FIRST ISRAEL FUND INC, N-30D, 1999-11-30

FIRST ISRAEL FUND INC
N-30D, 1999-11-30

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<PAGE>

THE FIRST ISRAEL
FUND, INC.
- -------------------------
ANNUAL REPORT
SEPTEMBER 30, 1999

[Picture]

<PAGE>
CONTENTS

<TABLE>
<S> <C>
Letter to Shareholders...................................... 1

Portfolio Summary........................................... 7

Schedule of Investments..................................... 8

Statement of Assets and Liabilities......................... 11

Statement of Operations..................................... 12

Statement of Changes in Net Assets.......................... 13

Statement of Cash Flows..................................... 14

Financial Highlights........................................ 15

Notes to Financial Statements............................... 16

Report of Independent Accountants........................... 22

Results of Annual Meeting of Shareholders................... 23

Tax Information............................................. 24

Description of InvestLink-SM- Program....................... 25

Recent Developments......................................... 28
</TABLE>

PICTURED ON THE COVER IS A SCENIC VIEW OF ISRAEL'S THIRD LARGEST CITY, HAIFA.

- --------------------------------------------------------------------------------
<PAGE>
LETTER TO SHAREHOLDERS
November 8, 1999

DEAR SHAREHOLDER:

I am writing to report on the activities of The First Israel Fund, Inc. (the
"Fund") for the fiscal year ended September 30, 1999.

At September 30, 1999, total net assets of the Fund were approximately
$76.7 million. The Fund's investments in securities listed and trading on the
Tel Aviv Stock Exchange ("TASE") were $50.4 million, with another $16.3 million
in the Israeli and Israel-related companies listed and trading in the United
States. Combined, these totaled $66.7 million, as compared to approximately
$61.8 million on September 30, 1998. The Fund also held investments valued at
approximately $8.9 million in unlisted securities, as compared to approximately
$7.4 million on September 30, 1998. In percentage terms, at September 30, 1999,
86.9% of the Fund's net assets was invested in Israeli and Israel-related
companies listed and trading on the TASE and in the United States and 11.7% in
unlisted securities.

The Fund successfully completed its initial public offering on October 29, 1992
and began operations with a net asset value ("NAV") of $13.74 per share. At
September 30, 1999, NAV per share was $17.18, as compared to $15.04 at
September 30, 1998. The Fund's common stock closed on the New York Stock
Exchange on September 30, 1999 at $14.00 per share, representing a discount of
18.5% to the Fund's NAV.

According to its charter, the Fund's investment objective is long-term capital
appreciation via investment primarily in equity securities of Israeli companies.
These securities may be listed on the TASE or elsewhere, notably New York and
NASDAQ. Up to 30% of the Fund's total assets may be invested in illiquid
securities, including securities of private equity funds that invest primarily
in the emerging markets.

PERFORMANCE: POWERED BY PEC ISRAEL ECONOMIC CORPORATION, PRIVATE EQUITIES,
MORTGAGE BANKS

During the fiscal year ended September 30, 1999, the Fund's total return, based
on NAV and assuming reinvestment of dividends and distributions, was 27.8%,
versus 18.7% for the Morgan Stanley Capital International Israel Index (the
"Index").+

Two of the elements that had hurt the Fund's performance during the fiscal
year's first half worked significantly in its favor during the second half:

- - The first was the share price of PEC Israel Economic Corporation ("PEC"), a
conglomerate that accounted for about 8% of the Fund's net assets at
September 30 and was the Fund's largest holding at the time.

PEC shares stagnated in the first quarter of 1999, reflecting displeasure with
a takeover bid announced by PEC's controlling shareholder. We agreed with many
other PEC investors that the proposed acquisition price was unreasonably low.

- --------------------------------------------------------------------------------
1
<PAGE>
LETTER TO SHAREHOLDERS

In the third quarter, however, the controlling shareholder made a revised
tender offer that bid $36.50 for each PEC share, or nearly 22% more than the
previous offer of $30.00. The revised offer breathed new life into the stock,
boosting the Fund's performance accordingly.

On November 2, two class-action lawsuits against PEC over the original tender
price (including one to which the Fund was a party) were settled, clearing the
way for shareholders to vote on the revised price on November 5. Shareholders
approved the acquisition on the latter date, and the stock ceased trading the
same day.

- - The second was the Fund's exposure to private equity transactions, which
experienced little revaluation in the fiscal first half. One private equity
partnership that specializes in telecommunications companies enjoyed a strong
return in the fiscal second half, as several of its individual equity stakes
were sold for handsome profits.

I would like to take this opportunity to reiterate that the ability to invest
in such less-liquid securities, which is one of the advantages of the
closed-end fund structure, has positively contributed to the Fund's return
over the last few years. The entities in which we have invested continue to
prosper, and I am confident that the Fund will benefit from them and future
private transactions well into the future.

An additional positive for performance was my longstanding allocation of a
portion of the portfolio (nearly 8% at September 30) to the shares of Israeli
mortgage banks. These stocks fared well, due to optimism about the domestic
economy and prospects for a positive interest-rate environment.

THE INVESTMENT ENVIRONMENT: A MIX OF PROS AND CONS

Over the past 12 months, the always-surprising Israeli marketplace was awash
with significant events that both nourished and jolted its equities. On the
positive side, we saw what was probably the end of the emerging markets crises
that began in Asia in 1997 and spread to Russia in 1998. The loss of investor
confidence inspired by these events hurt Israel and other emerging markets by
association, so their passage into the soon-to-be-forgotten annals of history
was most welcome. Along with this easing of crises-related tensions,
furthermore, there were signs that global growth was set to resume.

Closer to home, local and international investors returned to Israeli equities
after a very long absence. And newly elected Prime Minister Ehud Barak helped to
calm investor anxiety about the long-stalled peace process by moving
aggressively to revive it within his first days in office.

Yet, as the Fund's fiscal year ended, there were reminders that the Israeli
marketplace is better approached with prudent caution than unbridled optimism.
During the summer just past, for example, a combination of two U.S.
interest-rate hikes and a resumption of inflationary fears hammered U.S.
equities and, by extension, the numerous Israel-related companies with U.S.
exchange listings.

Domestic matters that bruised Israeli equities included:

- - The failure of an expected and long-awaited improvement in the domestic
economy to materialize.

- --------------------------------------------------------------------------------
2
<PAGE>
LETTER TO SHAREHOLDERS

- - A budget that included a much-needed increase in infrastructure spending was
approved by the Cabinet, but final passage by the Knesset was considered
unlikely until late this year. This delay is likely to keep investors on edge.

- - Prime Minister Barak's resumption of the peace process with the Palestinian
Authority, Syria and Lebanon did not bear immediate fruit, and significant
progress was not anticipated until next year. As a result, the "peace
dividend" that the market might otherwise have enjoyed remained on hold.

The above-mentioned issues aren't new to Israel and, with a little luck, most
will be favorably resolved sometime soon. Still, they are sufficiently worrisome
to warrant a very selective approach to Israeli equities at this time. But being
selective does not preclude me from being opportunistic, and I fully intend to
do so as we march toward the end of the present millenium and into the next.

PORTFOLIO STRUCTURE: EMPHASIZING FINANCIAL COMPANIES IN EXPECTATION OF LOWER
INTEREST RATES

TOP 10 HOLDINGS, BY ISSUER*

<TABLE>
<CAPTION>
% OF
HOLDING SECTOR NET ASSETS
------- ------ ----------
<S> <C> <C> <C>
1. PEC Israel Conglomerates 8.2
2. Koor Industries Conglomerates 5.3
3. Teva Pharm. Pharmaceuticals 5.1
4. Bezeq Telecommunications 4.4
5. Bank Leumi Banking 4.4
6. Israel
Chemicals Chemicals 4.0
7. ECI Telecom Telecommunications 3.8
8. Bank Hapoalim Banking 3.7
9. IDB Holding Conglomerates 3.3
10. Advent Israel Venture Capital 2.9
----
Total 45.1
====
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
SECTOR ALLOCATION
(% OF NET ASSETS)
<S> <C>
Banking 9.11%
Chemicals 4.93%
Conglomerates 19.95%
Financial Services 3.25%
Food & Beverages 6.58%
Insurance 3.80%
Inv. & Holding Cos. 5.54%
Mortgage Banking 7.69%
Pharm. 7.18%
Telecom. 8.96%
Venture Capital 6.27%
Cash & Other Assets 1.42%
Other* 15.32%
</TABLE>

- --------------
* Company names are abbreviations of those
found in the chart on page 7.
- ------------------
* Other includes sectors below 3.0% of net assets.

Here is a brief summary of the most prominent elements of my current approach to
structuring the portfolio:

- - I am emphasizing financial companies, in line with my anticipation that
Israeli interest rates may decline next year (see Outlook section). Mortgage
banks, which I mentioned earlier, should fare well under this scenario.
Roughly a quarter of the Fund was invested in various financial sectors at
September 30.

- - I favor consumer-oriented companies for the same reason.

- - I prefer to access the Israeli technology universe--whose potential is dynamic
but whose public valuations are, in my opinion, quite high--via investment in
relatively early-stage companies available only through private equity
transactions.

- --------------------------------------------------------------------------------
3
<PAGE>
LETTER TO SHAREHOLDERS

OUTLOOK: REASONABLY POSITIVE

My outlook for the Israeli equity market remains reasonably positive, for the
following key reasons:

THE PEACE DIVIDEND WILL ACCRUE GRADUALLY. Expectations for a peace dividend-type
effect in the near term are unrealistic. Although Prime Minister Barak's
aggressive efforts to jump-start the peace process are generating results, it is
still too soon to confidently forecast the process's potential macroeconomic
benefits. Regardless, however, the latter will ultimately prove to be of great
magnitude. As I see it, the likelihood that any peace dividend will take time to
accrue and will do so at a gradual pace, furthermore, should prove to be
favorable for Israeli equities.

PROSPECTS FOR LOWER INTEREST RATES AND INFLATION ARE SATISFACTORY. Israel's
annualized inflation rate is now approaching 6%, well above the government's
announced target of 3%-4%. I thus fully expect the Bank of Israel ("BoI") to
raise interest rates by 50-75 basis points before the end of 1999. Although this
would ordinarily be considered a big disappointment for investors, particularly
those in the financial services sector, it is already discounted in current
share prices. I therefore see relatively little further rate-related downside in
the market.

Looking further ahead, I would not be surprised to see BoI cut rates next year
by 100-150 basis points, suggesting that there is considerable rate-related
upside.

THE SHEKEL IS VULNERABLE. The shekel has demonstrated marked weakness against
the U.S. dollar in recent weeks, and the fourth quarter is typically a period of
shekel instability (I.E., due to budget-related uncertainties). Like the
potential for higher interest rates, though, the shekel's vulnerability to
weakness is already included in equity prices. I am therefore favoring companies
for which a weak shekel is helpful, particularly net exporters and global
cyclical plays.

Against this background, I note that conditions in the U.S. market should serve
as a caveat for investors. Volatility among U.S. equities is historically high,
regardless of whether the market's general trend is upward or downward. And U.S.
valuations--most prominently in the high-flying technology sector--have spent
much of the past few years at rather stretched levels. With most U.S.-listed,
Israel-related companies involved in technology and trading on NASDAQ, then,
these companies are highly exposed to the U.S. market's very real downside risk.
I have meaningfully reduced the Fund's holdings to them accordingly.

As for strategy, my basic approach is to populate the Fund with companies
focused on the domestic economy and possessing attractively low share
valuations. Many of these tend to be second-tier in terms of name recognition
and market capitalization. I also continue to pursue excess returns in the rich
vein of Israeli private equity transactions to which the Fund has access due to
its closed-end fund structure. The receipt of the cash proceeds from the tender
of the Fund's shares in PEC should provide me ample flexibility with which to
implement this strategy.

Going forward, there are signs that Israel's economy may soon stage a comeback
from its doldrums of the past three years or so. Tax revenues are growing
rapidly. Tourism is strong, fueled by people of many faiths who wish to tap into

- --------------------------------------------------------------------------------
4
<PAGE>
LETTER TO SHAREHOLDERS
Israel's rich spiritual heritage as we move into the next millenium. Corporate
earnings are recovering. Almost every economic indicator, in fact, is pointing
upward. For these and other reasons, I expect to see Israel's economy grow by
approximately 4% in 2000, compared to just 2% in 1999.

That said, I also expect a Y2K-inspired slowdown in the Israeli economy and
equity market as 1999 comes to a close. I view this as a temporary phenomenon,
though, one which may well create desirable buying opportunities. Among the
latter is the Fund itself: shares are trading at around an 18% discount to NAV
as I write, a level that I believe is compellingly attractive.

And so, as I close out the books on this, the seventh year of the Fund's
operation, I would like to thank our shareholders for their confidence in the
potential of this small, yet mighty, marketplace and for their continuing
confidence in my stewardship of their investments in it. May the coming year be
as good, or better, than the very rewarding year we have just concluded.

Respectfully,
/s/ Richard W. Watt
Richard W. Watt
President and Chief Investment Officer*

FROM CREDIT SUISSE ASSET MANAGEMENT, LLC:

I. Effective January 12, 1999, the Fund's investment adviser, BEA Associates,
changed its name to Credit Suisse Asset Management, LLC ("CSAM"). In making
the announcement, the firm said that it expected the new name to enhance its
recognition as a global asset manager. CSAM is the investment division of
Credit Suisse Group, one of the world's largest financial organizations,
with $600 billion in assets under management.

II. We wish to remind shareholders whose shares are registered in their own
name that they automatically participate in the Fund's dividend
reinvestment program known as the InvestLink-SM- Program (the "Program").
The Program can be of value to shareholders in maintaining their
proportional ownership interest in the Fund in an easy and convenient way.
A shareholder whose shares are held in the name of a broker/dealer or
nominee should contact the Fund's Transfer Agent for details about
participating in the Program. The Program is described on pages 25 through
27 of this report.

III. Many services provided to the Fund and its shareholders by 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.

- --------------------------------------------------------------------------------
5
<PAGE>
LETTER TO SHAREHOLDERS

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.

- --------------------------------------------------------------------------------
+ The Morgan Stanley Capital International Israel Index is an unmanaged index
(with no defined investment objective) of Israeli equities that includes
reinvestment of dividends, and is the exclusive property of Morgan Stanley
Capital International Inc.

* Richard W. Watt, who is a Managing Director of Credit Suisse Asset Management,
LLC ("CSAM"), is primarily responsible for management of the Fund's assets. He
joined CSAM on August 2, 1995. Mr. Watt was formerly associated with Gartmore
Investment Limited in London, where he was head of emerging markets investments
and research. Before joining Gartmore Investment Limited in 1992, Mr. Watt was a
director of Kleinwort Benson International Investments in London, where he was
responsible for research, analysis and trading of equities in Latin America and
other regions. Mr. Watt is President, Chief Investment Officer and a Director of
the Fund. He also is President, Chief Investment Officer and a Director of The
Brazilian Equity Fund, Inc., The Chile Fund, Inc., The Emerging Markets
Infrastructure Fund, Inc., The Emerging Markets Telecommunications Fund, Inc.,
The Latin America Equity Fund, Inc., The Latin America Investment Fund, Inc. and
The Portugal Fund, Inc. Effective November 9, 1999, Mr. Watt no longer serves as
Chief Investment Officer to The Brazilian Equity Fund, Inc., The Latin America
Equity Fund, Inc. and The Latin America Investment Fund, Inc. Effective
October 15, 1999, Mr. Watt no longer serves as Director to The Portugal Fund,
Inc.

- --------------------------------------------------------------------------------
6
<PAGE>
- --------------------------------------------------------------------------------

THE FIRST ISRAEL FUND, INC.

PORTFOLIO SUMMARY - AS OF SEPTEMBER 30, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
SECTOR ALLOCATION

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
AS A PERCENT OF NET ASSETS
<S> <C> <C>
9/30/99 9/30/98
Banking 9.11 8.07
Building Products 2.13 3.79
Chemicals 4.93 1.96
Conglomerates 19.95 16.94
Electronics/Electrical Equipment 2.47 2.64
Financial Services 3.25 3.49
Food & Beverages 6.59 4.26
Industrial Technology 2.59 1.34
Insurance 3.80 3.43
Investment & Holding Companies 5.54 5.27
Mortgage Banking 7.69 8.38
Pharmaceuticals 7.18 5.44
Telecommunications 8.96 12.24
Venture Capital 6.27 5.78
Other 8.12 8.74
Cash & Other Assets 1.42 8.23
</TABLE>

TOP 10 HOLDINGS, BY ISSUER

<TABLE>
<CAPTION>
Percent of
Holding Sector Net Assets
<C> <S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
1. PEC Israel Economic Corporation Conglomerates 8.2
- ---------------------------------------------------------------------------------------------------------
2. Koor Industries Ltd. Conglomerates 5.3
- ---------------------------------------------------------------------------------------------------------
3. Teva Pharmaceutical Industries Ltd. Pharmaceuticals 5.1
- ---------------------------------------------------------------------------------------------------------
4. Bezeq Israeli Telecommunication Corporation Ltd. Telecommunications 4.4
- ---------------------------------------------------------------------------------------------------------
5. Bank Leumi Le-Israel Ltd. Banking 4.4
- ---------------------------------------------------------------------------------------------------------
6. Israel Chemicals Ltd. Chemicals 4.0
- ---------------------------------------------------------------------------------------------------------
7. ECI Telecom Ltd. Telecommunications 3.8
- ---------------------------------------------------------------------------------------------------------
8. Bank Hapoalim Ltd. Banking 3.7
- ---------------------------------------------------------------------------------------------------------
9. IDB Holding Corporation Ltd. Conglomerates 3.3
- ---------------------------------------------------------------------------------------------------------
10. Advent Israel (Bermuda) L.P. Venture Capital 2.9
- ---------------------------------------------------------------------------------------------------------
</TABLE>

- --------------------------------------------------------------------------------
7
<PAGE>
- --------------------------------------------------------------------------------
THE FIRST ISRAEL FUND, INC.

SCHEDULE OF INVESTMENTS - SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
<S> <C> <C>
- ---------------------------------------------------------
EQUITY OR EQUITY-LINKED SECURITIES-98.58%
ISRAEL-97.20%
AEROSPACE/DEFENSE EQUIPMENT-1.31%
Elbit Systems Ltd. ...... 72,913 $ 1,002,704
------------
BANKING-9.11%
Bank Hapoalim Ltd........ 1,155,858 2,841,743
Bank Leumi Le-Israel
Ltd..................... 1,949,800 3,391,550
United Mizrahi Bank
Ltd..................... 325,972 753,473
------------
6,986,766
------------
BUILDING PRODUCTS-2.13%
Industrial Buildings
Corporation Ltd......... 528,896 738,454
Property & Building
Corporation Ltd......... 9,601 892,149
------------
1,630,603
------------
CHEMICALS-4.93%
Dead Sea Bromine Ltd. ... 136,619 724,084
Israel Chemicals Ltd..... 3,211,202 3,059,002
------------
3,783,086
------------
COMPUTER SOFTWARE-0.85%
Formula Systems
(1985) Ltd.+............ 3,523 87,191
Tecnomatix
Technologies Ltd.+...... 31,900 566,225
------------
653,416
------------
CONGLOMERATES-19.95%
Clal (Israel) Ltd........ 19,780 594,370
Discount Investment
Corporation............. 21,000 738,408
Elco Holdings Ltd.+...... 2,500 20,721
IDB Development
Corporation Ltd......... 36,000 1,062,433
IDB Holding
Corporation Ltd. ....... 87,245 2,540,142
Koor Industries Ltd...... 44,816 3,808,785

<CAPTION>
Par Value
Description (000) (Note A)
- ---------------------------------------------------------
<S> <C> <C>
CONGLOMERATES (CONTINUED)
Koor Industries Ltd.,
Convertible Note, 1.75%,
01/31/00*............... NIS 600 $ 223,105
<CAPTION>
No. of
Shares
---------------
<S> <C> <C>
PEC Israel Economic
Corporation+(1)......... 181,210 6,308,373
------------
15,296,337
------------
ELECTRONICS/ELECTRICAL EQUIPMENT-2.47%
Elco Industries Ltd...... 39,270 413,513
Electra Consumer
Products Ltd. .......... 85,707 914,501
Electra (Israel) Ltd. ... 8,642 534,702
Electronics Line (EL)
Ltd.+................... 22,434 29,857
------------
1,892,573
------------
ENERGY SERVICES-1.41%
Delek Israel Fuel
Corporation Ltd......... 16,773 583,507
Superbowl Acquisition
LDC++................... 36 495,252
------------
1,078,759
------------
FINANCIAL SERVICES-3.25%
F.I.B.I. Holdings
Ltd. ................... 252,960 1,972,651
Gachelet Investments
Ltd..................... 9,819 428,707
Taya Investments Ltd.+... 15,450 88,018
------------
2,489,376
------------
FOOD & BEVERAGES-6.58%
Elite Industries Ltd..... 28,148 1,334,141
Jaf-Ora Ltd.............. 405,208 1,242,209
Mayanot Eden Ltd......... 137,010 978,872
Osem Investment Ltd. .... 91,641 464,303
Supersol Ltd. ........... 369,828 1,030,131
------------
5,049,656
------------
INDUSTRIAL TECHNOLOGY-2.59%
Cubital, Ltd.*+.......... 329,278 0
</TABLE>

- --------------------------------------------------------------------------------
8
<PAGE>
- --------------------------------------------------------------------------------
THE FIRST ISRAEL FUND, INC.

SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
- ---------------------------------------------------------
<S> <C> <C>
INDUSTRIAL TECHNOLOGY (CONTINUED)
Orbotech Ltd.+........... 15,750 $ 974,531
Scitex Corporation
Ltd.+................... 92,500 1,011,719
------------
1,986,250
------------
INFORMATION TECHNOLOGY-0.45%
Formula Ventures
L.P.+++................. 350,000 341,600
------------
INSURANCE-3.80%
Clal Insurance Enterprise
Holdings Ltd. .......... 76,300 944,175
Harel Insurance
Investments Ltd. ....... 34,129 1,968,194
------------
2,912,369
------------
INVESTMENT & HOLDING COMPANIES-4.16%
Makhteshim-Agan
Industries Ltd.+........ 880,991 1,583,850
Oren Semiconductor, Inc.,
Series K*+.............. 29,951 65,893
Oren Semiconductor, Inc.,
Series L*+.............. 30,843 67,855
Oren Semiconductor, Inc.,
Series O, Units*+(2).... 46,035 101,277
Polaris Fund II LLC++#... 625,000 915,723
The Renaissance
Fund LDC++#............. 60 458,334
------------
3,192,932
------------
METAL PRODUCTS-0.89%
Caniel-Israel Can Company
Ltd..................... 5,122 32,767
Klil Industries Ltd.,
(Shares 5)+............. 18,654 422,897
Ofer Development &
Investments Ltd.+....... 68,640 224,526
------------
680,190
------------
MORTGAGE BANKING-7.69%
Discount Mortgage
Bank Ltd.+.............. 16,050 1,274,107
Israel Discount Bank
Ltd.+................... 1,690,467 1,748,487

<CAPTION>
No. of Value
Description Shares (Note A)
- ---------------------------------------------------------
<S> <C> <C>
MORTGAGE BANKING (CONTINUED)
Mishkan-Hapoalim Mortgage
Bank Ltd.+.............. 5,892 $ 1,202,337
Tefahot Israel Mortgage
Bank Ltd. .............. 2,303 1,673,345
------------
5,898,276
------------
PHARMACEUTICALS-7.18%
Agis Industries (1983)
Ltd..................... 201,716 1,191,551
Peptor Ltd.*+............ 56,000 392,000
Teva Pharmaceutical
Industries Ltd. ADR..... 78,010 3,924,878
------------
5,508,429
------------
REAL ESTATE & CONSTRUCTION-1.31%
Azorim Investment
Development &
Construction Company
Ltd..................... 98,130 1,003,524
------------
TELECOMMUNICATIONS-8.96%
Bezeq Israeli
Telecommunication
Corporation Ltd.+....... 954,401 3,407,142
ECI Telecom Ltd.......... 117,526 2,901,423
Geotek
Communications, Inc.+... 18,595 335
Geotek Communications,
Inc., Convertible
Preferred Series M,
8.50%*+................. 100 0
Geotek Communications,
Inc., Convertible
Preferred
Series N*+(3)........... 595 0
Nexus Telecommunication
Systems Ltd.+........... 68,933 133,558
Terayon Communication
Systems, Inc.+.......... 8,747 427,510
------------
6,869,968
------------
TEXTILES-0.32%
Macpell Industries
Ltd.+................... 116,079 248,799
------------
TRADING COMPANIES-0.22%
Rapac Electronics Ltd.... 34,806 169,033
------------
</TABLE>

- --------------------------------------------------------------------------------
9
<PAGE>
- --------------------------------------------------------------------------------
THE FIRST ISRAEL FUND, INC.

TOTAL INVESTMENTS-98.58%
(Cost $64,146,303) (Notes A,D)........... 75,598,079
CASH AND OTHER ASSETS IN EXCESS OF
LIABILITIES-1.42%........................ 1,085,329
------------
NET ASSETS-100.00%........................ $ 76,683,408
============
</TABLE>

<TABLE>
<S> <C>
- ----------------------------------------------------------
* Not readily marketable security.
++ Restricted security, not readily marketable (See Note
F).
+ Security is non-income producing.
(1) On November 5, 1999, the shareholders of the company
approved the acquisition by its controlling
shareholder for $36.50 per share, and the stock
ceased trading on the same day.
(2) With an additional 46,035 warrants attached, expiring
12/31/49, with no market value.
(3) With an additional 595 warrants attached, expiring
06/20/01, with no market value.
# As of September 30, 1999, the Fund committed to
investing an additional $587,037, $1,398,320,
$650,000, $350,000 and $375,000 of capital in ABS GE
Capital Giza Fund, L.P., Emerging Markets Ventures I
L.P., Formula Ventures L.P., K.T. Concord Sub-Fund QP
L.P. and Polaris Fund II LLC, respectively.
ADR American Depositary Receipts.
NIS New Israeli Shekel.
</TABLE>

- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------

THE FIRST ISRAEL FUND, INC.

STATEMENT OF ASSETS AND LIABILITIES - SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
ASSETS
Investments, at value (Cost $64,146,303) (Note A)........... $75,598,079
Cash (Note A)............................................... 1,440,439
Receivables:
Dividends................................................. 84,413
Interest.................................................. 2,461
Note...................................................... 23,563
Prepaid expenses............................................ 17,685
-----------
Total Assets................................................ 77,166,640
-----------

LIABILITIES
Payables:
Investment advisory fee (Note B).......................... 223,999
Israeli capital gains tax (Note A)........................ 28,096
Administration fees (Note B).............................. 19,147
Investments purchased..................................... 5,704
Other accrued expenses.................................... 206,286
-----------
Total Liabilities........................................... 483,232
-----------
NET ASSETS (applicable to 4,463,395 shares of common stock
outstanding) (Note C)...................................... $76,683,408
===========

NET ASSET VALUE PER SHARE ($76,683,408 DIVIDED BY
4,463,395)................................................. $17.18
===========

NET ASSETS CONSIST OF
Capital stock, $0.001 par value; 4,463,395 shares issued and
outstanding (100,000,000 shares authorized)................ $ 4,464
Paid-in capital............................................. 59,745,205
Distribution in excess of net investment loss............... (871,497)
Accumulated net realized gain on investments and foreign
currency related transactions.............................. 6,383,395
Net unrealized appreciation in value of investments and
translation of other assets and liabilities denominated in
foreign currency........................................... 11,421,841
-----------
Net assets applicable to shares outstanding................. $76,683,408
===========
</TABLE>

- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
11
<PAGE>
- --------------------------------------------------------------------------------
THE FIRST ISRAEL FUND, INC.

STATEMENT OF OPERATIONS - FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
INVESTMENT INCOME
Income (Note A):
Dividends................................................. $ 1,777,100
Interest.................................................. 177,677
Less: Foreign taxes withheld.............................. (481,067)
-----------
Total Investment Income................................... 1,473,710
-----------
Expenses:
Investment advisory fees (Note B)......................... 1,043,770
Custodian fees............................................ 161,263
Audit and legal fees...................................... 119,809
Printing.................................................. 104,634
Administration fees (Note B).............................. 93,557
Accounting fees........................................... 75,377
Directors' fees........................................... 45,349
Transfer agent fees....................................... 33,830
NYSE listing fees......................................... 16,170
Insurance................................................. 12,379
Other..................................................... 24,992
Israeli capital gains tax (Note A)........................ 28,096
-----------
Total Expenses............................................ 1,759,226
Less: Fee waivers (Note B)................................ (191,001)
-----------
Net Expenses............................................ 1,568,225
-----------
Net Investment Loss....................................... (94,515)
-----------

NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN
CURRENCY RELATED TRANSACTIONS
Net realized gain/(loss) from:
Investments............................................... 4,699,049
Foreign currency related transactions..................... (113,087)
Net change in unrealized depreciation in value of
investments and translation of other assets and liabilities
denominated in foreign currency............................ 11,510,531
-----------
Net realized and unrealized gain on investments and foreign
currency related transactions.............................. 16,096,493
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $16,001,978
===========
</TABLE>

- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
12
<PAGE>
- --------------------------------------------------------------------------------
THE FIRST ISRAEL FUND, INC.

STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
For the Fiscal Years Ended
September 30,
----------------------------------
1999 1998
----------------------------------
<S> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS
Operations:
Net investment income/(loss).............................. $ (94,515) $ 354,296
Net realized gain on investments and foreign currency
related transactions..................................... 4,585,962 6,122,784
Net change in unrealized appreciation/(depreciation) in
value of investments and translation of other assets and
liabilities denominated in foreign currency.............. 11,510,531 (21,046,316)
----------- ------------
Net increase/(decrease) in net assets resulting from
operations............................................. 16,001,978 (14,569,236)
----------- ------------
Dividends and distributions to shareholders:
Net investment income..................................... (1,105,935) --
Net realized gain on investments.......................... (5,958,298) (2,355,778)
----------- ------------
Total dividends and distributions to shareholders....... (7,064,233) (2,355,778)
----------- ------------
Capital share transactions:
Cost of 548,900 shares repurchased (Note G)............... (7,627,236) --
----------- ------------
Total increase/(decrease) in net assets................. 1,310,509 (16,925,014)
----------- ------------

NET ASSETS
Beginning of year........................................... 75,372,899 92,297,913
----------- ------------
End of year................................................. $76,683,408 $ 75,372,899*
=========== ============
</TABLE>

- ---------------
* Includes undistributed net investment income of $2,231,938.

- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
13
<PAGE>
- --------------------------------------------------------------------------------
THE FIRST ISRAEL FUND, INC.

STATEMENT OF CASH FLOWS - FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
INCREASE/(DECREASE) IN CASH FROM
Operating Activities
Investment income received................................ $ 1,401,133
Operating expenses paid................................... (1,606,490)
------------
Net decrease in cash from operating activities.............. $ (205,357)
Investing Activities
Purchases of long-term portfolio investments.............. (13,528,313)
Proceeds from disposition and maturity of long-term
portfolio investments.................................... 23,203,966
------------
Net increase in cash from investing activities.............. 9,675,653
Financing Activities
Cash paid for shares repurchased.......................... (7,627,236)
Cash dividends and distributions paid..................... (7,064,233)
------------
Net decrease in cash from financing activities.............. (14,691,469)
------------
Net decrease in cash........................................ (5,221,173)
Cash at beginning of year................................... 6,661,612
------------
Cash at end of year (Note A)................................ $ 1,440,439
============

RECONCILIATION OF NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS TO NET DECREASE IN CASH FROM OPERATING
ACTIVITIES
Net increase in net assets resulting from operations........ $ 16,001,978
Adjustments:
Increase in dividends and interest receivable............. $ (72,577)
Increase in prepaid expenses.............................. (7,242)
Decrease in accrued expenses.............................. (31,023)
Net realized and unrealized gain on investments and
foreign currency related transactions.................... (16,096,493)
------------
Total adjustments........................................... (16,207,335)
------------
NET DECREASE IN CASH FROM OPERATING ACTIVITIES.............. $ (205,357)
============
</TABLE>

- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
14
<PAGE>
- --------------------------------------------------------------------------------

THE FIRST ISRAEL 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 Fiscal Years Ended September 30, October 29, 1992*
--------------------------------------------------------------- through
1999+ 1998 1997 1996 1995 1994 September 30, 1993
-------- -------- -------- -------- -------- -------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year...... $15.04 $18.41 $13.10 $13.20 $11.74 $15.83 $13.74**
------- ------- ------- ------- ------- ------- -------
Net investment income/(loss)............ (0.02) 0.07 0.35 (0.09) (0.10) (0.28) (0.07)
Net realized and unrealized gain/(loss)
on investments, foreign currency
related transactions and anti-dilutive
impact of shares repurchased.......... 3.57++ (2.97) 6.20 (0.01) 1.56 (3.27) 2.16
------- ------- ------- ------- ------- ------- -------
Net increase/(decrease) in net assets
resulting from operations............. 3.55 (2.90) 6.55 (0.10) 1.46 (3.55) 2.09
------- ------- ------- ------- ------- ------- -------
Dividends and distributions to
shareholders:
Net investment income................. (0.21) -- -- -- -- -- --
Net realized gain on investments and
foreign currency related
transactions........................ (1.20) (0.47) (1.24) -- -- (0.43) --
In excess of net realized gains....... -- -- -- -- -- (0.11) --
------- ------- ------- ------- ------- ------- -------
Total dividends and distributions to
shareholders.......................... (1.41) (0.47) (1.24) -- -- (0.54) --
------- ------- ------- ------- ------- ------- -------
Net asset value, end of period.......... $ 17.18 $ 15.04 $ 18.41 $ 13.10 $ 13.20 $ 11.74 $ 15.83
======= ======= ======= ======= ======= ======= =======
Market value, end of period............. $14.000 $11.813 $14.938 $11.250 $12.000 $13.250 $17.375
======= ======= ======= ======= ======= ======= =======
Total investment return(a).............. 32.61% (18.05)% 44.36% (6.25)% (9.43)% (21.26)% 24.58%
======= ======= ======= ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000
omitted).............................. $76,683 $75,373 $92,298 $65,649 $66,150 $58,855 $79,274
Ratio of expenses to average net
assets(c)............................. 2.05% 2.06% 2.26% 2.23% 2.57% 2.64% 2.41%(b)
Ratio of expenses to average net assets,
excluding fee waivers................. 2.30% 2.31% 2.30% -- -- -- --
Ratio of net investment income/(loss) to
average net assets.................... (0.12)% 0.42% 2.20% (0.68)% (0.91)% (2.08)% (0.50)%(b)
Portfolio turnover rate................. 18.65% 29.11% 16.98% 21.68% 22.17% 17.07% 34.80%
</TABLE>

- --------------------------------------------------------------------------------

<TABLE>
<S> <C>
* 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 $0.21 per share.
+ Based on average shares outstanding, except for dividends
and distributions to shareholders which are based on actual
dividends and distributions paid.
++ Includes a $0.36 per share increase to the Fund's net asset
value per share resulting from the anti-dilutive impact of
shares repurchased pursuant to the Fund's share repurchase
program for the fiscal year ended September 30, 1999.
(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) Ratios reflect actual expenses incurred by the Fund. Amounts
are net of fee waivers.
</TABLE>

- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
15
<PAGE>
- --------------------------------------------------------------------------------

THE FIRST ISRAEL FUND, INC.

NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

NOTE A. SIGNIFICANT ACCOUNTING POLICIES

The First Israel Fund, Inc. (the "Fund") was incorporated in Maryland on March
6, 1990 and commenced investment operations on October 29, 1992. The Fund is
registered under the Investment Company Act of 1940, as amended, as a
closed-end, non-diversified management investment company. Significant
accounting policies are as follows:

MANAGEMENT ESTIMATES: The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make certain
estimates and assumptions that may affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.

PORTFOLIO VALUATION: Investments are stated at value in the accompanying
financial statements. All securities for which market quotations are readily
available are valued at the last sales price or lacking any sales, at the
closing price last quoted for the securities (but if bid and asked quotations
are available, at the mean between the current bid and asked prices). Securities
that are traded over-the-counter are valued at the mean between the current bid
and the asked prices. All other securities and assets are valued at fair value
as determined in good faith by the Board of Directors. Short-term investments
having a maturity of 60 days or less are valued on the basis of amortized cost.
The Board of Directors has established general guidelines for calculating fair
value of not readily marketable securities. At September 30, 1999, the Fund held
11.65% of its net assets in securities valued in good faith by the Board of
Directors with an aggregate cost of $9,653,089 and fair value of $8,932,898. 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 September 30, 1999, the
interest rate was 4.70% 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.

Pursuant to a ruling the Fund received from the Israeli tax authorities, the
Fund, subject to certain conditions, will not be subject to Israeli tax on
capital gains derived from the sale of securities listed on the Tel Aviv Stock
Exchange ("TASE"). Gains derived from securities not listed on TASE (unlisted
securities) will be subject to a 25% Israeli tax provided the security is an
approved investment. Generally, stock of corporations that produce a product or
provide a service that support the infrastructure of Israel, are considered
approved investments. Any gain sourced to unlisted unapproved securities are
subject to a 40% Israeli tax and an inflationary tax. Dividends derived from
listed or approved securities are subject to 15% withholding tax, while
dividends from unlisted unapproved securities are subject to a 25% withholding
tax. Interest on debt obligations (whether listed or not) is subject to
withholding tax of 25% to 35%. The Fund records deferred Israeli capital gains
taxes on the net unrealized

- --------------------------------------------------------------------------------
16
<PAGE>
- --------------------------------------------------------------------------------
THE FIRST ISRAEL FUND, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
appreciation on unlisted Israeli debt obligations. At September 30, 1999, the
Fund had deferred $28,096 in Israeli capital gains taxes on unlisted Israeli
debt obligations.

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. However, the Fund does isolate the
effect of fluctuations in foreign exchange rates when determining the gain or
loss upon the sale or maturity of foreign currency denominated debt obligations
pursuant to U.S. federal income tax regulations, with such amount categorized as
foreign exchange gain or loss for both financial reporting and U.S. federal
income tax reporting purposes.

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 sales and maturities of debt securities, transactions in foreign currency
and forward foreign currency contracts, exchange gains or losses realized
between the trade date and settlement dates on security transactions, and the
difference between the amounts of interest and dividends recorded on the Fund's
books and the U.S. dollar equivalent of the amounts actually received.

DISTRIBUTIONS OF INCOME AND GAINS: The Fund distributes at least annually to
shareholders, substantially all of its net investment income and net realized
short-term capital gains, if any. The Fund determines annually whether to
distribute any net realized long-term capital gains in excess of net realized
short-term capital losses, including capital loss carryovers, if any. An
additional distribution may be made to the extent necessary to avoid the payment
of a 4% U.S. federal excise tax. Dividends and distributions to shareholders are
recorded by the Fund on the ex-dividend date.

The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for U.S.
federal income tax purposes due to U.S. generally accepted accounting
principles/tax differences in the character of income and expense recognition.

At September 30, 1999, the Fund reclassifed $1,902,985 from distribution in
excess of net investment loss to accumulated net realized gain 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.

Investments in Israel may involve certain considerations and risks not typically
associated with investments in the U.S., including the possibility of

- --------------------------------------------------------------------------------
17
<PAGE>
- --------------------------------------------------------------------------------
THE FIRST ISRAEL FUND, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
future political and economic developments and the level of Israeli governmental
supervision and regulation of its securities markets. The Israeli securities
markets are substantially smaller, less liquid and more volatile than the major
securities markets in the United States. Consequently, acquisition and
disposition of securities by the Fund may be inhibited.

The Fund, subject to local investment limitations, may invest up to 30% of its
assets in illiquid equity securities, including securities of private equity
funds (whether in corporate or partnership form) that invest primarily in the
emerging markets. When investing through another investment fund, the Fund will
bear its proportionate share of the expenses incurred by that fund, including
management fees. Such securities are expected to be illiquid which may involve a
high degree of business and financial risk and may result in substantial losses.
Because of the current absence of any liquid trading market for these
investments, the Fund may take longer to liquidate these positions than would be
the case for publicly traded securities. Although these securities may be resold
in privately negotiated transactions, the prices realized on such sales could be
substantially less than those originally paid by the Fund or the current
carrying values. Further, companies whose securities are not publicly traded may
not be subject to the disclosures and other investor protection requirements
applicable to companies whose securities are publicly traded.

In addition, the Board of Directors has approved to remove the limitation set
forth in the Fund's prospectus requiring that the portion of the Fund's
investments not invested in Israeli securities be invested in securities of
companies that are substantially involved in or with Israel ("Israeli-Related
Securities").

NOTE B. AGREEMENTS

Credit Suisse Asset Management, LLC ("CSAM"), formerly BEA Associates, serves as
the Fund's investment adviser with respect to all investments. As compensation
for its advisory services, CSAM receives from the Fund an annual fee, calculated
weekly and paid quarterly, equal to 1.30% of the Fund's average weekly net
assets invested in listed securities (including securities traded
over-the-counter in the United States) and 2.00% of the Fund's average weekly
net assets invested in unlisted Israeli securities. The aggregate fee may not
exceed an annual rate of 1.40% of the Fund's average weekly net assets. CSAM has
agreed to waive the advisory fee previously payable to the Fund's former
investment sub-adviser. For the fiscal year ended September 30, 1999, CSAM
earned $1,043,770 for advisory services, of which CSAM waived $191,001. CSAM
also provides certain administrative services to the Fund and is reimbursed by
the Fund for costs incurred on behalf of the Fund (up to $20,000 per annum). For
the fiscal year ended September 30, 1999, CSAM was reimbursed $9,630 for
administrative services rendered to the Fund.

Analyst Exchange and Trading Services Ltd. ("Analyst I.M.S.") serves as the
Fund's investment sub-adviser. Prior to February 10, 1999, Analyst I.M.S. was
paid a fee, out of the advisory fee payable to CSAM, computed weekly and paid
quarterly at an annual rate of 0.20% of the Fund's average weekly net assets. In
addition, CSAM paid Analyst I.M.S., out of its advisory fee, a reimbursement for
any Israeli Value Added taxes (currently 17%) and $12,500 annually to cover
expenses incurred in the execution of sub-advisory services. Effective February
10, 1999, and pursuant to the sub-advisory agreement, Analyst I.M.S. is paid a
fee, out of the advisory fee payable to CSAM, computed weekly and paid quarterly
at an annual rate of 0.30% of the Fund's average weekly net assets. In addition,
CSAM pays Analyst I.M.S., out of its advisory fee, a reimbursement for any
Israeli Value Added taxes (currently 17%) and $25,000 annually to cover expenses
incurred in the execution of sub-advisory

- --------------------------------------------------------------------------------
18
<PAGE>
- --------------------------------------------------------------------------------
THE FIRST ISRAEL FUND, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------
services. For the fiscal year ended September 30, 1999, Analyst I.M.S. earned
$257,767 for sub-advisory services.

Analyst I.M.S. has certain commercial arrangements with banks and brokers in
Israel from which they receive a portion of the commission on trades executed in
Israel. For the fiscal year ended September 30, 1999, such commissions amounted
to approximately $16,700.

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
0.11% of the Fund's average weekly net assets. For the fiscal year ended
September 30, 1999, BSFM earned $83,927 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 4,463,395 shares outstanding at September 30, 1999,
CSAM owned 7,169 shares.

NOTE D. INVESTMENT IN SECURITIES

For U.S. federal income tax purposes, the cost of securities owned at September
30, 1999 was $66,777,758. Accordingly, the net unrealized appreciation of
investments (including investments denominated in foreign currency) of
$8,820,321, was composed of gross appreciation of $14,207,329, for those
investments having an excess of value over cost and gross depreciation of
$5,387,008, for those investments having an excess of cost over value.

For the fiscal year ended September 30, 1999, purchases and sales of securities,
other than short-term investments, were $13,534,017 and $22,107,081,
respectively.

NOTE E. CREDIT AGREEMENT

The Fund, along with 10 other U.S. regulated investment companies for which CSAM
serves as investment adviser, had a credit agreement with BankBoston, N.A. The
agreement provided that each fund was permitted to borrow an amount equal to the
lesser of $25,000,000 or 25% of the net assets of the fund. However, at no time
shall the aggregate outstanding principal amount of all loans to any of the 11
funds exceed $25,000,000. The line of credit bore interest at (i) the greater of
the bank's prime rate or the Federal Funds Effective Rate plus 0.50% or (ii) the
Adjusted Eurodollar Rate plus 1.50%. The maximum amount outstanding under the
credit agreement for the Fund was $1,100,000 with an average loan balance of
$21,096 with an interest rate of 7.75% during the fiscal year ended September
30, 1999. The above credit agreement was terminated as of June 30, 1999.

- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
THE FIRST ISRAEL FUND, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

NOTE F. RESTRICTED SECURITIES

Certain of the Fund's investments are restricted as to resale and are valued at
the direction of the Fund's Board of Directors in good faith, at fair value,
after taking into consideration appropriate indications of value. The table
below shows the number of shares held, the acquisition dates, aggregate cost,
fair value as of September 30, 1999, value per share of such securities and
percentage of net assets which the securities comprise.

<TABLE>
PERCENT
FAIR VALUE OF
NUMBER OF ACQUISITION AT VALUE PER NET
SECURITY SHARES DATES COST 09/30/99 SHARE ASSETS
- ------------------------------------------ ------- -------- -------- -------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
ABS GE Capital Giza Fund, L.P............. 50,544 02/03/98 $ 43,729 $ 35,426 $ 0.70 0.05
ABS GE Capital Giza Fund, L.P............. 87,203 04/22/98 75,447 61,120 0.70 0.08
ABS GE Capital Giza Fund, L.P............. 175,532 05/20/98 151,867 123,028 0.70 0.16
ABS GE Capital Giza Fund, L.P............. 200,000 05/06/99 79,575 140,178 0.70 0.18
ABS GE Capital Giza Fund, L.P............. 150,000 08/02/99 120,232 105,133 0.70 0.14
Advent Israel (Bermuda) L.P............... 650,000 06/16/93 520,340 845,207 1.30 1.10
Advent Israel (Bermuda) L.P............... 350,000 06/10/96 344,798 455,112 1.30 0.59
Advent Israel (Bermuda) L.P............... 682,293 01/16/98 772,235 887,198 1.30 1.16
Emerging Markets Ventures I L.P........... 10,667 01/22/98 10,868 10,613 0.99 0.01
Emerging Markets Ventures I L.P........... 469,493 05/05/98 478,366 467,108 0.99 0.61
Emerging Markets Ventures I L.P........... 231,739 07/07/98 236,119 230,562 0.99 0.30
Emerging Markets Ventures I L.P........... 183,217 10/27/98 203,598 182,286 0.99 0.24
Emerging Markets Ventures I L.P........... 105,548 02/26/99 105,549 105,012 0.99 0.14
Emerging Markets Ventures I L.P........... 42,751 04/19/99 42,751 42,534 0.99 0.05
Emerging Markets Ventures I L.P........... 24,429 08/24/99 34,254 24,305 0.99 0.03
Formula Ventures L.P...................... 350,000 08/06/99 363,580 341,600 0.98 0.45
K.T. Concord Sub-Fund QP L.P.............. 250,000 12/08/97 242,295 305,928 1.22 0.40
K.T. Concord Sub-Fund QP L.P.............. 100,000 12/28/98 100,000 122,371 1.22 0.16
K.T. Concord Sub-Fund QP L.P.............. 150,000 03/12/99 150,000 183,557 1.22 0.24
K.T. Concord Sub-Fund QP L.P.............. 100,000 08/03/99 100,000 122,371 1.22 0.16
K.T. Concord Sub-Fund QP L.P.............. 50,000 08/25/99 22,427 61,186 1.22 0.08
Polaris Fund II LLC....................... 250,000 10/31/96 236,352 366,288 1.47 0.47
Polaris Fund II LLC....................... 125,000 03/04/98 120,160 183,145 1.47 0.24
Polaris Fund II LLC....................... 125,000 10/08/98 125,000 183,145 1.47 0.24
Polaris Fund II LLC....................... 125,000 06/09/99 105,346 183,145 1.47 0.24
Superbowl Acquisition LDC................. 36 10/10/94 347,429 495,252 13,757.00 0.65
The Renaissance Fund LDC.................. 26 03/30/94 285,039 198,262 7,640.18 0.26
The Renaissance Fund LDC.................. 14 02/24/95 143,408 106,710 7,640.18 0.14
The Renaissance Fund LDC.................. 11 03/13/96 113,958 84,730 7,640.18 0.11
The Renaissance Fund LDC.................. 7 06/13/96 68,374 50,830 7,640.18 0.07
The Renaissance Fund LDC.................. 2 03/21/97 31,513 17,802 7,640.18 0.02
Walden-Israel Ventures, L.P............... 45,000 09/28/93 25,710 30,056 0.67 0.04
Walden-Israel Ventures, L.P............... 80,000 11/30/93 69,901 53,433 0.67 0.07
Walden-Israel Ventures, L.P............... 125,000 05/24/95 109,220 83,487 0.67 0.11
Walden-Israel Ventures, L.P............... 125,000 08/08/96 109,220 83,487 0.67 0.11
Walden-Israel Ventures, L.P............... 125,000 05/16/97 104,131 83,487 0.67 0.11
</TABLE>

The Fund may incur certain costs in connection with the disposition of the above
securities.

- --------------------------------------------------------------------------------
20
<PAGE>
- --------------------------------------------------------------------------------
THE FIRST ISRAEL FUND, INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)
- --------------------------------------------------------------------------------

NOTE G. SHARE REPURCHASE PROGRAM

On October 21, 1998, the Board of Directors authorized the repurchase by the
Fund of up to 15% of the Fund's outstanding common stock, for purposes of
enhancing shareholder value. The Fund's Board has authorized management of the
Fund to repurchase such shares in open market transactions at prevailing market
prices from time to time and in a manner consistent with the Fund continuing to
seek to achieve its investment objectives. The Board's actions were taken in
light of the significant discounts at which the Fund's shares were trading. It
is intended both to provide additional liquidity to those shareholders that
elect to sell their shares and to enhance the net asset value of the shares held
by those shareholders that maintain their investment. The repurchase program is
subject to review by the Board of Directors of the Fund. From October 21, 1998
through September 30, 1999, the Fund repurchased 548,900 of its shares for a
total cost of $7,627,236 at a weighted average discount of 18.29% from net asset
value. The discount of individual repurchases ranged from 15.15% - 22.30%.

- --------------------------------------------------------------------------------

21
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors
of The First Israel 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, cash flows and the financial highlights present fairly,
in all material respects, the financial position of The First Israel Fund, Inc.
(the "Fund") at September 30, 1999, and the results of its operations, the
changes in its net assets, its cash flows 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 September 30, 1999 by correspondence with the
custodian, brokers and issuers, provide a reasonable basis for the opinion
expressed above.

PricewaterhouseCoopers LLP

2400 Eleven Penn Center
Philadelphia, Pennsylvania
November 23, 1999

- --------------------------------------------------------------------------------
22
<PAGE>
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)

On February 9, 1999, the Annual Meeting of Shareholders of The First Israel
Fund, Inc. (the "Fund") was held and the following matters were voted upon:

(1) To re-elect three directors to the Board of Directors of the Fund.

<TABLE>
<CAPTION>
NAME OF DIRECTOR FOR WITHHELD NON-VOTES
- ---------------- --------- -------- ---------
<S> <C> <C> <C>
Jonathan W. Lubell 2,865,858 709,468 1,436,969
Steven N. Rappaport 3,414,236 161,090 1,436,969
Richard W. Watt 2,882,426 692,900 1,436,969
</TABLE>

In addition to the directors re-elected at the meeting, Dr. Enrique R. Arzac,
Peter A. Gordon, George W. Landau and William W. Priest, Jr. continue to serve
as directors of the Fund.

(2) To ratify the selection of PricewaterhouseCoopers LLP as independent public
accountants for the fiscal year ending September 30, 1999.

<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN NON-VOTES
--------- -------- -------- ---------
<S> <C> <C> <C> <C>
3,471,537 76,567 27,222 1,436,969
</TABLE>

(3) To approve or reject the shareholder proposal recommending that the Fund be
converted into an open-end investment company.

<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN BROKER NON-VOTES NON-VOTES
--------- -------- -------- ---------------- ---------
<S> <C> <C> <C> <C> <C>
1,311,159 589,821 69,967 1,604,379 1,436,969
</TABLE>

The above resolution was approved. Since the resolution was in the form of a
recommendation only, it did not require for its passage the vote generally
required under the Fund's charter (75% of outstanding shares) to open-end the
Fund. The Board considered the proposal at its subsequent meeting and
unanimously voted not to implement the recommendation at that time.

On October 21, 1998, the Board authorized the repurchase by the Fund of up to
15% of the Fund's outstanding common stock, for the purpose of enhancing
shareholder value. This program is currently being implemented.

- --------------------------------------------------------------------------------
23
<PAGE>
TAX INFORMATION (UNAUDITED)

The Fund is required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise its shareholders within 60 days of the Fund's fiscal year end
(September 30, 1999) as to the U.S. federal tax status of dividends and
distributions received by the Fund's shareholders in respect of such fiscal
year. Of the $1.41 per share distribution paid in respect of such fiscal year,
$0.21 per share was derived from net investment income, $0.03 per share was
derived from net realized short-term capital gains and $1.17 per share was
derived from net realized long-term capital gains. There were no distributions
which would qualify for the dividend received deduction available to corporate
shareholders.

The Fund does not intend to make an election under Section 853 to pass through
foreign taxes paid by the Fund to its shareholders. This information is given to
meet certain requirements of the Internal Revenue Code of 1986, as amended.
Shareholders should refer to their Form 1099-DIV to determine the amount
includable on their respective tax returns for 1999.

Because the Fund's fiscal year is not the calendar year, another notification
will be sent in respect of calendar year 1999. The notification will reflect the
amount, if any, that calendar year 1999 taxpayers will report on their U.S.
federal income tax returns. Such notification will be mailed with Form 1099-DIV
in January 2000.

Foreign shareholders will generally be subject to U.S. withholding tax on the
amount of their distribution. They will generally not be entitled to a foreign
tax credit or deduction for the withholding taxes paid by the Fund.

In general, distributions received by tax-exempt recipients (e.g., IRAs and
Keoghs) need not be reported as taxable income for U.S. federal income tax
purposes. However, some retirement trusts (e.g., corporate, Keogh and 403(b)(7)
plans) may need this information for their annual information reporting.

Shareholders are advised to consult their own tax advisers with respect to the
tax consequences of their investments in the Fund.

- --------------------------------------------------------------------------------
24
<PAGE>
DESCRIPTION OF INVESTLINK-SM-* PROGRAM

The InvestLink-SM- Program is sponsored and administered by BankBoston, N.A.,
not by The First Israel Fund, Inc. (the "Fund"). BankBoston, N.A. will act as
program administrator (the "Program Administrator") of the InvestLink-SM-
Program (the "Program"). The purpose of the Program is to provide interested
investors with a simple and convenient way to invest funds and reinvest
dividends in shares of the Fund's common stock ("Shares") at prevailing prices,
with reduced brokerage commissions and fees.

An interested investor may join the Program at any time. Purchases of Shares
with funds from a participant's cash payment or automatic account deduction will
begin on the next day on which funds are invested. If a participant selects the
dividend reinvestment option, automatic investment of dividends generally will
begin with the next dividend payable after the Program Administrator receives
his enrollment form. Once in the Program, a person will remain a participant
until he terminates his participation or sells all Shares held in his Program
account, or his account is terminated by the Program Administrator. A
participant may change his investment options at any time by requesting a new
enrollment form and returning it to the Program Administrator.

A participant will be assessed certain charges in connection with his
participation in the Program. First-time investors will be subject to an initial
service charge which will be deducted from their initial cash deposit. All
optional cash deposit investments will be subject to a service charge. Sales
processed through the Program will have a service fee deducted from the net
proceeds, after brokerage commissions. In addition to the transaction charges
outlined above, participants will be assessed per share processing fees (which
include brokerage commissions.) Participants will not be charged any fee for
reinvesting dividends.

The number of Shares to be purchased for a participant depends on the amount of
his dividends, cash payments or bank account or payroll deductions, less
applicable fees and commissions, and the purchase price of the Shares. The
Program Administrator uses dividends and funds of participants to purchase
Shares of 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

- --------------------------------------------------------------------------------
25
<PAGE>
DESCRIPTION OF INVESTLINK-SM-* PROGRAM (CONTINUED)

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

- --------------------------------------------------------------------------------
26
<PAGE>
DESCRIPTION OF INVESTLINK-SM-* 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) 969-3321; 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 is a service mark of Boston EquiServe Limited Partnership.

- --------------------------------------------------------------------------------
27
<PAGE>
RECENT DEVELOPMENTS (UNAUDITED)

Recently, the Securities and Exchange Commission (the "SEC") amended Rule
14a-4(c) under the Securities Exchange Act of 1934, as amended (the "1934 Act")
which governs The First Israel Fund, Inc.'s (the "Fund") use of discretionary
proxy voting authority with respect to shareholder proposals that are not being
included in the Fund's proxy solicitation material pursuant to Rule 14a-8 of the
1934 Act. Partly in connection thereto, the Fund's Board of Directors reviewed
the By-laws of the Fund and made the following material changes: 1) the
percentage of ownership needed for stockholders to request a special meeting has
been increased from 25% to a majority of the outstanding capital stock of the
Fund entitled to vote at such meeting; 2) the advance notice requirements
applicable to stockholder proposals at annual meetings and for nominations by
stockholders for election to the Board of Directors have been revised to reflect
changes in Rule 14a-4(c); and 3) the Board's ultimate authority concerning the
reimbursement of the expenses of solicitation of proxies for the election of
Directors has been clarified. The Fund's By-laws are on file with the SEC and
are accessible through the SEC web site (www.sec.gov) or may be obtained from
the Secretary of the Fund upon request.

- --------------------------------------------------------------------------------
28
<PAGE>
SUMMARY OF GENERAL INFORMATION

The Fund--The First Israel Fund, Inc.--is a closed-end, non-diversified
management investment company whose shares trade on the New York Stock Exchange.
Its investment objective is long-term capital appreciation through investments
primarily in equity securities of Israeli companies. The Fund is managed and
advised by Credit Suisse Asset Management, LLC ("CSAM"), formerly known as BEA
Associates. CSAM is a diversified asset manager, handling equity, balanced,
fixed income, international and derivative based accounts. Portfolios include
international and emerging market investments, common stocks, taxable and
non-taxable bonds, options, futures and venture capital. CSAM manages money for
corporate pension and profit-sharing funds, public pension funds, union funds,
endowments and other charitable institutions and private individuals. As of
September 30, 1999, CSAM-Americas managed approximately $58.6 billion in assets.

SHAREHOLDER INFORMATION

The market price is published in: THE NEW YORK TIMES (daily) under the
designation "FtIsrl" and THE WALL STREET JOURNAL (daily), and BARRON'S (each
Monday) under the designation "FstIsrael". The Fund's New York Stock Exchange
trading symbol is ISL. Weekly comparative net asset value (NAV) and market price
information about The First Israel Fund, Inc.'s shares are published each Sunday
in THE NEW YORK TIMES and each Monday in THE WALL STREET JOURNAL and BARRON'S,
as well as other newspapers, in a table called "Closed-End Funds."

THE CSAM GROUP OF FUNDS

LITERATURE REQUEST--Call today for free descriptive information on the
closed-end funds listed below at 1-800-293-1232 or visit our website on the
Internet: http://www.cefsource.com.

CLOSED-END FUNDS
SINGLE COUNTRY
The Brazilian Equity Fund, Inc. (BZL)
The Chile Fund, Inc. (CH)
The Indonesia Fund, Inc. (IF)
The Portugal Fund, Inc. (PGF)

MULTIPLE COUNTRY
The Emerging Markets Infrastructure Fund, Inc. (EMG)
The Emerging Markets Telecommunications Fund, Inc. (ETF)
The Latin America Equity Fund, Inc. (LAQ)
The Latin America Investment Fund, Inc. (LAM)

FIXED INCOME
Credit Suisse Asset Management Income Fund, Inc. (CIK)
Credit Suisse Asset Management Strategic Global Income Fund, Inc. (CGF)

Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that The First Israel Fund, Inc. may from time
to time purchase shares of its capital stock in the open market.
- --------------------------------------------------------------------------------
<PAGE>
DIRECTORS AND CORPORATE OFFICERS

<TABLE>
<S> <C>
Dr. Enrique R. Arzac Director

Peter A. Gordon Director

George W. Landau Director

Jonathan W. Lubell Director

Steven N. Rappaport Director

William W. Priest, Jr. Chairman of the Board of
Directors

Richard W. Watt President, Chief
Investment Officer and
Director

Hal Liebes Senior Vice President

Michael A. Pignataro Chief Financial Officer
and Secretary

Rocco A. Del Guercio Vice President
</TABLE>

INVESTMENT ADVISER

Credit Suisse Asset Management, LLC
One Citicorp Center
153 East 53rd Street
New York, NY 10022

ADMINISTRATOR

Bear Stearns Funds Management Inc.
575 Lexington Avenue
New York, NY 10022

CUSTODIAN

Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109

SHAREHOLDER SERVICING AGENT

BankBoston, N.A.
P.O. Box 1865
Mail Stop 45-02-62
Boston, MA 02105-1865

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, PA 19103

LEGAL COUNSEL

Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022

<TABLE>
<S> <C>
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. [LOGO]
</TABLE>

- --------------------------------------------------------------------------------
3917-AR-99