<PAGE>
THE INDONESIA
FUND, INC.
- -------------------
SEMI-ANNUAL REPORT
JUNE 30, 1997
<PAGE>
CONTENTS
<TABLE>
<S> <C>
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
Results of Annual Meeting of Shareholders.................................................... 16
Description of InvestLink Program............................................................ 17
</TABLE>
PICTURED ON THE COVER ARE THE SHRINES TO THE WATER DEITY LOCATED IN INDONESIA.
- --------------------------------------------------------------------------------
<PAGE>
LETTER TO SHAREHOLDERS
August 15, 1997
DEAR SHAREHOLDER:
We are pleased to report on the activities of The Indonesia Fund, Inc. (the
"Fund") for the six months ended June 30, 1997.
PERFORMANCE
At June 30, 1997, the Fund's net assets were $56.8 million. The Fund's net asset
value ("NAV") was $12.33 per share, as compared to $10.68 at December 31, 1996.
For the period January 1, 1997 through June 30, 1997, the Fund's total return,
based on NAV, was 15.5%. By comparison, the total return of the Morgan Stanley
Capital International Indonesia Index (the "Index") was 6.2%. From the
commencement of investment operations on March 9, 1990 through June 30, 1997,
the Fund's total return, based on NAV and assuming reinvestment of dividends and
distributions, declined 3.6%. The Index was down 8.7% during this period.
We attribute the Fund's outperformance of the Index during the six-month period
primarily to overall diversification and judicious allocation among industry
sectors. This was most evident in telecommunications. As a portion of the Index,
telecommunications accounts for 25-30% and consists of one stock, PT
Telekomunikasi Indonesia ("Telkom"). Prudence and legal diversification
requirements, however, prevent the Fund from being Index-weighted in this
sector. Since Telkom declined during the period, its negative impact was far
stronger on the Index than on the Fund.
Sector allocation was notably effective in our relative overweighting of banking
and financial services, retailing and automobiles. All three sectors were
beneficiaries of falling domestic interest rates. In automobiles, our only
position was in the country's largest producer, PT Astra International, whose
shares experienced a sharp turnaround after a weak showing in 1996.
According to the Lipper International Closed-End Funds Service (the "Service"),
the Fund's performance was the best generated during the year ended June 30,
1997 among the nine Indonesia-specific funds that the Service follows.
INVESTMENT PERSPECTIVE
The record-setting performance of aggregate Indonesian equities since September
1996 continued well into the first quarter of 1997. By April, though, optimism
in the market had evaporated as investors began to focus on the parliamentary
elections scheduled for late May. The elections were considered most meaningful
for any signals they might provide about the nation's future after President
Suharto eventually leaves office.
Predictably, election results ran heavily in favor of Suharto's dominant Golkar
party. Investors reacted with relief and pushed the market to an all-time peak
in early July.
- --------------------------------------------------------------------------------
1
<PAGE>
LETTER TO SHAREHOLDERS
Through July, underlying macroeconomic conditions in Indonesia were quite
favorable. The trade balance rose smartly during the year's first half. Core
inflation continued to decline, reaching 5.5% versus 6.6% in 1996. Annualized
GDP growth was on track to achieve a healthy 7% pace. Short-term interest rates
were trending downward.
This rosy picture darkened in August, however, as Indonesia was unable to escape
the turmoil affecting Asian currencies in recent weeks. The turmoil stems from a
marked economic deterioration in Thailand early in the year which, in turn,
prompted investors to look for similar economic problems elsewhere in the
region. Following several months in which the Thailand government was unable to
prop up the baht against waves of selling, the government in early July moved
closer to letting the baht freely float with market forces. In short order, the
Malaysian and Filipino governments did the same to the beleaguered ringgit and
peso, respectively. All the currencies plunged, as well as the Indonesian
rupiah.
By mid-August, the central bank was forced to float the rupiah. Stock prices
sharply declined, as the government raised interest rates to support the rupiah
and companies were hit with foreign exchange losses.
We must point out here that the economic problems currently experienced by
Indonesia are smaller in scope than those found in Thailand, Malaysia and the
Philippines. In fact, we agree with the positive assessment of the situation
offered by the International Monetary Fund ("IMF"). The IMF endorses flotation
as a healthy step to maintain the Indonesian economy's strong growth within a
framework of overall financial stability.
HIGHLIGHTED COMPANIES
To illustrate our stock selection process, we'd like to discuss two of the
Fund's holdings, PT Indah Kiat Pulp & Paper Corp. and PT Kawasan Industri
Jababeka. [Note: the prefix "PT" is the Indonesian equivalent of "Inc." or
"Ltd."]
PT INDAH KIAT PULP & PAPER CORP.
Founded in 1976, PT Indah Kiat Pulp & Paper Corp. ("IK") is the largest
vertically integrated producer of pulp and paper in Indonesia and one of the
largest in Asia excluding Japan. IK is controlled by the Widjaja family through
its majority stake in Asia Pulp & Paper, a New York Stock Exchange-listed paper
company.
There is much to recommend IK, and we are happy to have added it to the
portfolio since our last report. Our investment thesis is simple: this company
is well-positioned to benefit from a remarkably favorable supply/demand climate
for its products, as well as a significant cost advantage relative to its peers.
On the supply side, IK enjoys costs among the global paper industry's lowest. It
also owns the most timber property in Indonesia, which is one of the world's
most heavily forested nations and has near-ideal growing conditions for trees.
The primary source of IK's cost advantage is its huge, sustainable supply of
cheap wood. In addition, Indonesian trees generally mature in 7-8 years, less
than half the 20+ years in non-tropical countries. IK's aggressive commitment to
reforestation means that it should maintain access to low-cost wood well into
the future.
- --------------------------------------------------------------------------------
2
<PAGE>
LETTER TO SHAREHOLDERS
Other cost advantages for IK are in labor, chemicals, land, water, etc.
Chemicals are low-cost because they are produced internally rather than
purchased at volatile market prices. Since wood accounts for about 45% of the
cash production cost of pulp and chemicals another 29% or so, IK exerts some
level of control over roughly 74% of its pulp cash production expense.
Size also plays a significant role in IK's production cost advantage. Because
its operations are so huge, IK can generate economies of scale simply
unattainable by its domestic competitors. Its vertical integration, furthermore,
gives it the ability to maintain a high level of operating leverage, sustain
90%+ plant utilization rates and reduce its overall volatility of earnings.
Demand for IK's products is high and widely based. It begins at the
parent-company level, as Asia Pulp & Paper and associated companies provide a
large, captive source of ongoing demand for pulp. There is tremendous scope for
growth in demand across Asian markets more generally, notably those of China and
India. Consumption of paper and packaging products in Asia excluding Japan
during the 1985-95 period, for instance, rose at an annualized rate of 10%+,
more than twice the 4% global rate. Asian demand should remain vigorous for many
years, due to rising industrialization and consumer spending across the region.
IK's production capacity and proximity to Asian markets give it a powerful
advantage over its Western competitors.
An additional major benefit for IK is in the form of preferential government
treatment. The Indonesian government has granted the pulp and paper industry
Designated Exporter Company status, thus qualifying it for substantial
incentives. These are in the form of generous tax breaks, below-market lending
rates for mill construction and waiver of certain fees for mill projects in
areas without existing mills.
Most recently, IK shares were hit hard by the rupiah's fall. This is a buying
opportunity, in our view, because IK stands to reap great gains from a weakened
rupiah. Not only does it export nearly 70% of total production, but revenues
from exports also are priced in strong dollars while about half of production
costs are denominated in the now-cheaper rupiah. IK's valuation after the
sell-off makes it one of the cheapest paper stocks anywhere. Combined with its
status as the most liquid paper stock in the region, we believe this low
valuation makes IK shares a compelling investment for the Fund.
PT KAWASAN INDUSTRI JABABEKA
PT Kawasan Industri Jababeka ("KIJ") was established in 1989 as a vehicle to
benefit from Indonesia's increasing demand for affordable, strategically located
industrial estate property. 1996 revenues mainly came from industrial land sales
(44%), residential sales (30%) and a combination of sales and rental income from
office properties (27%). Analysts project that the revenue proportion of
industrial land sales will rise to 60% in 1997 and 1998.
KIJ has evolved into Indonesia's premier developer of industrial real estate.
This is a function of its experience, access to capital and high-powered
ownership. Its 21 founding shareholders are among the nation's most prominent
businessmen, and their considerable influence can help the company with
marketing, financing and regulatory matters.
- --------------------------------------------------------------------------------
3
<PAGE>
LETTER TO SHAREHOLDERS
Currently, KIJ has two major income-producing properties. These are the Cikarang
Industrial Estate and its adjoining residential tract. Two other properties, the
Cilegon Industrial Estate and high-technology park, are under development and
expected to generate income in 1998 or 1999. KIJ also holds majority stakes in
the owners of two valuable office and residential sites in Jakarta's central
business district.
Aside from its size and clout, there are substantial factors that distinguish
KIJ from its competitors:
- - Its developments have outstanding infrastructure facilities.
- - Industrial properties are strategically located near major highways and ports.
- - It offers industrial clients a full product range, including properties
specifically designed for light, medium and heavy-industry companies.
- - Pricing is competitive (i.e., in the middle range of the market rather than at
the extreme high or low).
- - Its operating track record is supported by world-class clients and unmatched
by other industrial developers.
- - It has a large inventory of as yet unsold/undeveloped properties that should
sustain sales for the next 5-10 years.
We believe that KIJ's most important competitive advantage is its emphasis on
infrastructure. Properties are available for sale not simply as land and
buildings, but come fully equipped with roads, water, electricity,
telecommunications and waste disposal. This makes KIJ's properties more
desirable and valuable for potential buyers, thus helping to keep pricing fairly
firm. In addition, the substantial upfront investment required for
infrastructure serves as a significant barrier to entry. KIJ has gone so far in
this regard as to purchase complete or controlling equity ownership of companies
that provide water service, electricity and telephony to its developments.
Several other factors support an investment in KIJ shares. These include a large
reduction in the tax on property sales; the fact that KIJ is unlikely to be
affected by the Indonesian government's recent prohibition on bank financing for
property developers; and the high demand for properties in the greater Jakarta
area.
We do not think that the rupiah's volatility will be problematic for KIJ: 70% of
the company's revenues are dollar-based, while all of its costs are in the
weakened rupiah. In addition, depreciation of the rupiah has enhanced
Indonesia's appeal as a manufacturing site for foreign-based companies and
should accelerate the deregulation of the nation's industrial economy. Both of
the latter will help to increase demand for KIJ's industrial estate products.
OUTLOOK
In the near term, investors in Indonesian equities are concerned with several
factors:
- - It is likely that the reverberations of the Asian currency turmoil will
continue to be felt into the fall season.
- --------------------------------------------------------------------------------
4
<PAGE>
LETTER TO SHAREHOLDERS
- - The market has had to absorb a recent flood of rights issues, which has
diluted projected earnings and lowered earnings growth rates for many
companies.
- - Corporate debt is rising and interest coverage is falling.
It is most probable both that there will be some downward revision of earnings
estimates and growth will slow over the next few quarters. Even so, earnings
growth should remain high relative to that of most other Asian markets, and
valuations have become inexpensive by historical standards. We thus believe that
confidence in Indonesian equities should recover toward the end of the year.
Sincerely,
/s/ Stephen M. Swift
Stephen M. Swift*
Chief Investment Officer
- --------------------------------------------------------------------------------
* Stephen M. Swift is primarily responsible for management of the Fund's assets.
He has served the Fund in such capacity since August 2, 1995. Mr. Swift is a
Managing Director at Credit Suisse Asset Management Limited ("CSAM"). From June
1995 to February 1997, he was a Managing Director of BEA Associates. Prior to
that time, he was head of Global Equities at CSAM.
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
THE INDONESIA FUND, INC.
PORTFOLIO SUMMARY - AS OF JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
SECTOR ALLOCATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AS A PERCENT OF NET ASSETS
<S> <C> <C>
6/30/97 12/31/96
Automotive 7.24% 8.39%
Beer, Beverages, Liquors &
Tobacco 8.00% 10.65%
Conglomerates 4.62% 4.06%
Construction & Heavy Equipment 6.76% 5.21%
Financial Services 27.30% 22.41%
Food & Kindred Products 5.89% 6.34%
Housing 2.31% 2.83%
Manufacturing 6.33% 9.00%
Paper Products 2.61% 1.23%
Pharmaceuticals 3.72% 4.11%
Real Estate 7.20% 6.74%
Retailing 6.09% 4.06%
Telecommunications 5.28% 6.47%
Transportation 0.00% 2.72%
Other 6.46% 2.38%
Cash & Other Assets 0.19% 3.40%
</TABLE>
TOP 10 HOLDINGS, BY ISSUER
<TABLE>
<CAPTION>
Percent of Net
Holding Sector Assets
<C> <S> <C> <C>
- -------------------------------------------------------------------------------------------------
1. PT Bank Dagang Nasional Indonesia Financial Services 8.8
- -------------------------------------------------------------------------------------------------
2. PT Astra International Automotive 7.2
- -------------------------------------------------------------------------------------------------
3. PT Matahari Putra Prima Retailing 6.1
- -------------------------------------------------------------------------------------------------
4. PT Sari Husada Food & Kindred Products 5.9
- -------------------------------------------------------------------------------------------------
5. PT Gudang Garam Beer, Beverages, Liquors & Tobacco 5.3
- -------------------------------------------------------------------------------------------------
6. PT Telekomunikasi Indonesia Telecommunications 5.3
- -------------------------------------------------------------------------------------------------
7. PT Bimantara Citra Conglomerates 4.6
- -------------------------------------------------------------------------------------------------
8. PT United Tractors Construction & Heavy Equipment 3.9
- -------------------------------------------------------------------------------------------------
9. PT Semen Gresik Manufacturing 3.3
- -------------------------------------------------------------------------------------------------
10. PT Bank Negara Indonesia Financial Services 3.2
- -------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------
THE INDONESIA FUND, INC.
SCHEDULE OF INVESTMENTS - JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
<S> <C> <C>
- -----------------------------------------------------
EQUITY OR EQUITY-LINKED SECURITIES-99.81%
AGRICULTURE-1.78%
PT London Sumatra
Indonesia+.............. 319,000 $ 1,009,992
-----------
AUTOMOTIVE-7.24%
PT Astra International... 1,000,000 4,111,842
-----------
BEER, BEVERAGES, LIQUORS & TOBACCO-8.00%
PT Gudang Garam.......... 720,000 3,019,737
PT HM Sampoerna.......... 400,000 1,525,493
-----------
4,545,230
-----------
CHEMICALS-0.94%
PT Unggul Indah Corp..... 333,800 535,288
-----------
CONGLOMERATES-4.62%
PT Bimantara Citra....... 1,500,000 2,621,299
-----------
CONSTRUCTION & HEAVY EQUIPMENT-6.76%
PT Citra Marga Nusaphala
Persada................. 1,650,000 966,797
PT Citra Marga Nusaphala
Persada, Rights
(expiring 08/13/97)+.... 1,650,000 627,570
PT United Tractors....... 606,000 2,242,599
-----------
3,836,966
-----------
FINANCIAL SERVICES-27.30%
PT Bank Dagang Nasional
Indonesia............... 6,521,376 4,625,565
PT Bank Dagang Nasional
Indonesia, Warrants
(expiring 02/14/00)+.... 931,626 383,070
PT Bank Danamon
Indonesia............... 2,900,000 1,520,354
PT Bank Internasional
Indonesia............... 634 548
PT Bank Mashill Utama.... 1,700,000 1,328,125
PT Bank Negara
Indonesia............... 2,856,000 1,820,230
PT BBL Dharmala
Finance................. 900,000 1,258,224
PT Dharmala Intiland..... 575,000 827,508
PT Lippo Bank............ 1,360,000 1,398,026
PT Lippo Securities...... 1,478,000 1,048,335
PT Putra Surya
Multidana+.............. 815,000 1,298,571
-----------
15,508,556
-----------
<CAPTION>
No. of Value
Description Shares (Note A)
- -----------------------------------------------------
<S> <C> <C>
FOOD & KINDRED PRODUCTS-5.89%
PT Sari Husada........... 478,652 $ 3,345,841
-----------
HOTELS-2.75%
PT Jakarta International
Hotels & Development.... 1,366,000 1,558,655
-----------
HOUSING-2.31%
PT Jaya Real Property.... 521,000 701,593
PT Surya Toto
Indonesia............... 323,520 611,921
-----------
1,313,514
-----------
MANUFACTURING-6.33%
PT Semen Gresik.......... 835,000 1,871,197
PT Trias Sentosa......... 3,426,000 1,725,678
-----------
3,596,875
-----------
PAPER PRODUCTS-2.61%
PT Indah Kiat Pulp &
Paper Corp.............. 978,670 573,439
PT Indah Kiat Pulp &
Paper Corp., Rights
(expiring 08/18/97)+.... 880,803 201,809
PT Pabrik Kertas Tjiwi
Kimia................... 610,443 709,088
-----------
1,484,336
-----------
PHARMACEUTICALS-3.72%
PT Darya Varia
Laboratoria............. 371,000 446,207
PT Kalbe Farma........... 1,247,880 1,667,603
-----------
2,113,810
-----------
REAL ESTATE-7.20%
PT Ciputra Development... 1,005,000 1,002,107
PT Kawasan Industri
Jababeka................ 998,000 1,333,676
PT Lippo Land
Development............. 476,000 543,133
PT Mulialand............. 958,500 1,211,919
-----------
4,090,835
-----------
RETAILING-6.09%
PT Matahari Putra
Prima................... 1,718,000 3,461,431
-----------
TELECOMMUNICATIONS-5.28%
PT Telekomunikasi
Indonesia............... 300,000 490,337
PT Telekomunikasi
Indonesia ADR........... 77,250 2,510,625
-----------
3,000,962
-----------
</TABLE>
- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
THE INDONESIA FUND, INC.
SCHEDULE OF INVESTMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
- -----------------------------------------------------
<S> <C> <C>
TEXTILES-0.99%
PT Great River
International........... 900,000 $ 564,350
-----------
TOTAL INVESTMENTS-99.81%
(Cost $40,556,482) (Notes A,D)......... 56,699,782
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES-0.19%...................... 107,657
-----------
NET ASSETS-100.00%...................... $56,807,439
-----------
-----------
- ---------------------------------------------------------
+ Security is non-income producing.
ADR American Depositary Receipts.
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
THE INDONESIA FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost $40,556,482)
(Note A)............................... $56,699,782
Cash (including $1,239,432 of foreign
currency with a cost of $1,239,797)
(Note A)............................... 1,286,160
Receivables:
Investments sold...................... 375,845
Dividends............................. 176,204
Prepaid expenses........................ 29,848
-----------
Total Assets............................ 58,567,839
-----------
LIABILITIES
Payables:
Investments purchased................. 871,268
Loan (Note E)......................... 600,000
Advisory fee (Note B)................. 129,666
Administration fees (Note B).......... 9,911
Other accrued expenses................ 149,555
-----------
Total Liabilities....................... 1,760,400
-----------
NET ASSETS (applicable to 4,608,989
shares of common stock outstanding)
(Note C)............................... $56,807,439
-----------
-----------
NET ASSET VALUE PER SHARE ($56,807,439
DIVIDED BY 4,608,989)................. $12.33
-----------
-----------
NET ASSETS CONSIST OF
Capital stock, $0.001 par value;
4,608,989 shares issued and outstanding
(100,000,000 shares authorized)........ $ 4,609
Paid-in capital......................... 63,164,835
Accumulated net investment loss......... (127,733)
Accumulated net realized loss on
investments and foreign currency
related transactions................... (22,377,570)
Net unrealized appreciation in value of
investments and translation of other
assets and liabilities denominated in
foreign currency....................... 16,143,298
-----------
Net assets applicable to shares
outstanding............................ $56,807,439
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
9
<PAGE>
- --------------------------------------------------------------------------------
THE INDONESIA FUND, INC.
STATEMENT OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Income (Note A):
Dividends............................. $ 327,767
Interest.............................. 41,139
Less: Foreign taxes withheld.......... (40,314)
----------
Total Investment Income............... 328,592
----------
Expenses:
Investment advisory fees (Note B)..... 259,107
Custodian fees........................ 54,300
Audit and legal fees.................. 28,960
Administration fees (Note B).......... 28,685
Printing.............................. 24,797
Accounting fees....................... 18,100
Transfer agent fees................... 10,860
Directors' fees....................... 10,412
NYSE listing fees..................... 8,018
Insurance............................. 7,656
Other................................. 5,430
----------
Total Expenses........................ 456,325
----------
Net Investment Loss................... (127,733)
----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY
RELATED TRANSACTIONS
Net realized gain/(loss) from:
Investments........................... 2,410,585
Foreign currency related
transactions......................... (16,442)
Net change in unrealized appreciation in
value of investments and translation of
other assets and liabilities
denominated in foreign currency........ 5,317,962
----------
Net realized and unrealized gain on
investments and foreign currency
related transactions................... 7,712,105
----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS........................ $7,584,372
----------
----------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
THE INDONESIA FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six
Months For the Year
Ended June Ended
30, 1997 December 31,
(unaudited) 1996
<S> <C> <C>
--------------------------------
INCREASE IN NET ASSETS
Operations:
Net investment income/(loss).......... $ (127,733) $ 45,224
Net realized gain/(loss) on
investments and foreign currency
related transactions................. 2,394,143 (4,785,591)
Net change in unrealized
appreciation/(depreciation) in value
of investments and translation of
other assets and liabilities
denominated in foreign currency...... 5,317,962 10,903,669
------------- -------------
Net increase in net assets resulting
from operations.................... 7,584,372 6,163,302
------------- -------------
NET ASSETS
Beginning of period..................... 49,223,067 43,059,765
------------- -------------
End of period........................... $ 56,807,439 $ 49,223,067
------------- -------------
------------- -------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
11
<PAGE>
- --------------------------------------------------------------------------------
THE INDONESIA 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
Period
For the Six March 9,
Months Ended For the Years Ended 1990*
June 30, December 31, through
1997 --------------------------------------------------------------- December 31,
(unaudited) 1996 1995 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning of
period....................... $10.68 $9.34 $9.18 $14.03 $7.63 $7.72 $10.38 $13.78**
------------ -------- -------- -------- -------- -------- -------- ------------
Net investment
income/(loss)................ (0.03) 0.01 -- (0.03) (0.03) 0.01 0.04 0.22
Net realized and unrealized
gain/(loss) on investments
and foreign currency related
transactions................. 1.68 1.33 0.16 (4.82) 6.43 (0.10) (2.65) (2.90)
------------ -------- -------- -------- -------- -------- -------- ------------
Net increase/(decrease) in net
assets resulting from
operations................... 1.65 1.34 0.16 (4.85) 6.40 (0.09) (2.61) (2.68)
------------ -------- -------- -------- -------- -------- -------- ------------
Dividends and distributions to
shareholders:
Net investment income....... -- -- -- -- -- -- (0.05) (0.19)
Net realized gain on
investments and foreign
currency related
transactions............... -- -- -- -- -- -- -- (0.53)
------------ -------- -------- -------- -------- -------- -------- ------------
Total dividends and
distributions to
shareholders................. -- -- -- -- -- -- (0.05) (0.72)
------------ -------- -------- -------- -------- -------- -------- ------------
Net asset value, end of
period....................... $12.33 $10.68 $9.34 $9.18 $14.03 $7.63 $7.72 $10.38
------------ -------- -------- -------- -------- -------- -------- ------------
------------ -------- -------- -------- -------- -------- -------- ------------
Market value, end of period... $10.875 $9.750 $10.125 $12.000 $20.750 $9.000 $8.375 $9.875
------------ -------- -------- -------- -------- -------- -------- ------------
------------ -------- -------- -------- -------- -------- -------- ------------
Total investment return(a).... 11.54% (3.70)% (15.63)% (42.17)% 130.56% 7.46% (14.71)% (24.15)%
------------ -------- -------- -------- -------- -------- -------- ------------
------------ -------- -------- -------- -------- -------- -------- ------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000
omitted)..................... $56,807 $49,223 $43,060 $42,297 $64,661 $35,186 $35,590 $47,817
Ratio of expenses to average
net assets................... 1.77%(b) 1.91% 1.96% 1.83% 1.98% 2.04% 2.00% 2.15%(b)
Ratio of net investment
income/(loss) to average net
assets....................... (0.50)%(b) 0.10% 0.05% (0.25)% (0.30)% 0.09% 0.49% 2.05%(b)
Portfolio turnover rate....... 13.82% 34.67% 24.10% 31.56% 63.77% 22.39% 32.27% 17.68%
Average commission rate per
share(c)..................... $0.0078 $0.0096 -- -- -- -- -- --
</TABLE>
- ---------------------------------------------------------------------------
* Commencement of operations.
** Initial public offering price of $15.00 per share less underwriting
discount of $1.05 per share and offering expenses of $0.17 per share.
(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 or initial underwriting discounts and
has not been annualized.
(b) Annualized.
(c) Disclosure is required for fiscal years beginning on or after
September 1, 1995. Represents average commission rate per share
charged to the Fund on purchases and sales of investments subject to
such commissions during the period.
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
12
<PAGE>
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THE INDONESIA FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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NOTE A. SIGNIFICANT ACCOUNTING POLICIES
The Indonesia Fund, Inc. (the "Fund") was incorporated in Maryland on January 8,
1990 and commenced investment operations on March 9, 1990. 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 equity securities for which market quotations are
readily available are valued at the last sales price prior to the time of
determination, or, if no sales price is available at that time, at the closing
price 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. Ministry of Finance Decree 1055 (1989) states that
foreign investors are allowed to purchase up to 49% of the shares of Indonesian
companies offered to the public in the primary market. When 49% of the shares
offered to the public are owned by foreign investors and a foreign market
quotation available, the foreign quotation is used. If less than 49% of the
shares offered to the public are owned by foreign investors, there is no foreign
market quotation available, therefore the local market quotation is used. Local
shares generally trade at a discount to foreign shares when 49% of the shares
offered to the public are owned by foreign investors. All other securities and
assets are valued at the 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 net asset value per share of the Fund
is calculated weekly, at the end of each month and at any other times determined
by the Board of Directors.
CASH: Deposits held at Brown Brothers Harriman & Co., the Fund's custodian, in a
variable rate account are classified as cash. At June 30, 1997, the interest
rate was 4.9375% 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.
At December 31, 1996, the Fund had a capital loss carryover for U.S. federal
income tax purposes of $24,515,005 of which $2,239,330 expires in 1999;
$1,666,081 expires in 2000; $683,625 expires in 2001; $8,617,662 expires in
2002; $6,619,896 expires in 2003 and $4,688,411 expires in 2004.
Income received by the Fund from sources within Indonesia and other countries
may be subject to withholding and other taxes imposed by such countries.
FOREIGN CURRENCY TRANSLATIONS: The books and records of the Fund are maintained
in U.S. dollars. Foreign
- --------------------------------------------------------------------------------
13
<PAGE>
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THE INDONESIA FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
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.
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 value of investments and translation of
other assets and liabilities denominated in foreign currency.
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 date on
security transactions, and the difference between the amounts of interest and
dividends recorded on the Fund's books and the U.S. dollar equivalent of the
amounts actually received.
DISTRIBUTIONS OF INCOME AND GAINS: The Fund distributes at least annually to
shareholders, substantially all of its net investment income and net realized
short-term capital gains, if any. The Fund determines annually whether to
distribute any net realized long-term capital gains in excess of net realized
short-term capital losses, including capital loss carryovers, if any. An
additional distribution may be made to the extent necessary to avoid the payment
of a 4% U.S. federal excise tax. Dividends and 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.
OTHER: Securities denominated in currencies other than U.S. dollars are subject
to changes in value due to fluctuations in exchange rates.
Investment in Indonesian securities requires consideration of certain factors
that are not normally involved in investments in U.S. securities. The Indonesian
securities market is an emerging market characterized by a small number of
company listings, high price volatility and a relatively illiquid secondary
trading environment. These factors, coupled with restrictions on investment by
foreigners and other factors, limit the supply of securities available for
investment by the Fund. This will affect the rate at which the Fund is able to
invest in Indonesian securities, the purchase and sale prices for such
securities and the timing of purchases and sales.
The limited liquidity of the Indonesian securities markets may also affect the
Fund's ability to acquire or dispose of securities at a price and time that it
wishes to do so. Accordingly, in periods of rising market prices, the Fund may
be unable to participate in such price increases fully to the extent that is
unable to acquire desired portfolio positions quickly; conversely the Fund's
inability to dispose fully and promptly of positions in declining markets will
cause its net asset value to decline as the value of unsold positions is marked
to lower prices.
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14
<PAGE>
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THE INDONESIA FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
- --------------------------------------------------------------------------------
The number of shares available for investment by the Fund is also limited by the
fact that non-Indonesians are permitted to purchase only 49% of the listed
shares of Indonesian companies. A high proportion of the shares of many listed
Indonesian companies may be held by a limited number of persons, thus reducing
the number of listed shares available for purchase by foreigners.
NOTE B. AGREEMENTS
BEA Associates ("BEA") serves as the Fund's investment adviser with respect to
all investments. As compensation for its advisory services, BEA receives from
the Fund an annual fee, calculated weekly and paid quarterly, equal to 1.00% of
the Fund's average weekly net assets. For the six months ended June 30, 1997,
BEA earned $259,107 for advisory services. BEA also provides certain
administrative services to the Fund and is reimbursed by the Fund for costs
incurred on behalf of the Fund (up to $20,000 per annum). For the six months
ended June 30, 1997, BEA was reimbursed $2,888 for administrative services
rendered to the Fund.
Effective April 22, 1997, Credit Suisse Asset Management Limited ("CSAM") was
approved by the Fund's shareholders to serve as the Fund's investment
sub-adviser. In return for its services, CSAM is paid by BEA a quarterly fee of
$18,750. Both BEA and CSAM are part of the Credit Suisse Asset Management
Business Unit, which is controlled by Credit Suisse.
Bear Stearns Funds Management Inc. ("BSFM") serves as the Fund's administrator.
The Fund pays BSFM a monthly fee that is computed weekly at an annual rate of
0.10% of the first $100 million of the Fund's average weekly net assets and
0.08% of amounts in excess of $100 million. For the six months ended June 30,
1997, BSFM earned $25,797 for administrative services.
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 4,608,989 shares outstanding at June 30, 1997, BEA
owned 7,169 shares.
NOTE D. INVESTMENT IN SECURITIES
For U.S. federal income tax purposes, the cost of securities owned at June 30,
1997 was $40,556,482. Accordingly, the net unrealized appreciation of
investments (including investments denominated in foreign currency) of
$16,143,300, was composed of gross appreciation of $19,439,833 for those
investments having an excess of value over cost and gross depreciation of
$3,296,533 for those investments having an excess of cost over value.
For the six months ended June 30, 1997, purchases and sales of securities, other
than short-term investments, were $8,493,431 and $7,068,491, respectively.
NOTE E. CREDIT AGREEMENT
The Fund, along with 18 other U.S. regulated 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 19 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 $600,000 with an interest rate of 8.50% outstanding under the credit
agreement at June 30, 1997. The amount outstanding under the credit agreement
for the Fund averaged $3,315 with an average interest rate of 8.50% during the
six months ended June 30, 1997.
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15
<PAGE>
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
On April 22, 1997, the annual meeting of shareholders of The Indonesia 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.
NAME OF DIRECTOR FOR WITHHELD NON-VOTES
- ------------------------------ ---------- ---------- ----------
C. Oscar Morong, Jr. 2,651,577 118,839 1,838,573
William W. Priest, Jr. 2,651,077 119,339 1,838,573
In addition to the directors re-elected at the meeting, Richard H. Francis and
Peter Kaplan 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, 1997.
FOR AGAINST ABSTAIN NON-VOTES
---------- ---------- ---------- ----------
2,685,525 80,710 4,181 1,838,573
(3) To approve a sub-advisory agreement with Credit Suisse Asset Management
Limited.
FOR AGAINST ABSTAIN NON-VOTES
---------- ---------- ---------- ----------
2,624,493 114,010 11,798 1,858,688
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16
<PAGE>
DESCRIPTION OF INVESTLINK* PROGRAM
The InvestLink Program is sponsored and administered by The First National Bank
of Boston, not by The Indonesia Fund, Inc. (the "Fund"). The First National Bank
of Boston will act as program administrator (the "Program Administrator") of the
InvestLink 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 Company 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 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.
The First National Bank of Boston, as Program Administrator, administers the
Program for participants, keeps records, sends statements of
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17
<PAGE>
DESCRIPTION OF INVESTLINK* PROGRAM (CONTINUED)
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 Report 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.
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
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18
<PAGE>
DESCRIPTION OF INVESTLINK* PROGRAM (CONTINUED)
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) 969-3294; Current Shareholders--(800) 730-6001. All
correspondence regarding the Program should be directed to: The First National
Bank of Boston, InvestLink Program, P.O. Box 1681, Boston, MA 02105-1681.
- ---------------------------------------------
*InvestLink-SM- is a service mark of Boston EquiServe Limited
Partnership.
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19
<PAGE>
SUMMARY OF GENERAL INFORMATION
The Fund--The Indonesia Fund, Inc.--is a closed-end, non-diversified management
investment company whose shares trade on the New York Stock Exchange. Its
principal investment objective is long-term capital appreciation with income as
a secondary objective through investments primarily in Indonesian equity and
debt securities. The Fund is managed and advised by BEA Associates ("BEA"). BEA
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. BEA manages money for corporate pension
and profit-sharing funds, public pension funds, union funds, endowments and
other charitable institutions and private individuals. As of June 30, 1997, BEA
managed approximately $31.9 billion in assets.
SHAREHOLDER INFORMATION
The market price is published in: THE NEW YORK TIMES (daily) under the
designation "Indones" and THE WALL STREET JOURNAL (daily), and BARRON'S (each
Monday) under the designation "IndonesiaFd". The Fund's New York Stock Exchange
trading symbol is IF. Weekly comparative net asset value (NAV) and market price
information about The Indonesia 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 BEA GROUP OF FUNDS
LITERATURE REQUEST--Call today for free descriptive information on the
closed-end funds or a prospectus on any of the open-end mutual funds listed
below. The prospectus contains more complete information, including fees,
charges and expenses, and should be read carefully before investing or sending
money.
<TABLE>
<S> <C>
CLOSED-END FUNDS BEA ADVISOR FUNDS
SINGLE COUNTRY OPEN-END MUTUAL FUNDS
The Brazilian Equity Fund, Inc. (BZL) BEA Emerging Markets Equity Fund
The Chile Fund, Inc. (CH) BEA Global Telecommunications Fund
The First Israel Fund, Inc. (ISL) BEA High Yield Fund
The Portugal Fund, Inc. (PGF) BEA International Equity Fund
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)
For shareholder information or a copy
FIXED INCOME of a prospectus for any of the
BEA Income Fund, Inc. (FBF) open-end mutual funds please call,
BEA Strategic Income Fund, Inc. (FBI) 1-800-401-2230.
For closed-end fund information Visit our website on the internet:
please call, 1-800-293-1232. http://www.beafunds.com
</TABLE>
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<PAGE>
DIRECTORS AND CORPORATE OFFICERS
Richard H. Francis Director
Peter Kaplan Director
C. Oscar Morong, Jr. Director
William W. Priest, Jr. Director and President
Stephen M. Swift Chief Investment Officer
Paul P. Stamler Senior Vice President
Michael A. Pignataro Chief Financial Officer and
Secretary
Wendy S. Setnicka Assistant Treasurer
INVESTMENT ADVISER
BEA Associates
One Citicorp Center
153 East 53rd Street
New York, NY 10022
ADMINISTRATOR
Bear Stearns Funds Management Inc.
245 Park Avenue
New York, NY 10167
CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
SHAREHOLDER SERVICING AGENT
The First National Bank of Boston
P.O. Box 1865
Mail Stop 45-02-62
Boston, MA 02105-1865
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, PA 19103
LEGAL COUNSEL
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
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. [LOGO]
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3913-SAR-6/97
