<PAGE>
The Indonesia
Fund, Inc.
---------------------------
ANNUAL REPORT
DECEMBER 31, 1998
[GRAPHIC]
<PAGE>
CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders.................................................... 1
Portfolio Summary......................................................... 5
Schedule of Investments................................................... 6
Statement of Assets and Liabilities....................................... 7
Statement of Operations................................................... 8
Statement of Changes in Net Assets........................................ 9
Financial Highlights...................................................... 10
Notes to Financial Statements............................................. 11
Report of Independent Accountants......................................... 15
Results of Annual Meeting of Shareholders................................. 16
Description of InvestLink-SM- Program..................................... 17
</TABLE>
PICTURED ON THE COVER IS THE COURT HALL-KERTHA GOSA LOCATED IN KLUNGKUNG, BALI.
- --------------------------------------------------------------------------------
<PAGE>
LETTER TO SHAREHOLDERS
February 4, 1999
DEAR SHAREHOLDER:
We are pleased to report on the activities of The Indonesia Fund, Inc. (the
"Fund") for the year ended December 31, 1998.
PERFORMANCE
At December 31, 1998, the Fund's net assets were $12.5 million. The Fund's net
asset value ("NAV") was $2.71 per share, as compared to $3.58 at December 31,
1997.
For the year ended December 31, 1998, the Fund's total return, based on NAV,
declined 24.3%. By comparison, the total return of the Morgan Stanley Capital
International Indonesia Index (the "Index") was down 32.4%. From the
commencement of investment operations on March 9, 1990 through December 31,
1998, the Fund's total return, based on NAV and assuming reinvestment of
dividends and distributions, fell 78.8%. The Index lost 85.1% during this same
period.
We attribute the Fund's outperformance of the Index in 1998 primarily to our
judicious management of cash. Throughout the year, we maintained an unusually
high level of total assets in cash, and also kept the cash in strong dollars.
Having so much cash on hand gave us additional flexibility in navigating the
portfolio through positive and negative periods alike.
Sector allocation was additive to returns in the form of our underweightings in
banking and real estate, both of which were among the hardest-hit sectors in the
entire Indonesian market; and our overweighting in beverages and tobacco, which
significantly outperformed the Index. Stock selection was most effective in the
building products sector due to our large position in PT Semen Gresik, a
prominent cement manufacturer in which a major foreign competitor bought a large
equity stake.
1998: AN EXTRAORDINARY YEAR
1998 was a year of extreme volatility for Indonesian equities. Through September
30, 1998, the Index had fallen 69.9%, leaving Indonesia second only to Russia as
the world's worst-performing market at that point in the year. In the fourth
quarter, however, stocks soared 125.6%, making Indonesia the world's
best-performing market for the quarter.
Investor activity underscored the extraordinary nature of developments in
Indonesia during 1998. To put the market in a clearer context, then, it is
useful to look back and review what actually happened. Here is a snapshot:
- - President Suharto resigned in late May after 32 years in power. This was an
event of truly historic proportions for Indonesia, as it simultaneously
released massive pent-up public dissatisfaction with Suharto's autocratic
style and opened the door to a universe of potentially positive economic and
social changes.
- --------------------------------------------------------------------------------
1
<PAGE>
LETTER TO SHAREHOLDERS
- - The Indonesian currency, the rupiah, lost nearly half its value versus the
dollar. At its weakest point, the rupiah declined over 80% on this basis.
Severe economic dislocation ensued, as the country's banking system proved
unable to deal with the strain. Adding to Indonesia's woes was an estimated
$140 billion in dollar-denominated public and private-sector debt, much of
which proved to be unserviceable in light of the rupiah's weakened condition.
- - Global commodity prices continued to slide. This deprived Indonesia--which is
one of the world's largest exporters of oil, tin, wood and pulp--of badly
needed foreign exchange at a time when it was heavily dependent on imported
food, fuel and manufactured goods.
- - After adjustment for inflation, the economy shrank by an estimated 13.8%, the
first such drop for Indonesia since 1988 and the largest in Asia in 1998.
Consumer inflation soared to an annualized rate of about 56%, up from 6.4% in
1997.
- - Short-term interest rates (as represented by money market rates) closed the
year at 39.8%, up from 18.8% at the end of 1997.
- - Indonesia reached a series of agreements for financial aid with the
International Monetary Fund ("IMF"), the world's lender of last resort. By
June, the nation had begun to implement a number of harsh measures designed to
get its economic house in order. Its reward was eventual access to
approximately $40 billion in IMF funding.
PORTFOLIO STRATEGY
Given the environment we have described, we believe that a conservative approach
to stock selection remains most appropriate for the Fund. More specifically, we
plan to focus the portfolio on those companies that possess most or all of the
following characteristics:
- - Ample liquidity
- - Proven management
- - Beneficiary of a strong rupiah and lower interest rates
- - Strong cash flow and balance sheet
- - Likely to be successful in rescheduling debts
- - Globally competitive and able to increase market share
A particularly good example is PT TELEKOMUNIKASI INDONESIA ("PT Telkom"), one of
Indonesia's two leading telecommunications companies and the portfolio's largest
holding at December 31, 1998.
- --------------------------------------------------------------------------------
2
<PAGE>
LETTER TO SHAREHOLDERS
We like PT Telkom for a variety of reasons. It is widely viewed as a company
that will survive Indonesia's economic crisis, for example. This is due to the
government's announced intention to raise phone service rates, which should
substantially increase PT Telkom's cash flow at a time when securing cash in any
form is a major effort for many other Indonesian corporations; the company's
retention of its monopoly/duopoly status in fixed line service and international
direct dial, respectively, while national telecommunications regulations undergo
revision; and the simple fact that it's in the interest of the government--which
owns a controlling equity stake--to support the company and bolster its
valuation in advance of the scheduled sale of part of its equity ownership in
future years.
It also helps that PT Telkom is a major player in a meaningfully underpenetrated
telecommunications market of over 200 million, among the largest in the world.
As a stock, it is a favorite target of foreign investors who are additionally
attracted to its superior liquidity, large size, blue-chip status and attractive
valuation relative to those of its global peers. As a domestic corporation,
furthermore, PT Telkom stands to directly benefit from any further improvement
in the value of the rupiah. This will occur as Indonesia pulls back from the
brink and begins to regain its previous status as a regional economic force.
OUTLOOK: CAUTIOUSLY OPTIMISTIC
Despite the recent buoyancy of Indonesian share returns, Indonesia's severe
economic and political problems are far from over. A massive amount of corporate
debt still needs to be paid or restructured, the banking system still needs to
be streamlined and recapitalized, and the prices of key commodities remain
depressed.
But these are largely well-known and have been reflected in share prices for
some time. We believe that the worst is probably behind us and that
conditions--both in the economy and the stock market--are more likely to get
better than worse.
One of the keys to the market's overall tone in the near term will be investor
sentiment in anticipation of parliamentary and presidential elections (in June
and August, respectively). These will be not only the first ostensibly
democratic elections in modern Indonesian history, but also an event that will
do much to set the nation's course going forward. As a result, the market may be
vulnerable to pockets of volatility until after the elections conclude.
Even after the explosive rally in 1998's fourth quarter, Indonesian equity
valuations remain at historically low levels. Should political risks decline,
macroeconomic factors continue to improve, and generally positive global
conditions prevail, investors will find them even more compelling.
Sincerely,
/s/ Robert B. Hrabchak*
Robert B. Hrabchak*
Chief Investment Officer
- --------------------------------------------------------------------------------
3
<PAGE>
LETTER TO SHAREHOLDERS
FROM CREDIT SUISSE ASSET MANAGEMENT:
I. Effective January 12, 1999, the Fund's investment adviser, BEA Associates,
changed its name to Credit Suisse Asset Management ("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. 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 Program-SM- (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 17 through 19 of this
report.
III. Many services provided to the Fund and its shareholders by Credit Suisse
Asset Management ("CSAM") and the Fund's service providers rely on the
functioning of their respective computer systems. Many computer systems
cannot distinguish the year 2000 from the year 1900, with resulting
potential difficulty in performing various calculations (the "Year 2000
Issue"). The Year 2000 Issue could potentially have an adverse impact on
the handling of security trades, the payment of interest and dividends,
pricing, account services and other Fund operations.
CSAM recognizes the importance of the Year 2000 Issue and is taking
appropriate steps necessary in preparation for the year 2000. At this time,
there can be no assurance that these steps will be sufficient to avoid any
adverse impact on the Fund, nor can there be any assurance that the Year 2000
Issue will not have an adverse effect on the Fund's investments or on global
markets or economies, generally.
CSAM anticipates that its systems will be adapted in time for the year 2000.
CSAM is seeking assurances that comparable steps are being taken by the
Fund's other major service providers. CSAM will be monitoring the Year 2000
Issue in an effort to ensure appropriate preparation.
- --------------------------------------------------------------------------------
*Robert B. Hrabchak is primarily responsible for management of the Fund's
assets. He has served the Fund in such capacity since November 17, 1998. Mr.
Hrabchak is a Director of Credit Suisse Asset Management ("CSAM"), where he is
chief investment officer for Asian equities. He joined CSAM in 1997 from Merrill
Lynch Asset Management in Hong Kong, where he was a senior portfolio manager.
Previously, he worked in corporate finance and equity capital markets for
Salomon Brothers in New York and Hong Kong; specialized in private equity
investments in Taiwan, Hong Kong and China for ChinaVest Limited; and was an
Asian portfolio manager at Chase Manhattan Bank in Hong Kong.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
THE INDONESIA FUND, INC.
PORTFOLIO SUMMARY - AS OF DECEMBER 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
SECTOR ALLOCATION
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
% OF NET ASSETS
<S> <C> <C>
Plot Points 12/31/98 12/31/97
Agriculture 4.91% 4.26%
Automotive 2.62% 0.66%
Beer, Beverages, Liquors &
Tobacco 17.72% 10.24%
Construction & Heavy Equipment 0.00% 2.18%
Fishery 2.90% 0.00%
Food & Kindred Products 4.27% 0.00%
Manufacturing 0.78% 2.96%
Metal-Diversified 2.52% 0.00%
Oil Exploration & Production 4.20% 10.76%
Paper Products 15.76% 7.47%
Quarrying 3.60% 0.00%
Telecommunications 24.71% 17.65%
Textiles 2.10% 3.31%
Other 2.77% 5.70%
Cash & Other Assets 11.14% 34.81%
</TABLE>
TOP 10 HOLDINGS, BY ISSUER
<TABLE>
<CAPTION>
Percent of Net
Holding Sector Assets
<C> <S> <C> <C>
- --------------------------------------------------------------------------------------------
1. PT Telekomunikasi Indonesia Telecommunications 14.0
- --------------------------------------------------------------------------------------------
2. PT Gudang Garam Beer, Beverages, Liquors &
Tobacco 10.9
- --------------------------------------------------------------------------------------------
3. PT Indosat Telecommunications 10.7
- --------------------------------------------------------------------------------------------
4. PT HM Sampoerna Beer, Beverages, Liquors &
Tobacco 6.8
- --------------------------------------------------------------------------------------------
5. PT Indah Kiat Pulp & Paper Corp. Paper Products 6.2
- --------------------------------------------------------------------------------------------
6. PT Pabrik Kertas Tjiwi Kimia Paper Products 5.9
- --------------------------------------------------------------------------------------------
7. PT Indofood Sukses Makmur Food & Kindred Products 4.3
- --------------------------------------------------------------------------------------------
8. Gulf Indonesia Resources Ltd. Oil Exploration &
Production 4.2
- --------------------------------------------------------------------------------------------
9. Asia Pulp & Paper Company Ltd. Paper Products 3.7
- --------------------------------------------------------------------------------------------
10. PT Tambang Timah Tbk Quarrying 3.6
- --------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
5
<PAGE>
- --------------------------------------------------------------------------------
THE INDONESIA FUND, INC.
SCHEDULE OF INVESTMENTS - DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
<S> <C> <C>
- --------------------------------------------------------------------
EQUITY OR EQUITY-LINKED SECURITIES-88.86%
AGRICULTURE-4.91%
PT Astra Agro Lestari................... 1,360,000 $ 412,250
PT London Sumatra Indonesia............. 1,235,600 200,785
-----------
613,035
-----------
AUTOMOTIVE-2.62%
PT Astra International+................. 2,620,000 327,500
-----------
BEER, BEVERAGES, LIQUORS & TOBACCO-17.72%
PT Gudang Garam......................... 935,500 1,362,322
PT HM Sampoerna+........................ 1,291,500 851,583
-----------
2,213,905
-----------
CHEMICALS-0.61%
PT Unggul Indah Corp.+.................. 645,600 76,665
-----------
FINANCIAL SERVICES-1.04%
PT Bank Internasional Indonesia+........ 4,600,000 129,375
-----------
FISHERY-2.90%
PT Daya Guna Samudera................... 560,000 362,250
-----------
FOOD & KINDRED PRODUCTS-4.27%
PT Indofood Sukses Makmur+.............. 1,054,000 533,587
-----------
MANUFACTURING-0.78%
PT Unilever Indonesia................... 26,000 97,500
-----------
METAL-DIVERSIFIED-2.52%
PT Aneka Tambang........................ 1,550,000 314,844
-----------
OIL EXPLORATION & PRODUCTION-4.20%
Gulf Indonesia Resources Ltd.*+......... 80,655 524,257
-----------
PAPER PRODUCTS-15.76%
Asia Pulp & Paper Company Ltd. ADR+..... 56,300 460,956
<CAPTION>
No. of Value
Description Shares (Note A)
- --------------------------------------------------------------------
<S> <C> <C>
PAPER PRODUCTS (CONTINUED)
PT Indah Kiat Pulp & Paper Corp.++...... 2,828,500 $ 768,999
PT Pabrik Kertas Tjiwi Kimia+........... 2,846,311 738,262
-----------
1,968,217
-----------
QUARRYING-3.60%
PT Tambang Timah Tbk.................... 670,000 450,156
-----------
RETAILING-1.12%
PT Matahari Putra Prima+................ 3,436,000 85,900
PT Ramayana Lestari Sentosa............. 225,000 54,141
-----------
140,041
-----------
TELECOMMUNICATIONS-24.71%
PT Indosat.............................. 1,027,500 1,338,961
PT Telekomunikasi Indonesia............. 2,346,500 791,944
PT Telekomunikasi Indonesia ADR......... 147,050 955,825
-----------
3,086,730
-----------
TEXTILES-2.10%
PT Indorama Synthetics+................. 1,470,000 261,844
-----------
TOTAL INVESTMENTS-88.86%
(Cost $19,514,358) (Notes A,D)........................ 11,099,906
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES-11.14%.................................... 1,391,200
-----------
NET ASSETS-100.00%..................................... $12,491,106
-----------
-----------
- ---------------------------------------------------------
* Security is traded on the New York Stock Exchange.
+ Security is non-income producing.
++ Includes 5 warrants, expiring 07/11/02, with a market
value of $0.63.
ADR American Depositary Receipts.
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
6
<PAGE>
- --------------------------------------------------------------------------------
THE INDONESIA FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost $19,514,358)
(Note A)............................... $11,099,906
Cash (including $472,825 of foreign
currency with a cost of $480,656) (Note
A)..................................... 527,837
Receivables:
Investments sold...................... 1,857,342
Dividends............................. 7,667
Prepaid expenses........................ 1,322
-----------
Total Assets............................ 13,494,074
-----------
LIABILITIES
Payables:
Investments purchased................. 907,902
Investment advisory fee (Note B)...... 27,940
Administration fees (Note B).......... 3,277
Other accrued expenses................ 63,849
-----------
Total Liabilities....................... 1,002,968
-----------
NET ASSETS (applicable to 4,608,989
shares of common stock outstanding)
(Note C)............................... $12,491,106
-----------
-----------
NET ASSET VALUE PER SHARE ($12,491,106
DIVIDED BY 4,608,989)................. $2.71
-----------
-----------
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......................... 63,035,295
Accumulated net realized loss on
investments and foreign currency
related transactions................... (42,126,335)
Net unrealized depreciation in value of
investments and translation of other
assets and liabilities denominated in
foreign currency....................... (8,422,463)
-----------
Net assets applicable to shares
outstanding............................ $12,491,106
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
7
<PAGE>
- --------------------------------------------------------------------------------
THE INDONESIA FUND, INC.
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME
Income (Note A):
Dividends............................. $ 76,620
Interest.............................. 260,472
Less: Foreign taxes withheld.......... (15,722)
-----------
Total Investment Income............... 321,370
-----------
Expenses:
Investment advisory fees (Note B)..... 113,027
Printing.............................. 90,005
Audit and legal fees.................. 72,400
Custodian fees........................ 53,625
Accounting fees....................... 39,500
Directors' fees....................... 27,298
Transfer agent fees................... 26,900
NYSE listing fees..................... 16,170
Insurance............................. 13,571
Administration fees (Note B).......... 12,575
Other................................. 11,010
-----------
Total Expenses........................ 476,081
-----------
Net Investment Loss................... (154,711)
-----------
NET REALIZED AND UNREALIZED LOSS ON
INVESTMENTS AND FOREIGN CURRENCY
RELATED TRANSACTIONS
Net realized gain/(loss) from:
Investments........................... (9,994,142)
Foreign currency related
transactions......................... 430,198
Net change in unrealized depreciation in
value of investments and translation of
other assets and liabilities
denominated in foreign currency........ 5,724,030
-----------
Net realized and unrealized loss on
investments and foreign currency
related transactions................... (3,839,914)
-----------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS........................ $(3,994,625)
-----------
-----------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
THE INDONESIA FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Years Ended December
31,
----------------------------
1998 1997
<S> <C> <C>
----------------------------
DECREASE IN NET ASSETS
Operations:
Net investment income/(loss).......... $ (154,711) $ 141,408
Net realized loss on investments and
foreign currency related
transactions......................... (9,563,944) (7,906,915)
Net change in unrealized
appreciation/(depreciation) in value
of investments and translation of
other assets and liabilities
denominated in foreign currency...... 5,724,030 (24,971,829)
----------- ------------
Net decrease in net assets resulting
from operations.................... (3,994,625) (32,737,336)
----------- ------------
NET ASSETS
Beginning of year....................... 16,485,731 49,223,067
----------- ------------
End of year............................. $12,491,106 $ 16,485,731
----------- ------------
----------- ------------
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
9
<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 Years Ended December 31,
--------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period.......................... $3.58 $10.68 $9.34 $9.18 $14.03 $7.63 $7.72 $10.38
--------- --------- --------- --------- --------- --------- --------- ---------
Net investment income/(loss)..... (0.04) 0.03 0.01 -- (0.03) (0.03) 0.01 0.04
Net realized and unrealized gain/
(loss) on investments and
foreign currency related
transactions.................... (0.83) (7.13) 1.33 0.16 (4.82) 6.43 (0.10) (2.65)
--------- --------- --------- --------- --------- --------- --------- ---------
Net increase/(decrease) in net
assets resulting from
operations...................... (0.87) (7.10) 1.34 0.16 (4.85) 6.40 (0.09) (2.61)
--------- --------- --------- --------- --------- --------- --------- ---------
Dividends and distributions to
shareholders:
Net investment income........... -- -- -- -- -- -- -- (0.05)
Net realized gains on
investments and foreign currency
related transactions............ -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total dividends and distributions
to shareholders................. -- -- -- -- -- -- -- (0.05)
--------- --------- --------- --------- --------- --------- --------- ---------
Net asset value, end of period... $2.71 $3.58 $10.68 $9.34 $9.18 $14.03 $7.63 $7.72
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Market value, end of period...... $3.438 $4.625 $9.750 $10.125 $12.000 $20.750 $9.000 $8.375
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
Total investment return(a)....... (25.68)% (52.56)% (3.70)% (15.63)% (42.17)% 130.56% 7.46% (14.71)%
--------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- ---------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000
omitted)........................ $12,491 $16,486 $49,223 $43,060 $42,297 $64,661 $35,186 $35,590
Ratio of expenses to average net
assets.......................... 4.21% 1.89% 1.91% 1.96% 1.83% 1.98% 2.04% 2.00%
Ratio of net investment income/
(loss) to average net assets.... (1.37)% 0.33% 0.10% 0.05% (0.25)% (0.30)% 0.09% 0.49%
Portfolio turnover rate.......... 36.58% 48.19% 34.67% 24.10% 31.56% 63.77% 22.39% 32.27%
<CAPTION>
For the Period
through
December 31, 1990
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period.......................... $13.78 **
--------
Net investment income/(loss)..... 0.22
Net realized and unrealized gain/
(loss) on investments and
foreign currency related
transactions.................... (2.90 )
--------
Net increase/(decrease) in net
assets resulting from
operations...................... (2.68 )
--------
Dividends and distributions to
shareholders:
Net investment income........... (0.19 )
Net realized gains on
investments and foreign currency
related transactions............ (0.53 )
--------
Total dividends and distributions
to shareholders................. (0.72 )
--------
Net asset value, end of period... $10.38
--------
--------
Market value, end of period...... $9.875
--------
--------
Total investment return(a)....... (24.15 )%
--------
--------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000
omitted)........................ $47,817
Ratio of expenses to average net
assets.......................... 2.15 %(b)
Ratio of net investment income/
(loss) to average net assets.... 2.05 %(b)
Portfolio turnover rate.......... 17.68 %
</TABLE>
- ---------------------------------------------------------------------------
* Commencement of investment 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.
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
THE INDONESIA FUND, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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. In the banking sector, foreign investors are allowed
to purchase up to 49% of the shares offered to the public in the primary market.
When 49% of such shares are owned by foreign investors and a foreign share
market quotation is available, the foreign share quotation is used. If less than
49% of these 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 banking shares generally trade at a discount to foreign banking
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 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, 1998, the interest
rate was 4.125% 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, 1998, the Fund had a capital loss carryover for U.S. federal
income tax purposes of $41,035,269 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; $4,688,411 expires in 2004; $3,265,956 expires
in 2005 and $13,254,308 expires in 2006.
For U.S. federal income tax purposes, realized capital losses and foreign
exchange losses incurred after October 31, 1998, within the fiscal year, are
deemed to
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
THE INDONESIA FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
arise on the first day of the following fiscal year. The Fund incurred and
elected to defer realized capital losses of $554,964.
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 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 or losses from valuing foreign currency denominated assets
and liabilities at period end exchange rates are reflected as a component of net
unrealized appreciation/depreciation in value of investments and translation of
other assets and liabilities denominated in foreign 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.
At December 31, 1998, the Fund reclassified a net investment loss of $154,711 to
accumulated net realized loss on investments and foreign currency related
transactions.
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
- --------------------------------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
THE INDONESIA FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
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.
The number of shares available for investment by the Fund is also limited, in
the banking sector only, by the fact that non-Indonesians are permitted to
purchase only 49% of the listed shares of Indonesian finance companies. A high
proportion of the shares of many listed Indonesian finance 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 year ended December 31, 1998, BEA
earned $113,027 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 year ended December 31, 1998, BEA
was reimbursed $1,272 for administrative services rendered to the Fund.
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 year ended December 31,
1998, BSFM earned $11,303 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 December 31, 1998, BEA
owned 7,169 shares.
NOTE D. INVESTMENT IN SECURITIES
For U.S. federal income tax purposes, the cost of securities owned at December
31, 1998 was $20,255,133. Accordingly, the net unrealized depreciation of
investments (including investments denominated in foreign currency) of
$9,155,227, was composed of gross appreciation of $553,053 for those investments
having an excess of value over cost and gross depreciation of $9,708,280 for
those investments having an excess of cost over value.
For the year ended December 31, 1998, purchases and sales of securities, other
than short-term obligations, were $8,095,039 and $3,459,374, respectively.
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
THE INDONESIA FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
NOTE E. CREDIT AGREEMENT
The Fund, along with 10 other U.S. regulated investment companies for which BEA
serves as investment adviser, has a credit agreement with BankBoston, N.A.. The
agreement provides that each fund is 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
shall the aggregate outstanding principal amount of all loans to any of the 11
funds exceed $25,000,000. The line of credit will bear interest at (i) the
greater of the bank's prime rate or the Federal Funds Effective Rate plus 0.50%
or (ii) the Adjusted Eurodollar Rate plus 1.50%. The Fund had no amounts
outstanding under the credit agreement for the year ended and at December 31,
1998.
- --------------------------------------------------------------------------------
14
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors
of The Indonesia 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 Indonesia Fund, Inc. (the
"Fund") at December 31, 1998, and the results of its operations for the year
then ended, changes in its net assets for each of the two years in the period
then ended, and its financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
February 19, 1999
- --------------------------------------------------------------------------------
15
<PAGE>
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
On April 24, 1998, 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 one director to the Board of Directors of the Fund.
<TABLE>
<CAPTION>
NAME OF DIRECTOR FOR WITHHELD NON-VOTES
- ------------------------------ ---------- ---------- ----------
<S> <C> <C> <C>
Richard H. Francis 2,923,072 38,048 1,647,869
</TABLE>
In addition to the director re-elected at the meeting, C. Oscar Morong, Jr.,
William W. Priest, Jr. and Peter Kaplan continue to serve as directors of the
Fund.
(2) To ratify the selection of PricewaterhouseCoopers LLP (formerly Coopers &
Lybrand L.L.P.) as independent public accountants for the year ending December
31, 1998.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN NON-VOTES
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
2,931,689 7,575 21,856 1,647,869
</TABLE>
- --------------------------------------------------------------------------------
16
<PAGE>
DESCRIPTION OF INVESTLINK* PROGRAM
The InvestLink Program-SM- is sponsored and administered by BankBoston, N.A.,
not by The Indonesia Fund, Inc. (the "Fund"). BankBoston, N.A. 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.
BankBoston, N.A., as Program Administrator, administers the Program for
participants, keeps records, sends statements of account to participants and
performs
- --------------------------------------------------------------------------------
17
<PAGE>
DESCRIPTION OF INVESTLINK* PROGRAM (CONTINUED)
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
- --------------------------------------------------------------------------------
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: BankBoston, N.A.,
InvestLink Program, P.O. Box 8040, Boston, MA 02266-8040.
- --------------------------------------------------------------------------------
*InvestLink-SM- is a service mark of Boston EquiServe Limited
Partnership.
- --------------------------------------------------------------------------------
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 Credit Suisse Asset
Management ("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, 1998, CSAM managed
approximately $35.3 billion in assets in the U.S.
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 CSAM CLOSED-END 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.
<TABLE>
<S> <C>
CLOSED-END FUNDS
SINGLE COUNTRY
The Brazilian Equity Fund, Inc. (BZL)
The Chile Fund, Inc. (CH)
The First Israel Fund, Inc. (ISL)
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
BEA Income Fund, Inc. (FBF)
BEA Strategic Global Income Fund, Inc. (FBI)
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
DIRECTORS AND CORPORATE OFFICERS
Richard H. Francis Director
Peter Kaplan Director
C. Oscar Morong, Jr. Director
William W. Priest, Jr. Director and President
Robert B. Hrabchak Chief Investment Officer
Hal Liebes Senior Vice President
Michael A. Pignataro Chief Financial Officer and
Secretary
Rocco A. Del Guercio Vice President
INVESTMENT ADVISER
Credit Suisse Asset Management
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
BankBoston, N.A.
P.O. Box 1865
Mail Stop 45-02-62
Boston, MA 02105-1865
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, PA 19103
LEGAL COUNSEL
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019-6099
[LOGO]
This report, including the financial statements herein, is sent
to the shareholders of the Fund for their information. 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.
- --------------------------------------------------------------------------------
3913-AR-12/98
