund's proxy
solicitation material pursuant to Rule 14a-8 of the 1934 Act. In light of these
amendments, the Fund's Board of Directors reviewed the By-laws of the Fund and
made the following material changes: 1) the percentage of ownership needed for
stockholders to request a special meeting has been increased from 25% to a
majority of the outstanding capital stock of the Fund entitled to vote at such
meeting; 2) the advance notice requirements applicable to stockholder proposals
at annual meetings and for nominations by stockholders for election to the Board
of Directors have been revised to reflect changes in Rule 14a-4(c); 3) the
Board's ultimate authority concerning reimbursement of expenses in soliciting
proxies for the election of Directors has been clarified; and 4) the power to
amend the By-laws is reserved to the Board of Directors. The Fund's By-laws are
on file with the SEC and are accessible through the SEC web site (www.sec.gov)
or may be obtained from the Secretary of the Fund upon request.
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<PAGE>
SUMMARY OF GENERAL INFORMATION
The Fund--The Chile Fund, Inc.--is a closed-end, non-diversified management
investment company whose shares trade on the New York Stock Exchange. Its
investment objective is to seek total return, consisting of capital appreciation
and current income through investments primarily in Chilean equity and debt
securities. The Fund is managed and advised by Credit Suisse Asset Management,
LLC ("CSAM"), formerly known as BEA Associates. CSAM is a diversified asset
manager, handling equity, balanced, fixed income, international and derivative
based accounts. Portfolios include international and emerging market
investments, common stocks, taxable and non-taxable bonds, options, futures and
venture capital. CSAM manages money for corporate pension and profit-sharing
funds, public pension funds, union funds, endowments and other charitable
institutions and private individuals. As of December 31, 1999, CSAM-Americas
managed approximately $72.0 billion in assets.
SHAREHOLDER INFORMATION
The market price is published in: THE NEW YORK TIMES (daily) under the
designation "Chile" and THE WALL STREET JOURNAL (daily), and BARRON'S (each
Monday) under the designation "ChileFd". The Fund's New York Stock Exchange
trading symbol is CH. Weekly comparative net asset value (NAV) and market price
information about The Chile Fund, Inc.'s shares are published each Sunday in THE
NEW YORK TIMES and each Monday in THE WALL STREET JOURNAL and BARRON'S, as well
as other newspapers, in a table called "Closed-End Funds."
THE CSAM GROUP OF FUNDS
LITERATURE REQUEST--Call today for free descriptive information on the
closed-end funds listed below at 1-800-293-1232 or visit our website on the
Internet: http://www.cefsource.com.
CLOSED-END FUNDS
SINGLE COUNTRY
The Brazilian Equity Fund, Inc. (BZL)
The First Israel Fund, Inc. (ISL)
The Indonesia Fund, Inc. (IF)
The Portugal Fund, Inc. (PGF)
MULTIPLE COUNTRY
The Emerging Markets Infrastructure Fund, Inc. (EMG)
The Emerging Markets Telecommunications Fund, Inc. (ETF)
The Latin America Equity Fund, Inc. (LAQ)
The Latin America Investment Fund, Inc. (LAM)
FIXED INCOME
Credit Suisse Asset Management Income Fund, Inc. (CIK)
Credit Suisse Asset Management Strategic Global Income Fund, Inc. (CGF)
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<PAGE>
DIRECTORS AND CORPORATE OFFICERS
Dr. Enrique R. Arzac Director
James J. Cattano Director
George W. Landau Director
William W. Priest, Jr. Chairman of the Board of Directors
Richard W. Watt President, Chief Investment Officer and Director
Emily Alejos Investment Officer
Yarek Aranowicz Investment Officer
Hal Liebes Senior Vice President
Michael A. Pignataro Chief Financial Officer and Secretary
Rocco A. Del Guercio Vice President
Robert M. Rizza Treasurer
INVESTMENT ADVISER
Credit Suisse Asset Management, LLC
One Citicorp Center
153 East 53rd Street
New York, NY 10022
ADMINISTRATOR
Bear Stearns Funds Management Inc.
575 Lexington Avenue
New York, NY 10022
CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
SHAREHOLDER SERVICING AGENT
BankBoston, N.A.
P.O. Box 1865
Mail Stop 45-02-62
Boston, MA 02105
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, PA 19103
LEGAL COUNSEL
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019
This report, including the financial statements herein, is sent CH
to the shareholders of the Fund for their information. It is not [NYSE LOGO]
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.
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3911-AR-99
