UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED
SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number
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811-6024
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THE INDONESIA FUND, INC.
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(Exact name of registrant as
specified in charter)
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Eleven Madison Avenue, New York, New York
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10010
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(Address of principal executive
offices)
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(Zip code)
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J. Kevin Gao, Esq.
The Indonesia Fund, Inc.
Eleven Madison Avenue
New York, New York 10010
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(Name and address of agent for
service)
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Registrants telephone number, including
area code:
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(212) 325-2000
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Date of fiscal year end:
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December
31st
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Date of reporting period:
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January 1,
2008 to December 31, 2008
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Item 1. Reports to Stockholders.
THE INDONESIA
FUND, INC.
ANNUAL REPORT
DECEMBER 31, 2008
IF-AR-1208
LETTER TO SHAREHOLDERS (UNAUDITED)
February 9, 2009
Dear Shareholder:
For the twelve-month period ended December 31, 2008, The Indonesia Fund, Inc. (the "Fund") had a decrease in its net asset value of -55.32%, vs. a decrease of -57.57% for the Morgan Stanley Capital International Indonesia Index (net dividends) (the "Index").* Based on market price, the Fund's shares decreased by -56.94% during the period.
Market Review: A volatile period
The year ending December 31, 2008, was a tough one by any standards. While Indonesia weathered regional volatility well in the first half of the year, the market succumbed to the pressure in the second half as commodity prices, led by crude oil, began to deteriorate at a fast pace.
Amid concerns that Welfare Minister and wealthy entrepreneur Aburizal Bakrie may not be able to pay his creditors, financing arrangements based on shares of Bakrie-related companies came under scrutiny and suffered severe price declines across the board. Selling pressure intensified with rumors of brokers running into financial difficulties due to loans collateralized by the plummeting Bakrie-related stocks.
The rupiah came under pressure, reaching a 10-year low of Rp13,000 to US$1, due to capital outflows from liquidation of short-term government paper held by foreigners. This exacerbated existing concerns brought about by commodity weakness and deleveraging from hedge funds.
Inflation remained high after the Moslem New Year on January 10a fact that delayed the central bank's response to slowing economic activities (rate increases were made in October).
The General Elections Commission kicked off the campaign season by creating 18 new parties for the 2009 legislative election. This and the presidential election, also being held in 2009, have added to market uncertainty particularly at a time when coherent economic policies must be enacted and executed to help weather the economic slowdown.
Strategic Review and Outlook: Remaining defensive going forward
For the year ended December 31, 2008, the Fund outperformed its benchmark. This outperformance was mainly due to our significant underweight in Bumi Resources (3.3% of the Fund as of December 31, 2008). This security had an 85% drop in share price for the year. Additionally, positive contributions came from stock selection in consumer staples and underweights in the cyclical materials and real estate sectors. Conversely, underweights to banks and telecommunications dragged down performance.
Despite favorable signs, such as the fact that sales of big-ticket items like cars and motorcycles held up until late 2008, we believe expectations calling for a sharp slowdown in the months ahead are more realistic. Similarly, bank loan growth, which tracked above 35% growth for the first 10 months of the year, despite the global crisis, should be more subdued for 2009 (expectations are for loan growth to halve). And, stories of recent losses of wealth that was created by formerly strong prices in the soft commodity chain does not bode well for near term.
External events arising from the credit crisis, risk aversion, demand destruction and the fall in commodity prices all point to a period of slowdown for Indonesia. Policy responses have been somewhat slower than expected due to inflation, lobby groups, and internal disagreements. In an overwhelmingly pessimistic prognosis for Indonesia, positive indicators are
1
LETTER TO SHAREHOLDERS (UNAUDITED) (CONTINUED)
lower fuel prices in line with falling world crude oil prices, slowly falling interest rates, and a financially strong banking system. However, due to less policy certainty in the 2009 election year, the extent of the slowdown in major economies, and the direction of commodity prices, the outlook is for muted GDP growth of .4% (substantially below 2008's 6%). We expect inflation to ease, on account of falling fuel prices.
In view of the global economic and domestic political uncertainty, we will remain defensive going forward. We are positive on consumer staples (namely food and beverages), materials (specifically cement, which should benefit from plays on the increased infrastructure spending and has attractive valuations), and mildly positive on energy and coal mining (given the drop in share prices). We are less positive on financials (namely banks due to muted loan growth, the potential rise in non-performing loans, and margin compression), and slightly negative on real estate (amid declining demand). We will keep the portfolio inclined toward companies with more resilient outlooks, such as consumer staples, telecommunications, and selected industrials benefiting from increased government fiscal spending.
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Boon Hong Yeo
Chief Investment Officer**
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George Hornig
Chief Executive Officer and President***
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International investing entails special risk considerations, including currency fluctuations, lower liquidity, economic and political risks, and differences in accounting methods. There are also risks associated with investing in Indonesia, including the risk of investing in a single-country fund.
In addition to historical information, this report contains forward-looking statements, which may concern, among other things, domestic and foreign market, industry and economic trends and developments and government regulation and their potential impact on the Fund's investments. These statements are subject to risks and uncertainties and actual trends, developments and regulations in the future and their impact on the Fund could be materially different from those projected, anticipated or implied. The Fund has no obligation to update or revise forward-looking statements.
* The Morgan Stanley Capital International Indonesia Index (net dividends) is an unmanaged index (with no defined investment objective) of Indonesian equities that includes reinvestment of net dividends, and is the exclusive property of Morgan Stanley Capital International Inc. Investors cannot invest directly in an index.
** Boon Hong Yeo, who is a Director of Credit Suisse Asset Management Limited ("Credit Suisse Ltd."), the Fund's sub-adviser, is primarily responsible for management of the Fund's assets. He has served the Fund in such capacity since January17, 2003. Mr. Yeo joined Credit Suisse Ltd. in 2002 from AIB Govett (Asia) Limited in Singapore, where he was Director of Private Equity and managed Asian equity portfolios. Previously, he was founder and Managing Director of Zenith Asset Management Singapore; and held various positions in Asian equity portfolio management, investment banking and corporate banking in Singapore.
*** George Hornig is a Managing Director of Credit Suisse. He is the Co-Chief Operating Officer of Asset Management and Head of Asset Management Americas. Mr. Hornig has been associated with Credit Suisse since 1999.
2
THE INDONESIA FUND, INC.
PORTFOLIO SUMMARY
DECEMBER 31, 2008 (UNAUDITED)
SECTOR ALLOCATION
TOP TEN HOLDINGS, BY ISSUER
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Holding
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Sector
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Percent of
Net Assets
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1.
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PT Telekomunikasi Indonesia
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Diversified Telecommunication Services
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22.1
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2.
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PT Bank Central Asia Tbk
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Commercial Banks
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13.7
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3.
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PT Astra International Tbk
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Automobiles
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6.9
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4.
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PT Perusahaan Gas Negara
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Gas Utilities
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6.5
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5.
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PT Bank Mandiri
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Commercial Banks
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5.6
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6.
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PT Bank Rakyat Indonesia
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Commercial Banks
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5.5
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7.
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PT Indosat Tbk
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Diversified Telecommunication Services
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4.4
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8.
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PT Unilever Indonesia Tbk
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Household Products
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4.4
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9.
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PT Bumi Resources Tbk
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Oil, Gas & Consumable Fuels
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3.3
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10.
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PT United Tractors Tbk
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Machinery
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2.9
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3
THE INDONESIA FUND, INC.
AVERAGE ANNUAL RETURNS
DECEMBER 31, 2008 (UNAUDITED)
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1 Year
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3 Years
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5 Years
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10 Years
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Net Asset Value (NAV)
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(55.32
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)%
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(1.11
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)%
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8.58
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%
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8.24
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%
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Market Value
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(56.94
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)%
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(3.29
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)%
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1.87
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%
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4.56
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%
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Credit Suisse may waive fees and/or reimburse expenses, without which performance would be lower. Waivers and/or reimbursements are subject to change and may be discontinued at any time. Returns represent past performance. Total investment return at net asset value is based on changes in the net asset value of fund shares and assumes reinvestment of dividends and distributions, if any. Total investment return at market value is based on changes in the market price at which the fund's shares traded on the stock exchange during the period and assumes reinvestment of dividends and distributions, if any, at actual prices pursuant to the fund's dividend reinvestment program. Because the fund's shares trade in the stock market based on investor demand, the fund may trade at a price higher or lower than its NAV. Therefore, returns are calculated based on share price and NAV.
Past performance is no guarantee of future results.
The current performance of the fund may be lower or higher than the figures shown. The fund's yield, return and market price and NAV will fluctuate. Performance information current to the most recent month-end is available by calling 800-293-1232.
The annualized gross and net expense ratios are 1.62%.
4
THE INDONESIA FUND, INC.
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2008
Description
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No. of
Shares
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|
Value
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EQUITY OR EQUITY-LINKED SECURITIES-93.52%
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INDONESIA-90.37%
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AUTOMOBILES-6.93%
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PT Astra International Tbk
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3,312,461
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$
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3,255,501
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COMMERCIAL BANKS-26.21%
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PT Bank Central Asia Tbk
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21,357,000
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6,458,206
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PT Bank Danamon
Indonesia Tbk
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2,183,000
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633,182
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PT Bank Mandiri
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13,884,500
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2,635,577
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PT Bank Rakyat Indonesia
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6,100,000
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2,594,033
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12,320,998
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CONSTRUCTION & ENGINEERING-0.24%
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PT Adhi Karya Tbk
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4,525,000
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113,741
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CONSTRUCTION MATERIALS-3.96%
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PT Holcim Indonesia Tbk
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1,419,000
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|
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83,802
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PT Indocement Tunggal
Prakarsa Tbk
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1,711,000
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738,928
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PT Semen Gresik
(Persero) Tbk
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2,692,000
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1,038,112
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1,860,842
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DIVERSIFIED TELECOMMUNICATION SERVICES-26.50%
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PT Indosat Tbk
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3,859,000
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2,052,142
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PT Telekomunikasi Indonesia
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16,275,560
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10,402,072
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12,454,214
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FOOD PRODUCTS-3.83%
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PT Astra Agro Lestari Tbk
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762,500
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698,072
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PT Indofood Sukses
Makmur Tbk
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12,703,500
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1,102,494
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1,800,566
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GAS UTILITIES-6.46%
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PT Perusahaan Gas Negara
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17,356,000
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|
|
|
3,034,249
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HOUSEHOLD PRODUCTS-4.36%
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PT Unilever Indonesia Tbk
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2,832,000
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2,051,366
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MACHINERY-2.89%
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PT United Tractors Tbk
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3,244,700
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|
|
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1,356,765
|
|
|
Description
|
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No. of
Shares
|
|
Value
|
|
MULTILINE RETAIL-1.21%
|
|
PT Matahari Putra Prima Tbk
|
|
|
6,335,000
|
|
|
$
|
371,439
|
|
|
PT Matahari Putra Prima Tbk
Warrants (Strike Price: 900 IDR;
expiring 07/12/10)
|
|
|
3,104,125
|
|
|
|
4,272
|
|
|
PT Ramayana Lestari
Sentosa Tbk
|
|
|
4,218,000
|
|
|
|
194,975
|
|
|
|
|
|
570,686
|
|
|
OIL, GAS & CONSUMABLE FUELS-6.21%
|
|
PT Bumi Resources Tbk
|
|
|
18,392,000
|
|
|
|
1,551,456
|
|
|
PT Indika Energy Tbk
|
|
|
2,715,000
|
|
|
|
276,570
|
|
|
PT Tambang Batubara Bukit
Asam Tbk
|
|
|
1,693,000
|
|
|
|
1,091,022
|
|
|
|
|
|
2,919,048
|
|
|
REAL ESTATE MANAGEMENT & DEVELOPMENT-1.57%
|
|
PT Bakrieland
Development Tbk
|
|
|
37,776,500
|
|
|
|
253,406
|
|
|
PT Bakrieland Development Tbk
Warrants (Strike Price: 250 IDR;
expiring 04/30/10)
|
|
|
2,264,560
|
|
|
|
6,025
|
|
|
PT Ciputra Development Tbk
|
|
|
8,284,000
|
|
|
|
143,774
|
|
|
PT Kawasan Industri
Jababeka Tbk
|
|
|
56,601,000
|
|
|
|
265,280
|
|
|
PT Summarecon Agung Tbk
Warrants (Strike Price: 550 IDR;
expiring 06/21/10)
|
|
|
2,523,932
|
|
|
|
4,631
|
|
|
PT Sentul City Tbk
|
|
|
10,418,000
|
|
|
|
64,635
|
|
|
|
|
|
737,751
|
|
|
TOTAL INDONESIA
(Cost $35,152,209)
|
|
|
42,475,727
|
|
|
SINGAPORE-2.15%
|
|
OIL, GAS & CONSUMABLE FUELS-2.15%
|
|
Straits Asia Resources Ltd.
(Cost $4,208,879)
|
|
|
1,845,000
|
|
|
|
1,009,901
|
|
|
See accompanying notes to financial statements.
5
THE INDONESIA FUND, INC.
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2008
Description
|
|
No. of
Shares
|
|
Value
|
|
THAILAND-1.00%
|
|
COMMERCIAL BANK-0.28%
|
|
Kasikornbank Public
Company Ltd.
|
|
|
100,200
|
|
|
$
|
131,415
|
|
|
REAL ESTATE MANAGEMENT & DEVELOPMENT-0.72%
|
|
Land and Houses Public
Company Ltd., NVDR
|
|
|
3,084,700
|
|
|
|
337,759
|
|
|
TOTAL THAILAND
(Cost $539,228)
|
|
|
469,174
|
|
|
TOTAL EQUITY OR EQUITY-LINKED
SECURITIES-93.52%
(Cost $39,900,316)
|
|
|
43,954,802
|
|
|
|
|
Principal
Amount (000's)
|
|
|
|
SHORT-TERM INVESTMENT-7.91%
|
|
CANADA-7.91%
|
|
Bank of America, overnight
deposit, 0.06%, 01/02/09
(Cost $3,721,000)
|
|
$
|
3,721
|
|
|
|
3,721,000
|
|
|
TOTAL INVESTMENTS-101.43%
(Cost $43,621,316) (Notes B,E,G)
|
|
|
47,675,802
|
|
|
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS-(1.43)%
|
|
|
(673,568
|
)
|
|
NET ASSETS-100.00%
|
|
$
|
47,002,234
|
|
|
Non-income producing security.
NVDR Non-Voting Depository Receipt.
See accompanying notes to financial statements.
6
THE INDONESIA FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2008
ASSETS
|
|
Investments, at value (Cost $43,621,316) (Notes B, E, G)
|
|
$
|
47,675,802
|
|
|
Foreign currencies (Cost $168,619)
|
|
|
169,632
|
|
|
Prepaid expenses
|
|
|
2,244
|
|
|
Total Assets
|
|
|
47,847,678
|
|
|
LIABILITIES
|
|
Due to custodian
|
|
|
4,877
|
|
|
Payables:
|
|
Dividends (Note B)
|
|
|
578,738
|
|
|
Investment advisory fees (Note C)
|
|
|
115,976
|
|
|
Administration fees (Note C)
|
|
|
6,603
|
|
|
Directors' fees
|
|
|
2,802
|
|
|
Other accrued expenses
|
|
|
136,448
|
|
|
Total Liabilities
|
|
|
845,444
|
|
|
NET ASSETS (applicable to 8,270,371 shares of common stock outstanding) (Note D)
|
|
$
|
47,002,234
|
|
|
NET ASSETS CONSIST OF
|
|
Capital stock, $0.001 par value; 8,270,371 shares issued and outstanding
(100,000,000 shares authorized)
|
|
$
|
8,270
|
|
|
Paid-in capital
|
|
|
48,202,128
|
|
|
Accumulated net investment loss
|
|
|
(58,496
|
)
|
|
Accumulated net realized loss on investments and foreign currency related transactions
|
|
|
(5,205,167
|
)
|
|
Net unrealized depreciation in value of investments and translation of other
assets and liabilities denominated in foreign currencies
|
|
|
4,055,499
|
|
|
Net assets applicable to shares outstanding
|
|
$
|
47,002,234
|
|
|
NET ASSET VALUE PER SHARE ($47,002,234 ÷ 8,270,371)
|
|
$
|
5.68
|
|
|
MARKET PRICE PER SHARE
|
|
$
|
5.10
|
|
|
See accompanying notes to financial statements.
7
THE INDONESIA FUND, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2008
INVESTMENT INCOME
|
|
Income (Note B):
|
|
Dividends
|
|
$
|
2,424,239
|
|
|
Interest
|
|
|
16,052
|
|
|
Securities lending
|
|
|
1,704
|
|
|
Less: Foreign taxes withheld
|
|
|
(341,527
|
)
|
|
Total Investment Income
|
|
|
2,100,468
|
|
|
Expenses:
|
|
Investment advisory fees (Note C)
|
|
|
817,484
|
|
|
Custodian fees
|
|
|
186,859
|
|
|
Directors' fees
|
|
|
77,275
|
|
|
Legal fees
|
|
|
52,799
|
|
|
Audit and tax fees
|
|
|
46,076
|
|
|
Administration fees (Note C)
|
|
|
42,266
|
|
|
Accounting fees (Note C)
|
|
|
33,785
|
|
|
Printing (Note C)
|
|
|
29,806
|
|
|
Shareholder servicing fees
|
|
|
18,300
|
|
|
Insurance fees
|
|
|
2,423
|
|
|
Stock exhange listing fees
|
|
|
1,742
|
|
|
Miscellaneous
|
|
|
13,625
|
|
|
Total Expenses
|
|
|
1,322,440
|
|
|
Net Investment Income
|
|
|
778,028
|
|
|
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY RELATED TRANSACTIONS
|
|
Net realized loss from:
|
|
Investments
|
|
|
(1,786,035
|
)
|
|
Foreign currency related transactions
|
|
|
(248,159
|
)
|
|
Net change in unrealized depreciation in value of investments and translation
of other assets and liabilties denominated in foreign currencies
|
|
|
(57,760,705
|
)
|
|
Net realized and unrealized loss on investments and foreign currency related transactions
|
|
|
(59,794,899
|
)
|
|
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS
|
|
$
|
(59,016,871
|
)
|
|
See accompanying notes to financial statements.
8
THE INDONESIA FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
|
|
For the Years Ended December 31,
|
|
|
|
2008
|
|
2007
|
|
INCREASE/(DECREASE) IN NET ASSETS
|
|
Operations:
|
|
Net investment income
|
|
$
|
778,028
|
|
|
$
|
263,505
|
|
|
Net realized gain/(loss) on investments and foreign currency
related transactions
|
|
|
(2,034,194
|
)
|
|
|
7,186,682
|
|
|
Net change in unrealized appreciation/(depreciation) in value of
investments and translation of other assets and liabilities denominated
in foreign currencies
|
|
|
(57,760,705
|
)
|
|
|
19,471,302
|
|
|
Net increase/(decrease) in net assets resulting from operations
|
|
|
(59,016,871
|
)
|
|
|
26,921,489
|
|
|
Dividends to shareholders:
|
|
Net investment income
|
|
|
(587,006
|
)
|
|
|
(190,124
|
)
|
|
Capital share transactions:
|
|
Issuance of 0 and 94 shares respectively from reinvestments of dividends
|
|
|
|
|
|
|
986
|
|
|
Issuance of 4,075 and 0 shares through the
directors compensation plan (Note C)
|
|
|
29,485
|
|
|
|
|
|
|
Total capital share transactions
|
|
|
29,485
|
|
|
|
986
|
|
|
Total increase/(decrease) in net assets
|
|
|
(59,574,392
|
)
|
|
|
26,732,351
|
|
|
NET ASSETS
|
|
Beginning of year
|
|
|
106,576,626
|
|
|
|
79,844,275
|
|
|
End of year*
|
|
$
|
47,002,234
|
|
|
$
|
106,576,626
|
|
|
* Includes accumulated net investment loss of $(58,496) and undistributed net investment income of $5,453, respectively.
See accompanying notes to financial statements.
9
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 year indicated. This information has been derived from information provided in the financial statements and market price data for the Fund's shares.
|
|
For the Years Ended December 31,
|
|
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
PER SHARE OPERATING PERFORMANCE
|
|
Net asset value, beginning of year
|
|
$
|
12.89
|
|
|
$
|
9.66
|
|
|
$
|
6.00
|
|
|
$
|
5.08
|
|
|
$
|
3.91
|
|
|
Net investment income/(loss)
|
|
|
0.09
|
|
|
|
0.03
|
#
|
|
|
0.05
|
|
|
|
0.02
|
|
|
|
0.09
|
|
|
Net realized and unrealized gain/(loss) on investments
and foreign currency related transactions
|
|
|
(7.23
|
)
|
|
|
3.22
|
|
|
|
3.66
|
|
|
|
0.90
|
|
|
|
1.17
|
|
|
Net increase/(decrease) in net assets resulting from operations
|
|
|
(7.14
|
)
|
|
|
3.25
|
|
|
|
3.71
|
|
|
|
0.92
|
|
|
|
1.26
|
|
|
Dividends and distributions to shareholders:
|
|
Net investment income
|
|
|
(0.07
|
)
|
|
|
(0.02
|
)
|
|
|
(0.05
|
)
|
|
|
0.00
|
|
|
|
(0.09
|
)
|
|
Net realized gain on investments and
foreign currency related transactions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total dividends and distributions to shareholders
|
|
|
(0.07
|
)
|
|
|
(0.02
|
)
|
|
|
(0.05
|
)
|
|
|
0.00
|
|
|
|
(0.09
|
)
|
|
Net asset value, end of year
|
|
$
|
5.68
|
|
|
$
|
12.89
|
|
|
$
|
9.66
|
|
|
$
|
6.00
|
|
|
$
|
5.08
|
|
|
Market value, end of year
|
|
$
|
5.10
|
|
|
$
|
12.01
|
|
|
$
|
11.70
|
|
|
$
|
5.76
|
|
|
$
|
5.07
|
|
|
Total investment return (a)
|
|
|
(56.94
|
)%
|
|
|
2.89
|
%
|
|
|
104.14
|
%
|
|
|
13.69
|
%
|
|
|
6.72
|
%
|
|
RATIOS/SUPPLEMENTAL DATA
|
|
Net assets, end of year (000 omitted)
|
|
$
|
47,002
|
|
|
$
|
106,577
|
|
|
$
|
79,844
|
|
|
$
|
49,576
|
|
|
$
|
42,020
|
|
|
Ratio of expenses to average net assets
|
|
|
1.62
|
%
|
|
|
1.55
|
%
|
|
|
1.65
|
%
|
|
|
1.81
|
%
|
|
|
2.03
|
%
|
|
Ratio of net investment income/(loss) to average net assets
|
|
|
0.95
|
%
|
|
|
0.29
|
%
|
|
|
0.67
|
%
|
|
|
0.42
|
%
|
|
|
2.24
|
%
|
|
Portfolio turnover rate
|
|
|
33.05
|
%
|
|
|
20.25
|
%
|
|
|
23.93
|
%
|
|
|
67.87
|
%
|
|
|
43.59
|
%
|
|
* Based on actual shares outstanding on June 8, 2001 (prior to the Agreement and Plan of Reorganization effective June 11, 2001 between the Fund and Jakarta Growth Fund) and December 31, 2001.
# Based on average shares oustanding.
Amount is less than a $0.01.
(a) Total investment return at market value is based on the changes in market price of a share during the year and assumes reinvestment of dividends and distributions, if any, at actual prices pursuant to the Fund's dividend reinvestment program.
(b) Excluding merger-related fees, the ratio of expenses to average net assets would have been 4.31%.
(c) Excluding merger-related fees, the ratio of expenses to average net assets would have been 4.13%.
See accompanying notes to financial statements.
10
THE INDONESIA FUND, INC.
Financial Highlights
|
|
|
|
2003
|
|
2002
|
|
2001
|
|
2000
|
|
1999
|
|
PER SHARE OPERATING PERFORMANCE
|
|
Net asset value, beginning of year
|
|
$
|
2.09
|
|
|
$
|
1.52
|
|
|
$
|
1.72
|
|
|
$
|
4.48
|
|
|
$
|
2.71
|
|
|
Net investment income/(loss)
|
|
|
0.03
|
|
|
|
0.01
|
|
|
|
(0.13
|
)*
|
|
|
(0.13
|
)
|
|
|
(0.05
|
)
|
|
Net realized and unrealized gain/(loss) on investments
and foreign currency related transactions
|
|
|
1.81
|
|
|
|
0.56
|
|
|
|
(0.07
|
)
|
|
|
(2.63
|
)
|
|
|
1.87
|
|
|
Net increase/(decrease) in net assets resulting from operations
|
|
|
1.84
|
|
|
|
0.57
|
|
|
|
(0.20
|
)
|
|
|
(2.76
|
)
|
|
|
1.82
|
|
|
Dividends and distributions to shareholders:
|
|
Net investment income
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized gain on investments and
foreign currency related transactions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.05
|
)
|
|
Total dividends and distributions to shareholders
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.05
|
)
|
|
Net asset value, end of year
|
|
$
|
3.91
|
|
|
$
|
2.09
|
|
|
$
|
1.52
|
|
|
$
|
1.72
|
|
|
$
|
4.48
|
|
|
Market value, end of year
|
|
$
|
4.83
|
|
|
$
|
1.65
|
|
|
$
|
1.32
|
|
|
$
|
1.563
|
|
|
$
|
5.438
|
|
|
Total investment return (a)
|
|
|
194.19
|
%
|
|
|
25.00
|
%
|
|
|
(15.52
|
)%
|
|
|
(71.26
|
)%
|
|
|
59.58
|
%
|
|
RATIOS/SUPPLEMENTAL DATA
|
|
Net assets, end of year (000 omitted)
|
|
$
|
32,304
|
|
|
$
|
17,317
|
|
|
$
|
12,545
|
|
|
$
|
7,935
|
|
|
$
|
20,669
|
|
|
Ratio of expenses to average net assets
|
|
|
2.65
|
%
|
|
|
2.69
|
%
|
|
|
8.89
|
%(b)
|
|
|
7.23
|
%(c)
|
|
|
3.18
|
%
|
|
Ratio of net investment income/(loss) to average net assets
|
|
|
1.23
|
%
|
|
|
0.36
|
%
|
|
|
(5.63
|
)%
|
|
|
(4.85
|
)%
|
|
|
(1.43
|
)%
|
|
Portfolio turnover rate
|
|
|
95.66
|
%
|
|
|
29.15
|
%
|
|
|
10.23
|
%
|
|
|
16.48
|
%
|
|
|
47.38
|
%
|
|
11
THE INDONESIA FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008
NOTE A. ORGANIZATION
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.
NOTE B. SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Security Valuation:
The net asset value of the Fund is determined daily as of the close of regular trading on the New York Stock Exchange, Inc. (the "Exchange") on each day the Exchange is open for business. Equity investments are valued at market value, which is generally determined using the closing price on the exchange or market on which the security is primarily traded at the time of valuation (the "Valuation Time"). If no sales are reported, equity investments are generally valued at the most recent bid quotation as of the Valuation Time or at the lowest ask quotation in the case of a short sale of securities. Debt securities with a remaining maturity greater than 60 days are valued in accordance with the price supplied by a pricing service, which may use a matrix, formula or other objective method that takes into consideration market indices, yield curves and other specific adjustments. Debt obligations that will mature in 60 days or less are valued on the basis of amortized cost, which approximates market value, unless it is determined that using this method would not represent fair value. Investments in mutual funds are valued at the mutual fund's closing net asset value per share on the day of valuation.
Securities and other assets for which market quotations are not readily available, or whose values have been materially affected by events occurring before the Fund's Valuation Time, but after the close of the securities' primary market, are valued at fair value as determined in good faith by, or under the direction of, the Board of Directors under procedures established by the Board of Directors. The Fund may utilize a service provided by an independent third party which has been approved by the Board of Directors to fair value certain securities. When fair-value pricing is employed, the prices of securities used by a fund to calculate its net asset value may differ from quoted or published prices for the same securities. The Fund's estimate of fair value assumes a willing buyer and a willing seller neither acting under the compulsion to buy or sell.
The Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157, Fair Value Measurements ("FAS 157"), effective January 1, 2008. In accordance with FAS 157, fair value is defined as the price that the Fund would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. FAS 157 established a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value including such a pricing model and/or the risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs
12
THE INDONESIA FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2008
that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below.
Level 1quoted prices in active markets for identical investments
Level 2other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
Level 3significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used as of December 31, 2008 in valuing the Fund's investments carried at value:
Valuation Inputs
|
|
Investments
in Securities
|
|
Other
Financial
Instruments*
|
|
Level 1Quoted Prices
|
|
$
|
14,928
|
|
|
$
|
|
|
|
Level 2Other Significant
Observable Inputs
|
|
|
47,660,874
|
|
|
|
|
|
|
Level 3Significant
Unobservable
Inputs
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
47,675,802
|
|
|
$
|
|
|
|
* Other financial instruments include futures, forwards and swap contracts.
Short-Term Investment:
The Fund sweeps available cash into a short-term time deposit available through Brown Brothers Harriman & Co., the Fund's custodian. The short-term time deposit is a variable rate account classified as a short-term investment.
Investment Transactions and Investment Income:
Investment transactions are accounted for on a trade date basis. The cost of investments sold is determined by use of the specific identification method for both financial reporting and U.S. income tax purposes. Interest income is accrued as earned; dividend income is recorded on the ex-dividend date.
Taxes:
No provision is made for federal taxes as it is the Fund's intention to continue to qualify for and elect the tax treatment applicable to regulated investment companies under the Internal Revenue Code of 1986, as amended, and to make the requisite distributions to its shareholders, which will be sufficient to relieve it from federal income and excise taxes.
Income received by the Fund from sources within Indonesia and other foreign countries may be subject to withholding and other taxes imposed by such countries.
During June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation 48 ("FIN 48 or the "Interpretation"),
Accounting for Uncertainty in Income Taxesan interpretation of FASB statement 109.
The Fund has reviewed its current tax positions and has determined that no provision for income tax is required in the Fund's financial statements. The Fund's federal tax returns for the prior three fiscal years remain subject to examination by the Internal Revenue Service.
13
THE INDONESIA FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2008
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 valuation date 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 on investments in equity securities which is due to changes in the foreign exchange rates from that which is due to changes in market prices of equity securities. Accordingly, realized and unrealized foreign currency gains and losses with respect to such securities are included in the reported net realized and unrealized gains and losses on investment transactions balances.
The Fund reports certain foreign currency related transactions and foreign taxes withheld on security transactions as components of realized gains for financial reporting purposes, whereas such foreign currency related transactions are treated as ordinary income for U.S. income tax purposes.
Net unrealized 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 currencies.
Net realized foreign exchange gains or 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.
Securities Lending:
In connection with its security lending activities, the Fund received cash as collateral for any securities out on loan to brokers. Such cash collateral was reinvested into either an overnight repurchase agreement or a securities lending fund available through Brown Brothers Harriman & Co. Security loans are required at all times to have collateral at least equal to 100% of the market value of the securities on loan; however, in the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral may be subject to legal proceedings. During the year ended December 31, 2008, total earnings from the investment of cash collateral received by the Fund in a securities lending arrangement was $1,704.
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. income tax purposes due to U.S. generally accepted accounting principles/tax differences in the character of income and expense recognition.
14
THE INDONESIA FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2008
Other:
The Fund invests in securities of foreign countries and governments which involve certain risks in addition to those inherent in domestic investments. Such risks generally include, among others, currency risks (fluctuations in currency exchange rates), information risk (key information may be inaccurate or unavailable) and political risk (expropriation, nationalization or the imposition of capital or currency controls or punitive taxes). Other risks of investing in foreign securities include liquidity and valuation risks.
Securities denominated in currencies other than U.S. dollars are subject to changes in value due to fluctuations in exchange rates.
Investment in Indonesian and other foreign securities requires consideration of certain factors that are not normally involved in investments in U.S. securities. The Indonesian securities market is an emerging market characterized by a small number of company listings, high price volatility and a relatively illiquid secondary trading environment. These factors, coupled with restrictions on investment by foreigners and other factors, limit the supply of securities available for investment by the Fund. This will affect the rate at which the Fund is able to invest in Indonesian and other foreign securities, the purchase and sale prices for such securities and the timing of purchases and sales.
The limited liquidity of the Indonesian and other foreign 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 it 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.
NOTE C. AGREEMENTS
Credit Suisse Asset Management, LLC ("Credit Suisse"), serves as the Fund's investment adviser with respect to all investments. Credit Suisse receives as compensation for its advisory services 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, 2008, Credit Suisse earned $817,484 for advisory services. Credit Suisse 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, 2008, Credit Suisse was reimbursed $2,707 for administrative services rendered to the Fund.
Credit Suisse Asset Management Limited ("Sub- Adviser") serves as the Fund's sub-investment adviser. Credit Suisse currently pays the Sub-Adviser on a quarterly basis a fee of 90% of the net quarterly amount received by Credit Suisse as the Fund's investment adviser. The Fund does not pay the Sub-Adviser.
Bear Stearns Funds Management Inc. ("BSFM") served as the Fund's administrator until July 31, 2008. The Fund paid BSFM a monthly fee that was calculated weekly based on the Fund's average weekly net assets. For the period ended July 31, 2008, BSFM earned $39,528 for administrative services.
Brown Brothers Harriman & Co. ("BBH & Co.") serves as the Fund's administrator. For the period August 1, 2008 to December 31, 2008, BBH & Co. earned $12,601 for administrative and fund accounting services.
Merrill Corporation ("Merrill"), an affiliate of Credit Suisse, has been engaged by the Fund to provide certain financial printing services. For the year ended December 31, 2008, Merrill was paid $25,952 for its services to the Fund.
15
THE INDONESIA FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2008
The Independent Directors receive fifty percent (50%) of their annual retainer in the form of shares. Beginning in 2008, the Independent Directors can elect to receive up to 100% of their annual retainer in shares of the Fund. During the fiscal year end December 31, 2008, 4,075 shares were issued through the directors compensation plan. Directors as a group own less than 1% of the Fund's outstanding shares.
NOTE D. CAPITAL STOCK
The authorized capital stock of the Fund is 100,000,000 shares of common stock, $0.001 par value. Of the 8,270,371 shares outstanding at December 31, 2008, Credit Suisse owned 7,169 shares.
NOTE E. INVESTMENT IN SECURITIES
For the year ended December 31, 2008, purchases and sales of securities, other than short-term investments, were $26,772,983 and $30,696,566, respectively.
NOTE F. CREDIT FACILITY
The Fund, together with other funds/portfolios advised by Credit Suisse (collectively, the "Participating Funds"), participates in a $50 million committed, unsecured, line of credit facility ("Credit Facility") with State Street Bank and Trust Company for temporary or emergency purposes. Under the terms of the Credit Facility, the Participating Funds pay an aggregate commitment fee at a rate of 0.10% per annum on the average unused amount of the Credit Facility, which is allocated among the Participating Funds in such manner as is determined by the governing Boards of the Participating Funds. In addition, the Participating Funds pay interest on borrowings at the Federal Funds rate plus 0.50%. At December 31, 2008, and during the fiscal year ended December 31, 2008, the Fund had no borrowings under the Credit Facility.
NOTE G. FEDERAL INCOME TAXES
Income and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP.
The tax character of dividends and distributions paid during the years ended December 31, 2008 and 2007, respectively, by the Fund were as follows:
|
|
Ordinary Income
|
|
|
|
2008
|
|
2007
|
|
|
|
$
|
587,006
|
|
|
$
|
190,124
|
|
|
The tax basis of components of distributable earnings differ from the amounts reflected in the Statement of Assets and Liabilities by temporary book/tax differences. These differences are primarily due to losses deferred on wash sales and deferral of post-October losses.
At December 31, 2008, the components of distributable earnings on a tax basis, for the Fund were as follows:
Undistributed ordinary income
|
|
$
|
61,244
|
|
|
Accumulated net realized loss
|
|
|
(1,323,579
|
)
|
|
Unrealized appreciation
|
|
|
3,403,070
|
|
|
Deferral of post-October capital losses
|
|
|
(3,229,159
|
)
|
|
Deferral of post-October currency losses
|
|
|
(119,740
|
)
|
|
Total distributable earnings
|
|
$
|
(1,208,164
|
)
|
|
At December 31, 2008, the Fund had a capital loss carry forward for U.S. federal income tax purposes of $1,323,579. Capital loss carry forwards of $637,573 and $686,006 expire in 2009 and 2010, respectively. It is uncertain whether the Fund will be able to realize the benefits before they expire. During the year ended December 31, 2008, the Fund utilized capital loss carry forwards of $1,526,448.
At December 31, 2008, the identified cost for federal income tax purposes, as well as the gross unrealized appreciation from investments for those securities
16
THE INDONESIA FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2008
having an excess of value over cost, gross unrealized depreciation from investments for those securities having an excess of cost over value and the net unrealized appreciation from investments were $44,273,745, $16,705,828, $(13,303,771) and $3,402,057, respectively.
At December 31, 2008, the Fund reclassified $254,971 from undistributed net investment income and $2 from paid-in capital to accumulated net realized loss on investments and foreign currency related transactions. These permanent differences are primarily due to differing book/tax treatments of foreign currency transactions. Net assets were not affected by this reclassification.
NOTE H. CONTINGENCIES
In the normal course of business, the Fund may provide general indemnifications pursuant to certain contracts and organizational documents. The Fund's maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated; however, based on experience, the risk of loss from such claims is considered remote.
NOTE I. RECENT ACCOUNTING PRONOUNCEMENTS
In March 2008, FASB issued Statement of Financial Accounting Standards No. 161,
Disclosures about Derivative Instruments and Hedging Activities
("FAS 161"), an amendment of FASB Statement No. 133. FAS 161 requires enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and hedging activities are accounted for, and (c) how derivative instruments and related hedging activities affect a fund's financial position, financial performance, and cash flows. Management of the Funds does not believe the adoption of FAS 161 will materially impact the financial statement amounts, but will require additional disclosures. This will include qualitative and quantitative disclosures on derivative positions existing at period end and the effect of using derivatives during the reporting period. FAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008.
NOTE J. OTHER MATTERS
On December 31, 2008, Credit Suisse, the corporate parent of the Funds' investment adviser, announced it had signed an agreement to sell part of its Global Investors traditional asset management business to Aberdeen Asset Management ("Aberdeen"), an international investment management group, managing assets for both institutions and private individuals from offices around the world. Credit Suisse has stated that the transaction is subject to customary closing conditions, including regulatory approvals in various jurisdictions and approval by Aberdeen shareholders, and is expected to close in the second quarter of 2009.
Pending the closing of the transaction, Credit Suisse Asset Management, LLC ("CSAM"), Credit Suisse Asset Management Limited (U.K.) ("CSAM UK") and Credit Suisse Asset Management Limited (Australia) ("CSAM Australia") are expected to continue to operate in the ordinary course of business as the investment adviser or sub-adviser of the Funds.
If completed, acquisition of the Credit Suisse business by Aberdeen would constitute an "assignment" of the Funds' Advisory and Sub-Advisory Agreements with CSAM, CSAM UK and CSAM Australia and, by law, would automatically terminate those agreements. Accordingly, each Fund's Board of Directors is considering various options in connection with the transaction, including possibly entering into new investment advisory and sub-advisory agreements with Aberdeen. If approved by a Fund's Board of Directors, including the Directors who are not "interested persons" of the investment manager and its affiliates or the Fund, any new investment advisory and sub-advisory agreements will require the approval of the Fund's shareholders.
17
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
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, 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, 2008, the results of its operations for the year then ended and the changes in its net assets and financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 audit, which included confirmation of securities at December 31, 2008 by correspondence with the custodian and brokers, provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 26, 2009
18
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
On April 10, 2008, the Annual Meeting of Shareholders of the Fund (the "Meeting") was held and the following matter was voted upon:
(1) To re-elect two directors to the Board of Directors of the Fund:
Name of Director
|
|
For
|
|
Withheld
|
|
Lawrence J. Fox (Class II)
|
|
|
5,391,350
|
|
|
|
413,173
|
|
|
Lawrence D. Haber (Class II)
|
|
|
5,395,169
|
|
|
|
409,354
|
|
|
In addition to the directors elected at the Meeting, Enrique R. Arzac, James J. Cattano and Steven N. Rappaport continued as directors of the Fund. Subsequent to the Meeting, Lawrence D. Haber resigned as a director of the Fund.
TAX INFORMATION (UNAUDITED)
For the fiscal year ended December 31, 2008, the Fund designates approximately $928,533, or up to the maximum amount of such dividends allowable pursuant to the Internal Revenue Code, as qualified dividend income eligible for reduced tax rates. These lower rates range from 5% to 15% depending on an individual's tax bracket. If the Fund pays a distribution during calendar year 2008, complete information will be reported in conjunction with Form 1099-DIV.
The Fund has made an election under Section 853 to pass through foreign taxes paid by the Fund to its shareholders. The amount of foreign taxes that were passed through to shareholders for the year ended December 31, 2008, was $341,527. The amount of foreign source income was $2,325,546. Shareholders should refer to their Form 1099-DIV to determine the amount includable on their respective tax returns for 2008.
Shareholders are advised to consult their own tax advisers with respect to the tax consequences of their investment in the Fund.
19
INFORMATION CONCERNING DIRECTORS AND OFFICERS (UNAUDITED)
Name, Address
(Year of Birth)
|
|
Position(s)
Held with
Fund
|
|
Term
of Office
and
Length
of Time
Served
|
|
Principal
Occupation(s) During
Past Five Years
|
|
Number of
Portfolios in
Fund
Complex
Overseen by
Director
|
|
Other
Directorships
Held by Director
|
|
Independent Directors
|
|
|
Enrique R. Arzac
c/o Credit Suisse Asset Management, LLC
Attn: General Counsel Eleven Madison Avenue
New York, New York 10010-3629
(1941
)
|
|
Chairman of
the Board of Directors; Nominating and Audit Committee Member
|
|
Director since 2000; Chairman since 2005; current term ends at the 2009 annual meeting
|
|
Professor of Finance
and Economics,
Graduate School of Business, Columbia University
since 1971
|
|
|
33
|
|
|
Director of Epoch Holding Corporation (an Investment management and investment advisory services company); Director of The Adams Express Company (a closed-end investment company); Director of Petroleum and Resources Corporation (a closed-end investment company)
|
|
|
James J. Cattano
c/o Primary Resources, Inc. 5100 Tamiami Trail N.
Naples, FL
34103
(1943
)
|
|
Director; Nominating Committee Member and Audit Committee Chairman
|
|
Since 2007; current term ends at the 2010 annual meeting
|
|
President, Primary Resources Inc. (an international trading and manufacturing company specializing in the sale of agricultural commodities throughout Latin American markets) since October 1996
|
|
|
7
|
|
|
None
|
|
|
Lawrence J. Fox
One Logan Square
18th & Cherry Streets Philadelphia,
Pennsylvania 19103
(1943
)
|
|
Director; Nominating Committee Chairman and Audit Committee Member
|
|
Since 2000; Current term ends at the 2011 annual meeting
|
|
Partner, Drinker Biddle &
Reath (law firm)
since 1972
|
|
|
6
|
|
|
None
|
|
|
Steven N. Rappaport
Lehigh Court, LLC
555 Madison Ave., 29th Floor New York, New York 10022
(1948
)
|
|
Director; Nominating and Audit Committee Member
|
|
Since 2005; current term ends at the 2009 annual meeting
|
|
Partner of Lehigh Court, LLC and RZ Capital (private investment firms) since July 2002
|
|
|
33
|
|
|
Director of iCAD, Inc. (Surgical & Medical Instruments & Apparatus); Director of Presstek, Inc.
(digital imaging technologies company); Director of Wood Resources, LLC (a plywood manufacturing company)
|
|
|
20
INFORMATION CONCERNING DIRECTORS AND OFFICERS (UNAUDITED) (CONTINUED)
Name, Address
(Year of Birth)
|
|
Position(s)
Held with
Fund
|
|
Length
of Time
Served
|
|
Principal Occupation(s) During Past Five Years
|
|
Officers
|
|
|
George R. Hornig
Credit Suisse Asset
Management, LLC
Eleven Madison Avenue
New York, New York
10010
(1954
)
|
|
Chief Executive Officer and President
|
|
Since 2008
|
|
Managing Director of Credit Suisse; Co-Chief Operating Officer of Asset Management and Head of Asset Management Americas; Associated with Credit Suisse since 1999; Officer of other Credit Suisse Funds.
|
|
|
Boon Hong Yeo
c/o Credit Suisse Asset Management, LLC
Eleven Madison Avenue
New York, New York
10010
(1960
)
|
|
Chief Investment Officer
|
|
Since 2003
|
|
Director of Credit Suisse Asset Management Limited ("Credit Suisse Ltd."); Associated with Credit Suisse Ltd. since 2002.
|
|
|
Michael A. Pignataro
Credit Suisse Asset Management, LLC
Eleven Madison Avenue
New York, New York
10010
(1959
)
|
|
Chief Financial Officer
|
|
Since 1993
|
|
Director and Director of Fund Administration of Credit Suisse; Associated with Credit Suisse or its predecessor since 1984; Officer of other Credit Suisse Funds.
|
|
|
Emidio Morizio
Credit Suisse Asset Management, LLC
Eleven Madison Avenue
New York, New York
10010
(1966
)
|
|
Chief Compliance Officer
|
|
Since 2004
|
|
Director and Global Head of Compliance of Credit Suisse; Associated with Credit Suisse since July 2000; Officer of other Credit Suisse Funds.
|
|
|
J.Kevin Gao
Credit Suisse Asset Management, LLC
Eleven Madison Avenue
New York, New York
10010
(1967
)
|
|
Chief Legal Officer since 2006; Senior
Vice President And Secretary since 2004
|
|
Since 2004
|
|
Director and Legal Counsel of Credit Suisse; Associated with Credit Suisse since July 2003; Associated with the law firm of Willkie Farr & Gallagher LLP from 1998 to 2003; Officer of other Credit Suisse Funds.
|
|
|
Cecilia Chau
Credit Suisse Asset
Management, LLC
Eleven Madison Avenue
New York, New York
10010
(1973
)
|
|
Treasurer
|
|
Since 2008
|
|
Assistant Vice President of Credit Suisse since June 2007; Associated with Alliance Bernstein LP. From January 2007 to May 2007; Associated with Credit Suisse from August 2000 to December 2006; Officer of other Credit Suisse Funds.
|
|
|
21
ADVISORY AGREEMENT APPROVAL DISCLOSURE (UNAUDITED)
Board Consideration and Re-Approval of Investment Advisory and Sub-Advisory Agreements
The Board of Directors (the "Board") of The Indonesia Fund, Inc. (the "Fund"), including a majority of the Directors who have no direct or indirect interest in the investment advisory and sub-advisory agreements and are not "interested persons" of the Fund, as defined in the Investment Company Act of 1940 (the "Independent Directors"), is required annually to review and re-approve the terms of the Fund's investment advisory and sub-advisory agreements. During the most recent six months covered by this report, the Board reviewed and re-approved: (i) an investment advisory agreement with Credit Suisse Asset Management, LLC ("Credit Suisse"), and (ii) a sub-advisory agreement with Credit Suisse Asset Management Limited ("Credit Suisse Australia" or the "Sub-Adviser"). These agreements are collectively referred to as the "Advisory Agreements."
More specifically, at a meeting held on November 19-20, 2008, the Board, including the Independent Directors advised by their independent legal counsel, considered the factors and reached the conclusions described below relating to the selection of Credit Suisse and Credit Suisse Australia and the re-approval of the Advisory Agreements.
Nature, Extent and Quality of Services
The Board received and considered various data and information regarding the nature, extent and quality of services provided to the Fund by Credit Suisse and Credit Suisse Australia under the Advisory Agreements. The most recent investment adviser registration forms for Credit Suisse and Credit Suisse Australia were provided to the Board, as were responses of Credit Suisse and Credit Suisse Australia to a detailed series of requests submitted by the Independent Directors' independent legal counsel on their behalf. The Board reviewed and analyzed these materials, which included, among other things, information about the background and experience of senior management and investment personnel of Credit Suisse and Credit Suisse Australia. In this regard, the Board specifically reviewed the qualifications, background and responsibilities of the individual primarily responsible for day-to-day portfolio management services for the Fund.
In addition, the Board considered the investment and legal compliance programs of Credit Suisse and Credit Suisse Australia including their compliance policies and procedures and reports of the Fund's Chief Compliance Officer.
The Board also evaluated the ability of Credit Suisse and Credit Suisse Australia, including their respective resources, reputations and other attributes, to attract and retain qualified investment professionals, including research, advisory, and supervisory personnel.
Finally, the Board considered preliminary information from Credit Suisse's corporate parent about its search for a strategic partner for part of its asset management business. In reaching its determination to continue the agreements and arrangements, the Board relied upon Credit Suisse's undertaking and assurances to continue providing quality management, personnel and other resources necessary to continue providing advisory services of a nature, extent and quality at least comparable to those currently provided to the Funds.
22
ADVISORY AGREEMENT APPROVAL DISCLOSURE (UNAUDITED) (CONTINUED)
Based on the above factors, together with those referenced below, the Board concluded that it was satisfied with the nature, extent and quality of the investment advisory services provided to the Fund by Credit Suisse and Credit Suisse Australia.
Fund Performance and Expenses
The Board considered the performance results of the Fund in comparison to the Fund's benchmark index, the MSCI Indonesia Index. The Board noted that, although the Fund has underperformed its benchmark in recent periods, the Fund outperformed its benchmark index in other periods.
The Board also considered information regarding the Fund's total expense ratio and its various components in comparison to expense information for a group of funds that was determined to be most similar to the Fund (the "Peer Group") and a broader universe of relevant funds (the "Expense Universe"). Lipper Inc. ("Lipper"), an independent provider of investment company data, determined the Peer Group and Expense Universe for the Fund and provided the comparative data. The Board noted that the overall expense ratio of the Fund was slightly above the median overall expense ratio of the Fund's Peer Group, but comparable to the median of the Fund's Expense Universe, both including and excluding investment-related expenses and taxes.
Based on the above-referenced considerations and other factors, the Board concluded that the overall performance results and expense comparisons supported the re-approval of the Advisory Agreements.
Investment Advisory and Sub-Advisory Fee Rates
The Board reviewed the contractual investment advisory fee rate (the "Advisory Agreement Rate") payable by the Fund to Credit Suisse for investment advisory services. The Board also reviewed the contractual investment sub-advisory fee rate (the "Sub-Advisory Agreement Rate") payable by Credit Suisse to Credit Suisse Australia for investment sub-advisory services.
Additionally, the Board considered information comparing the Advisory Agreement Rate (both on a stand-alone basis and on a combined basis with the Fund's administration fee rate) with that of the other funds in its Peer Group. The Board observed that the combined rates of investment advisory and administration fees for the Fund were lower than the median combined rate of its Peer Group, but comparable to that of its Expense Universe. The Board also noted that the Fund's administrator is not affiliated with Credit Suisse and that the Fund's administration agreement and corresponding fees were negotiated at arm's length. The Board concluded that these and other factors supported the Advisory Agreement Rate.
The Board also reviewed the Sub-Advisory Agreement Rate charged by Credit Suisse Australia, which is payable by Credit Suisse and not by the Fund, and concluded that it was not excessive.
23
ADVISORY AGREEMENT APPROVAL DISCLOSURE (UNAUDITED) (CONTINUED)
Profitability
The Board received and considered an estimated profitability analysis of Credit Suisse based on the Advisory Agreement Rate and on revenues earned from other relationships between the Fund and Credit Suisse and its affiliates, including Credit Suisse Australia. The Board concluded that, in light of the costs of providing investment management and other services to the Fund, the profits and other ancillary benefits that Credit Suisse and its affiliates derived from providing these services to the Fund were not excessive.
Economies of Scale
The Board considered information regarding whether there have been economies of scale with respect to the management of the Fund, whether the Fund has appropriately benefited from any economies of scale, and whether there is potential for realization of any further economies of scale.
The Board observed that the Advisory Agreements do not offer breakpoints, but considered the diminished opportunity to achieve economies of scale in the context of closed-end funds.
Information about Services to Other Clients
The Board considered information about the nature and extent of services and fee rates offered by Credit Suisse to other clients, including other registered investment companies, separate accounts and institutional investors and investment companies to which Credit Suisse serves as an unaffiliated sub-adviser. The Board also considered information about the nature and extent of services offered, and general information about the fees charged, by Credit Suisse Australia to other clients. The Board concluded that the Advisory Agreement Rate and Sub-Advisory Agreement Rate were not excessive, given the nature and extent of services offered and comparison with rates charged to other clients.
Other Benefits to Credit Suisse and the Sub-Adviser
The Board also considered information regarding potential "fall-out" or ancillary benefits received by Credit Suisse and its affiliates, including Credit Suisse Australia, as a result of their relationship with the Fund. In particular, the Board considered that Credit Suisse may gain certain reputational benefits from managing the Fund.
Other Factors and Broader Review
As discussed above, the Board reviews detailed materials received from Credit Suisse and Credit Suisse Australia as part of the annual re-approval process. The Board also reviews and assesses the quality of the services that the Fund receives throughout the year. In this regard, the Board reviews reports of Credit Suisse at least quarterly, which include, among other things, detailed portfolio and market reviews and detailed fund performance reports.
After considering the above-described factors and based on its deliberations and its evaluation of the information provided to it, the Board concluded that re-approval of the Advisory Agreements for the Fund was in the best interest of the Fund and its shareholders. Accordingly, the Board members unanimously re-approved the Advisory Agreements.
24
PROXY VOTING AND PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)
Information regarding how the Fund voted proxies related to its portfolio securities during the 12-month period ended June 30, of each year, as well as the policies and procedures that the Fund uses to determine how to vote proxies relating to its portfolio securities are available:
by calling 1-800-293-1232;
on the Fund's website, www.credit-suisse.com/us
on the website of the Securities and Exchange Commission, www.sec.gov.
The Fund files a complete schedule of its portfolio holdings for the first and third quarters of its fiscal year with the SEC on Form N-Q. The Fund's Forms N-Q are available on the SEC's website at www.sec.gov and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the SEC's Public Reference Room may be obtained by calling 1-202-551-8090.
25
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN (UNAUDITED)
The Indonesia Fund, Inc. (the "Fund") offers a Dividend Reinvestment and Cash Purchase Plan (the "Plan") to its common stockholders. The Plan offers common stockholders a prompt and simple way to reinvest net investment income dividends and capital gains and other periodic distributions in shares of the Fund's common stock. Computershare Trust Company, N.A. ("Computershare") acts as Plan Agent for stockholders in administering the Plan.
Participation in the Plan is voluntary. In order to participate in the Plan, you must be a registered holder of at least one share of stock of the Fund. If you are a beneficial owner of the Fund having your shares registered in the name of a bank, broker or other nominee, you must first make arrangements with the organization in whose name your shares are registered to have the shares transferred into your own name. Registered shareholders can join the Plan via the Internet by going to www.computershare.com, authenticating your online account, agreeing to the Terms and Conditions of online "Account Access" and completing an online Plan Enrollment Form. Alternatively, you can complete the Plan Enrollment Form and return it to Computershare at the address below.
By participating in the Plan, your dividends and distributions will be promptly paid to you in additional shares of common stock of the Fund. The number of shares to be issued to you will be determined by dividing the total amount of the distribution payable to you by the greater of (i) the net asset value per share ("NAV") of the Fund's common stock on the payment date, or (ii) 95% of the market price per share of the Fund's common stock on the payment date. If the NAV of the Fund's common stock is greater than the market price (plus estimated brokerage commissions) on the payment date, then Computershare (or a broker-dealer selected by Computershare) shall endeavor to apply the amount of such distribution on your shares to purchase shares of Fund common stock in the open market.
You should be aware that all net investment income dividends and capital gain distributions are taxable to you as ordinary income and capital gain, respectively, whether received in cash or reinvested in additional shares of the Fund's common stock.
The Plan also permits participants to purchase shares of the Fund through Computershare. You may invest $100 or more monthly, with a maximum of $100,000 in any annual period. Computershare will purchase shares for you on the open market on the 25th of each month or the next trading day if the 25th is not a trading day.
There is no service fee payable by Plan participants for dividend reinvestment. For voluntary cash payments, Plan participants must pay a service fee of $5.00 per transaction. Plan participants will also be charged a pro rata share of the brokerage commissions for all open market purchases ($0.03 per share as of October 2006). Participants will also be charged a service fee of $5.00 for each sale and brokerage commissions of $0.03 per share (as of October 2006).
You may terminate your participation in the Plan at any time by requesting a certificate or a sale of your shares held in the Plan. Your withdrawal will be effective immediately if your notice is received by Computershare prior to any dividend or distribution record date; otherwise, such termination will be effective only with respect to any subsequent dividend or distribution. Your dividend participation option will remain the same unless you withdraw all of your whole and fractional Plan shares, in which case your participation in the Plan will be terminated and you will receive subsequent dividends and capital gains distributions in cash instead of shares.
26
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN (UNAUDITED)
(CONTINUED)
If you want further information about the Plan, including a brochure describing the Plan in greater detail, please contact Computershare as follows:
By Internet:
|
|
www.computershare.com
|
|
|
By phone:
|
|
(800) 730-6001 (U.S. and Canada)
|
|
|
|
|
(781) 575-3100 (Outside U.S. and Canada)
|
|
|
|
|
Customer service associates are available from 9:00 a.m. to 5:00 p.m. Eastern time, Monday through Friday
|
|
|
By mail:
|
|
The Indonesia Fund, Inc.
|
|
|
|
|
c/o Computershare
|
|
|
|
|
P.O. Box 43078
|
|
|
|
|
Providence, Rhode Island 02940-3078
|
|
|
|
|
All notices, correspondence, questions or other communications sent by mail should be sent by registered or certified mail, return receipt requested.
|
|
|
The Plan may be terminated by the Fund or Computershare upon notice in writing mailed to each participant at least 30 days prior to any record date for the payment of any dividend or distribution.
27
FUNDS MANAGED BY CREDIT SUISSE ASSET MANAGEMENT, LLC
CLOSED-END FUNDS
Single Country
The Chile Fund, Inc. (AMEX: CH)
The First Israel Fund, Inc. (AMEX: ISL)
The Indonesia Fund, Inc. (AMEX: IF)
Multiple Country
The Emerging Markets Telecommunications Fund, Inc. (AMEX: ETF)
The Latin America Equity Fund, Inc. (AMEX: LAQ)
Fixed Income
Credit Suisse Asset Management Income Fund, Inc. (AMEX: CIK)
Credit Suisse High Yield Bond Fund (AMEX: DHY)
Literature Request
Call today for free descriptive information on the closed-end funds listed above at 800-293-1232 or visit our website at www.credit-suisse.com/us.
OPEN-END FUNDS
Credit Suisse Commodity Return Strategy Fund
|
|
Credit Suisse Large Cap Blend Fund
|
|
|
Credit Suisse Global Fixed Income Fund
|
|
Credit Suisse Large Cap Growth Fund
|
|
|
Credit Suisse Global Small Cap Fund
|
|
Credit Suisse Large Cap Value Fund
|
|
|
Credit Suisse High Income Fund
|
|
Credit Suisse Mid-Cap Core Fund
|
|
|
Credit Suisse International Focus Fund
|
|
Credit Suisse Small Cap Core Fund
|
|
|
Fund shares are not deposits or other obligations of Credit Suisse Asset Management, LLC or any affiliate, are not FDIC-insured and are not guaranteed by Credit Suisse Asset Management, LLC or any affiliate. Fund investments are subject to investment risks, including loss of your investment. There are special risk considerations associated with international, global, emerging-market, small-company, private equity, high-yield debt, single-industry, single-country and other special, aggressive or concentrated investment strategies. Past performance cannot guarantee future results.
More complete information about a fund, including charges and expenses, is provided in the Prospectus, which should be read carefully before investing. You may obtain copies by calling Credit Suisse Funds at 800-927-2874. Performance information current to the most recent month-end is available at www.credit-suisse.com/us.
|
|
|
Credit Suisse Asset Management Securities, Inc., Distributor.
28
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DIRECTORS AND CORPORATE OFFICERS
Enrique R. Arzac Chairman of the Board of
Directors
James J. Cattano Director
Lawrence J. Fox Director
Steven N. Rappaport Director
George R. Hornig Chief Executive Officer
and President
Boon Hong Yeo Chief Investment Officer
J. Kevin Gao Chief Legal Officer, Senior
Vice President and Secretary
Emidio Morizio Chief Compliance Officer
Michael A. Pignataro Chief Financial Officer
Cecilia Chau Treasurer
INVESTMENT ADVISER
Credit Suisse Asset Management, LLC
Eleven Madison Avenue
New York, NY 10010
INVESTMENT SUB-ADVISER
Credit Suisse Asset Management Limited
Level 32, Gateway Building
1 Macquarie Place
Sydney NSW 2000
ADMINISTRATOR & CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
SHAREHOLDER SERVICING AGENT
Computershare Trust Company, N.A.
P.O. Box 43078
Providence, RI 02940
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
PricewaterhouseCoopers LLP
100 East Pratt Street
Baltimore, MD 21202
LEGAL COUNSEL
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
IF-AR-1208
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.
Item 2. Code of Ethics.
The registrant has
adopted a code of ethics applicable to its Chief Executive Officer, President,
Chief Financial Officer and Chief Accounting Officer, or persons performing
similar functions. A copy of the code is filed as Exhibit 12(a)(1) to
this Form. There were no amendments to the code during the fiscal year ended December 31,
2008. There were no waivers or implicit waivers from the code granted by the
registrant during the fiscal year ended December 31, 2008.
Item
3. Audit Committee Financial Expert.
The registrants
governing board has determined that it has two audit committee financial
experts serving on its audit committee: Enrique R. Arzac and Steven N.
Rappaport. Each audit committee
financial expert is independent for purposes of this item.
Item 4. Principal Accountant Fees and
Services.
(a) through (d). The information in the table below is provided
for services rendered to the registrant by its independent registered public
accounting firm, PricewaterhouseCoopers LLP (PwC), for its fiscal years ended
December 31, 2007 and December 31, 2008.
|
|
2007
|
|
2008
|
|
Audit Fees
|
|
$
|
35,640
|
|
$
|
36,350
|
|
Audit-Related
Fees(1)
|
|
$
|
3,340
|
|
$
|
3,400
|
|
Tax Fees(2)
|
|
$
|
8,345
|
|
$
|
2,800
|
|
All Other Fees
|
|
|
|
|
|
Total
|
|
$
|
47,325
|
|
$
|
42,550
|
|
(1)
Services
include agreed-upon procedures in connection with the registrants semi-annual
financial statements ($3,340 in 2007 and $3,400 in 2008).
(2)
Tax services in
connection with the registrants excise tax calculations and review of the
registrants applicable tax returns.
The information in the table below is provided with respect to
non-audit services that directly relate to the registrants operations and
financial reporting and that were rendered by PwC to the registrants investment
adviser, Credit Suisse Asset Management, LLC (Credit Suisse), and any service
provider to the registrant controlling, controlled by or under common control
with Credit Suisse that provided ongoing services to the registrant (Covered
Services Provider), for the registrants fiscal years ended December 31,
2007 and December 31, 2008.
|
|
2007
|
|
2008
|
|
Audit-Related
Fees
|
|
N/A
|
|
N/A
|
|
Tax Fees
|
|
N/A
|
|
N/A
|
|
All Other Fees
|
|
N/A
|
|
N/A
|
|
Total
|
|
N/A
|
|
N/A
|
|
2
(e)(1) Pre-Approval Policies and Procedures. The Audit Committee (Committee) of the
registrant is responsible for pre-approving (i) all audit and permissible
non-audit services to be provided by the independent registered public
accounting firm to the registrant and (ii) all permissible non-audit
services to be provided by the independent registered public accounting firm to
Credit Suisse and any Covered Services Provider if the engagement relates
directly to the operations and financial reporting of the registrant. The Committee may delegate its responsibility
to pre-approve any such audit and permissible non-audit services to the
Chairperson of the Committee, and the Chairperson shall report to the Committee,
at its next regularly scheduled meeting after the Chairpersons pre-approval of
such services, his or her decision(s).
The Committee may also establish detailed pre-approval policies and
procedures for pre-approval of such services in accordance with applicable
laws, including the delegation of some or all of the Committees pre-approval
responsibilities to other persons (other than Credit Suisse or the registrants
officers). Pre-approval by the Committee
of any permissible non-audit services shall not be required so long as: (i) the
aggregate amount of all such permissible non-audit services provided to the
registrant, Credit Suisse and any Covered Services Provider constitutes not
more than 5% of the total amount of revenues paid by the registrant to its
independent registered public accounting firm during the fiscal year in which
the permissible non-audit services are provided; (ii) the permissible
non-audit services were not recognized by the registrant at the time of the
engagement to be non-audit services; and (iii) such services are promptly
brought to the attention of the Committee and approved by the Committee (or its
delegate(s)) prior to the completion of the audit.
(e)(2) The information in the table below sets forth the
percentages of fees for services (other than audit, review or attest services)
rendered by PwC to the registrant for which the pre-approval requirement was
waived pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X:
|
|
2007
|
|
2008
|
|
Audit-Related
Fees
|
|
N/A
|
|
N/A
|
|
Tax Fees
|
|
N/A
|
|
N/A
|
|
All Other Fees
|
|
N/A
|
|
N/A
|
|
Total
|
|
N/A
|
|
N/A
|
|
3
The information in the table below sets forth the percentages of fees
for services (other than audit, review or attest services) rendered by PwC to
Credit Suisse and any Covered Services Provider required to be approved
pursuant to Rule 2-01(c)(7)(ii)of Regulation S-X, for the registrants
fiscal years ended December 31, 2007 and December 31, 2008:
|
|
2007
|
|
2008
|
|
Audit-Related
Fees
|
|
N/A
|
|
N/A
|
|
Tax Fees
|
|
N/A
|
|
N/A
|
|
All Other Fees
|
|
N/A
|
|
N/A
|
|
Total
|
|
N/A
|
|
N/A
|
|
(f) Not Applicable.
(g) The aggregate fees billed by PwC for non-audit services
rendered to the registrant, Credit Suisse and Covered Service Providers for the
fiscal years ended December 31, 2007 and December 31, 2008 were
$11,685 and $6,200, respectively.
(h) Not Applicable.
Item 5. Audit Committee of Listed
Registrants.
The registrant has a
separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of
the Securities Exchange Act of 1934, as amended. The members of the committee are
Enrique R. Arzac, James Cattano, Lawrence
Fox and Steven N. Rappaport.
Item 6. Schedule of Investments.
Included as part of the
report to shareholders filed under Item 1 of this Form.
Item 7. Disclosure of Proxy Voting
Policies and Procedures for Closed-End Management Investment Companies.
4
CREDIT
SUISSE ASSET MANAGEMENT, LLC
CREDIT
SUISSE FUNDS
CREDIT
SUISSE INSTITUTIONAL FUNDS
CREDIT
SUISSE CLOSED-END FUNDS
PROXY VOTING
POLICY AND PROCEDURES
Introduction
Credit Suisse Asset Management, LLC (Credit
Suisse) is a fiduciary that owes each of its clients duties of care and
loyalty with respect to proxy voting.
The duty of care requires Credit Suisse to monitor corporate events and
to vote proxies. To satisfy its duty of
loyalty, Credit Suisse must cast proxy votes in the best interests of each of
its clients.
The Credit Suisse Funds,
Credit Suisse Institutional Funds, and Credit Suisse Closed-End Funds (the Funds),
which have engaged Credit Suisse Asset Management, LLC as their investment
adviser, are of the belief that the proxy voting process is a means of
addressing corporate governance issues and encouraging corporate actions both
of which can enhance shareholder value.
Policy
The Proxy Voting Policy (the Policy) set
forth below is designed to ensure that proxies are voted in the best interests
of Credit Suisses clients. The Policy
addresses particular issues and gives a general indication of how Credit Suisse
will vote proxies. The Policy is not
exhaustive and does not include all potential issues.
Proxy Voting Committee
The Proxy
Voting Committee will consist of a member of the Portfolio Management
Department, a member of the Legal and Compliance Department, and a member of
the Operations Department (or their designees).
The purpose of the Proxy Voting Committee is to administer the voting of
all clients proxies in accordance with the Policy. The Proxy Voting Committee will review the
Policy annually to ensure that it is designed to promote the best interests of
Credit Suisses clients.
For the
reasons disclosed below under Conflicts, the Proxy Voting Committee has
engaged the services of an independent third party (initially, Risk Metrics
Groups ISS Governance Services Unit (ISS)) to assist in issue analysis and
vote recommendation for proxy proposals.
Proxy proposals addressed by the Policy will be voted in accordance with
the Policy. Proxy proposals
5
addressed by
the Policy that require a case-by-case analysis will be voted in accordance
with the vote recommendation of ISS.
Proxy proposals not addressed by the Policy will also be voted in
accordance with the vote recommendation of ISS.
To the extent that the Proxy Voting Committee proposes to deviate from
the Policy or the ISS vote recommendation, the Committee shall obtain client
consent as described below.
Credit Suisse investment professionals may
submit a written recommendation to the Proxy Voting Committee to vote in a
manner inconsistent with the Policy and/or the recommendation of ISS. Such recommendation will set forth its basis
and rationale. In addition, the
investment professional must confirm in writing that he/she is not aware of any
conflicts of interest concerning the proxy matter or provide a full and
complete description of the conflict.
Conflicts
Credit Suisse
is part of the asset management business of
Credit Suisse one of the worlds leading banks.
As part of a global, full service investment-bank, broker-dealer,
and asset-management organization, Credit Suisse and its affiliates and
personnel may have multiple advisory, transactional, financial, and other
interests in securities, instruments, and companies that may be purchased or
sold by Credit Suisse for its clients accounts. The interests of Credit Suisse and/or its
affiliates and personnel may conflict with the interests of Credit Suisses
clients in connection with any proxy issue.
In addition, Credit Suisse may not be able to identify all of the
conflicts of interest relating to any proxy matter.
Consent
In each and every instance in which the Proxy
Voting Committee favors voting in a manner that is inconsistent with the Policy
or the vote recommendation of ISS (including proxy proposals addressed and not
addressed by the Policy), it shall disclose to the client conflicts of interest
information and obtain client consent to vote.
Where the client is a Fund, disclosure shall be made to any one director
who is not an interested person, as that term is defined under the Investment
Company Act of 1940, as amended, of the Fund.
Recordkeeping
Credit Suisse is required to maintain in an
easily accessible place for six years all records relating to proxy voting.
These records include the
following:
·
a copy of the Policy;
·
a copy of each proxy statement received on
behalf of Credit Suisse clients;
6
·
a record of each vote cast on behalf of
Credit Suisse clients;
·
a copy of all
documents created by Credit Suisse personnel that were material to making a
decision on a vote or that memorializes the basis for the decision; and
·
a copy of each
written request by a client for information on how Credit Suisse voted proxies,
as well as a copy of any written response.
Credit Suisse reserves
the right to maintain certain required proxy records with ISS in accordance
with all applicable regulations.
Disclosure
Credit Suisse will
describe the Policy to each client. Upon
request, Credit Suisse will provide any client with a copy of the Policy. Credit Suisse will also disclose to its
clients how they can obtain information on their proxy votes.
ISS will capture
data necessary for Funds to file Form N-PX on an annual basis concerning
their proxy voting record in accordance with applicable law.
Procedures
The Proxy
Voting Committee will administer the voting of all client proxies. Credit
Suisse has engaged ISS as an independent third party proxy voting service to
assist in the voting of client proxies.
ISS will coordinate with each clients custodian to ensure that proxy
materials reviewed by the custodians are processed in a timely fashion. ISS will provide Credit Suisse with an
analysis of proxy issues and a vote recommendation for proxy proposals. ISS will refer proxies to the Proxy Voting
Committee for instructions when the application of the Policy is not
clear. The Proxy Voting Committee will
notify ISS of any changes to the Policy or deviating thereof.
PROXY VOTING POLICY
Operational Items
Adjourn Meeting
Proposals to
provide management with the authority to adjourn an annual or special meeting
will be determined on a case-by-case basis.
Amend Quorum
Requirements
Proposals to
reduce quorum requirements for shareholder meetings below a majority of the
shares outstanding will be determined on a case-by-case basis.
7
Amend Minor Bylaws
Generally vote for
bylaw or charter changes that are of a housekeeping nature.
Change Date, Time,
or Location of Annual Meeting
Generally vote for
management proposals to change the date/time/location of the annual meeting
unless the proposed change is unreasonable.
Generally vote against shareholder proposals to change the
date/time/location of the annual meeting unless the current scheduling or
location is unreasonable.
Ratify Auditors
Generally vote for
proposals to ratify auditors unless: (1) an auditor has a financial
interest in or association with the company, and is therefore not independent; (2) fees
for non-audit services are excessive, or (3) there is reason to believe
that the independent auditor has rendered an opinion, which is neither accurate
nor indicative of the companys financial position. Generally vote on a case-by-case basis on
shareholder proposals asking companies to prohibit their auditors from engaging
in non-audit services (or capping the level of non-audit services). Generally vote on a case-by-case basis on
auditor rotation proposals taking into consideration: (1) tenure of audit
firm; (2) establishment and disclosure of a renewal process whereby the
auditor is regularly evaluated for both audit quality and competitive price; (3) length
of the rotation period advocated in the proposal, and (4) significant
audit related issues.
Board of Directors
Voting on Director Nominees in Uncontested Elections
Generally votes on
director nominees on a case-by-case basis.
Votes may be withheld: (1) from directors who attended less than
75% of the board and committee meetings without a valid reason for the
absences; (2) implemented or renewed a dead-hand poison pill; (3) ignored
a shareholder proposal that was approved by a majority of the votes cast for
two consecutive years; (4) ignored a shareholder proposal approved by a
majority of the shares outstanding; (5) have failed to act on takeover
offers where the majority of the shareholders have tendered their shares; (6) are
inside directors or affiliated outside directors and sit on the audit,
compensation, or nominating committee; (7) are inside directors or
affiliated outside directors and the full board serves as the audit,
compensation, or nominating committee or the company does not have one of these
committees; or (8) are audit committee members and the non-audit fees paid
to the auditor are excessive
8
Cumulative Voting
Proposals to
eliminate cumulative voting will be determined on a case-by-case basis.
Proposals to restore or provide for cumulative voting in the absence of
sufficient good governance provisions and/or poor relative shareholder returns
will be determined on a case-by-case basis.
Director and
Officer Indemnification and Liability Protection
Proposals on
director and officer indemnification and liability protection generally evaluated
on a case-by-case basis. Generally vote
against proposals that would: (1) eliminate entirely directors and
officers liability for monetary damages for violating the duty of care; or (2) expand
coverage beyond just legal expenses to acts, such as negligence, that are more
serious violations of fiduciary obligation than mere carelessness. Generally vote for only those proposals
providing such expanded coverage in cases when a directors or officers legal
defense was unsuccessful if: (1) the director was found to have acted in
good faith and in a manner that he reasonably believed was in the best
interests of the company, and (2) only if the directors legal expenses
would be covered.
Filling
Vacancies/Removal of Directors
Generally vote
against proposals that provide that directors may be removed only for
cause. Generally vote for proposals to
restore shareholder ability to remove directors with or without cause. Proposals that provide that only continuing
directors may elect replacements to fill board vacancies will be determined on
a case-by-case basis. Generally vote for
proposals that permit shareholders to elect directors to fill board vacancies.
Independent
Chairman (Separate Chairman/CEO)
Generally vote for
shareholder proposals requiring the position of chairman be filled by an
independent director unless there are compelling reasons to recommend against
the proposal, including: (1) designated lead director, elected by and from
the independent board members with clearly delineated duties; (2) 2/3
independent board; (3) all independent key committees; or (4) established
governance guidelines.
Majority of
Independent Directors
Generally vote for
shareholder proposals requiring that the board consist of a majority or
substantial majority (two-thirds) of independent directors unless the board
composition already meets the adequate threshold. Generally vote for shareholder proposals
requiring the board audit, compensation, and/or nominating committees be
composed exclusively of independent directors if they currently do not meet
that standard. Generally withhold votes
from insiders and affiliated outsiders sitting on the audit, compensation, or
nominating committees. Generally
withhold votes from insiders and affiliated outsiders on boards that are
9
lacking any of
these three panels. Generally withhold
votes from insiders and affiliated outsiders on boards that are not at least
majority independent.
Term Limits
Generally vote
against shareholder proposals to limit the tenure of outside directors.
Proxy Contests
Voting on Director
Nominees in Contested Elections
Votes in a
contested election of directors should be decided on a case-by-case basis, with
shareholders determining which directors are best suited to add value for
shareholders. The major decision factors
are: (1) company performance relative to its peers; (2) strategy of
the incumbents versus the dissidents; (3) independence of
directors/nominees; (4) experience and skills of board candidates; (5) governance
profile of the company; (6) evidence of management entrenchment; (7) responsiveness
to shareholders; or (8) whether takeover offer has been rebuffed.
Amend Bylaws
without Shareholder Consent
Proposals giving
the board exclusive authority to amend the bylaws will be determined on a
case-by-case basis. Proposals giving the
board the ability to amend the bylaws in addition to shareholders will be
determined on a case-by-case basis.
Confidential
Voting
Generally vote for
shareholder proposals requesting that corporations adopt confidential voting,
use independent vote tabulators and use independent inspectors of election, as
long as the proposal includes a provision for proxy contests as follows: In the
case of a contested election, management should be permitted to request that
the dissident group honor its confidential voting policy. If the dissidents agree, the policy may
remain in place. If the dissidents will
not agree, the confidential voting policy may be waived. Generally vote for management proposals to
adopt confidential voting.
Cumulative Voting
Proposals to
eliminate cumulative voting will be determined on a case-by-case basis. Proposals to restore or provide for
cumulative voting in the absence of sufficient good governance provisions
and/or poor relative shareholder returns will be determined on a case-by-case
basis.
10
Antitakeover
Defenses and Voting Related Issues
Advance Notice Requirements for Shareholder
Proposals/Nominations
Votes on advance
notice proposals are determined on a case-by-case basis.
Amend Bylaws without Shareholder Consent
Proposals giving
the board exclusive authority to amend the bylaws will be determined on a
case-by-case basis. Generally vote for
proposals giving the board the ability to amend the bylaws in addition to
shareholders.
Poison Pills
(Shareholder Rights Plans)
Generally vote for
shareholder proposals requesting that the company submit its poison pill to a
shareholder vote or redeem it. Votes
regarding management proposals to ratify a poison pill should be determined on
a case-by-case basis. Plans should
embody the following attributes: (1) 20% or higher flip-in or flip-over; (2) two
to three year sunset provision; (3) no dead-hand or no-hand features; or (4) shareholder
redemption feature
Shareholders
Ability to Act by Written Consent
Generally vote
against proposals to restrict or prohibit shareholders ability to take action
by written consent. Generally vote for
proposals to allow or make easier shareholder action by written consent.
Shareholders
Ability to Call Special Meetings
Proposals to
restrict or prohibit shareholders ability to call special meetings or that
remove restrictions on the right of shareholders to act independently of
management will be determined on a case-by-case basis.
Supermajority Vote
Requirements
Proposals to
require a supermajority shareholder vote will be determined on a case-by-case
basis Proposals to lower supermajority vote requirements will be determined on
a case-by-case basis.
Merger and
Corporate Restructuring
Appraisal Rights
Generally vote for
proposals to restore, or provide shareholders with, rights of appraisal.
11
Asset Purchases
Generally vote
case-by-case on asset purchase proposals, taking into account: (1) purchase
price, including earnout and contingent payments; (2) fairness opinion; (3) financial
and strategic benefits; (4) how the deal was negotiated; (5) conflicts
of interest; (6) other alternatives for the business; or (7) noncompletion
risk (companys going concern prospects, possible bankruptcy).
Asset Sales
Votes on asset sales
should be determined on a case-by-case basis after considering: (1) impact
on the balance sheet/working capital; (2) potential elimination of
diseconomies; (3) anticipated financial and operating benefits; (4) anticipated
use of funds; (5) value received for the asset; fairness opinion (if any);
(6) how the deal was negotiated; or (6) Conflicts of interest
Conversion of Securities
Votes on proposals
regarding conversion of securities are determined on a case-by-case basis. When
evaluating these proposals, should review (1) dilution to existing
shareholders position; (2) conversion price relative to market value; (3) financial
issues: companys financial situation and degree of need for capital; effect of
the transaction on the companys cost of capital; (4) control issues:
change in management; change in control; standstill provisions and voting
agreements; guaranteed contractual board and committee seats for investor; veto
power over certain corporate actions; (5) termination penalties; (6) conflict
of interest: arms length transactions, managerial incentives. Generally vote for the conversion if it is
expected that the company will be subject to onerous penalties or will be
forced to file for bankruptcy if the transaction is not approved.
Corporate Reorganization
Votes on proposals to
increase common and/or preferred shares and to issue shares as part of a debt
restructuring plan are determined on a case-by-case basis, after evaluating: (1) dilution
to existing shareholders position; (2) terms of the offer; (3) financial
issues; (4) managements efforts to pursue other alternatives; (5) control
issues; (6) conflict of interest.
Generally vote for the debt restructuring if it is expected that the
company will file for bankruptcy if the transaction is not approved.
Reverse Leveraged Buyouts
Votes on proposals to
increase common and/or preferred shares and to issue shares as part of a debt
restructuring plan are determined on a case-by-case basis, after evaluating: (1) dilution
to existing shareholders position; (2) terms of the offer; (3) financial
issues; (4) managements efforts to pursue other alternatives; (5) control
issues; (6) conflict of interest.
Generally vote
12
for the debt
restructuring if it is expected that the company will file for bankruptcy if
the transaction is not approved.
Formation of Holding
Company
Votes on proposals
regarding the formation of a holding company should be determined on a
case-by-case basis taking into consideration: (1) the reasons for the
change; (2) any financial or tax benefits; (3) regulatory benefits; (4) increases
in capital structure; (5) changes to the articles of incorporation or
bylaws of the company. Absent compelling
financial reasons to recommend the transaction, generally vote against the
formation of a holding company if the transaction would include either of the
following: (1) increases in common or preferred stock in excess of the
allowable maximum as calculated a model capital structure; (2) adverse
changes in shareholder rights; (3) going private transactions; (4) votes
going private transactions on a case-by-case basis, taking into account: (a) offer
price/premium; (b) fairness opinion; (c) how the deal was negotiated;
(d) conflicts of interest; (e) other alternatives/offers considered; (f) noncompletion
risk.
Joint Ventures
Vote on a case-by-case
basis on proposals to form joint ventures, taking into account: (1) percentage
of assets/business contributed; (2) percentage ownership; (3) financial
and strategic benefits; (4) governance structure; (5) conflicts of
interest; (6) other alternatives; (7) noncompletion risk; (8) liquidations. Votes on liquidations should be determined on
a case-by-case basis after reviewing: (1) managements efforts to pursue
other alternatives such as mergers; (2) appraisal value of the assets
(including any fairness opinions); (3) compensation plan for executives
managing the liquidation. Generally vote
for the liquidation if the company will file for bankruptcy if the proposal is
not approved.
Mergers and Acquisitions
Votes on mergers and
acquisitions should be considered on a case-by-case basis, determining whether
the transaction enhances shareholder value by giving consideration to: (1) prospects
of the combined companies; (2) anticipated financial and operating
benefits; (3) offer price; (4) fairness opinion; (5) how the
deal was negotiated; (6) changes in corporate governance and their impact
on shareholder rights; (7) change in the capital structure; (8) conflicts
of interest.
Private Placements
Votes on proposals
regarding private placements should be determined on a case-by-case basis. When
evaluating these proposals, should review: (1) dilution to existing
shareholders position; (2) terms of the offer; (3) financial issues;
(4) managements efforts to pursue alternatives such as mergers; (5) control
issues; (6) conflict of interest.
Generally vote for the
13
private placement if it
is expected that the company will file for bankruptcy if the transaction is not
approved.
Prepackaged Bankruptcy
Plans
Votes on proposals to
increase common and/or preferred shares and to issue shares as part of a debt
restructuring plan are determined on a case-by-case basis, after evaluating: (1) dilution
to existing shareholders position; (2) terms of the offer; (3) financial
issues; (4) managements efforts to pursue other alternatives; (5) control
issues; (6) conflict of interest.
Generally vote for the debt restructuring if it is expected that the
company will file for bankruptcy if the transaction is not approved.
Recapitalization
Votes case-by-case on
recapitalizations (reclassifications of securities), taking into account: (1) more
simplified capital structure; (2) enhanced liquidity; (3) fairness of
conversion terms, including fairness opinion; (4) impact on voting power
and dividends; (5) reasons for the reclassification; (6) conflicts of
interest; (7) other alternatives considered.
Reverse Stock Splits
Generally vote for
management proposals to implement a reverse stock split when the number of
authorized shares will be proportionately reduced. Generally vote for management proposals to
implement a reverse stock split to avoid delisting. Votes on proposals to implement a reverse
stock split that do not proportionately reduce the number of shares authorized
for issue should be determined on a case-by-case basis.
Spinoffs
Votes on spinoffs should
be considered on a case-by-case basis depending on: (1) tax and regulatory
advantages; (2) planned use of the sale proceeds; (3) valuation of
spinoff; fairness opinion; (3) benefits that the spinoff may have on the
parent company including improved market focus; (4) conflicts of interest;
managerial incentives; (5) any changes in corporate governance and their
impact on shareholder rights; (6) change in the capital structure
Value Maximization
Proposals
Vote case-by-case on
shareholder proposals seeking to maximize shareholder value.
14
Capital Structure
Adjustments to Par Value
of Common Stock
Generally vote for
management proposals to reduce the par value of common stock unless the action
is being taken to facilitate an antitakeover device or some other negative
corporate governance action. Generally
vote for management proposals to eliminate par value.
Common Stock
Authorization
Votes on proposals to
increase the number of shares of common stock authorized for issuance are
determined on a case-by-case basis.
Generally vote against proposals at companies with dual-class capital structures
to increase the number of authorized shares of the class of stock that has
superior voting rights. Generally vote
for proposals to approve increases beyond the allowable increase when a companys
shares are in danger of being delisted or if a companys ability to continue to
operate as a going concern is uncertain.
Dual-class Stock
Generally vote against
proposals to create a new class of common stock with superior voting
rights. Generally vote for proposals to
create a new class of nonvoting or subvoting common stock if: (1) it is
intended for financing purposes with minimal or no dilution to current
shareholders; (2) it is not designed to preserve the voting power of an
insider or significant shareholder.
Issue Stock for Use with
Rights Plan
Generally vote against
proposals that increase authorized common stock for the explicit purpose of
implementing a shareholder rights plan.
Preemptive Rights
Votes regarding
shareholder proposals seeking preemptive rights should be determined on a
case-by-case basis after evaluating: (1) the size of the company; (2) the
shareholder base; (3) the liquidity of the stock
Preferred Stock
Generally vote against
proposals authorizing the creation of new classes of preferred stock with
unspecified voting, conversion, dividend distribution, and other rights (blank
check preferred stock). Generally vote
for proposals to create declawed blank check preferred stock (stock that
cannot be used as a takeover defense).
Generally vote for proposals to authorize preferred stock in cases where
the company specifies the voting, dividend, conversion, and other rights of
such stock and the terms of the preferred stock appear reasonable. Generally vote against proposals to increase
the number of blank check preferred stock authorized for issuance when no
shares have been issued or reserved for a specific purpose. Generally vote case-by-case on proposals to
increase the number of blank check
15
preferred shares after
analyzing the number of preferred shares available for issue given a companys
industry and performance in terms of shareholder returns.
Recapitalization
Vote case-by-case on
recapitalizations (reclassifications of securities), taking into account: (1) more
simplified capital structure; (2) enhanced liquidity; (3) fairness of
conversion terms, including fairness opinion; (4) impact on voting power
and dividends; (5) reasons for the reclassification; (6) conflicts of
interest; (7) other alternatives considered.
Reverse Stock Splits
Generally vote for
management proposals to implement a reverse stock split when the number of
authorized shares will be proportionately reduced. Generally vote for management proposals to
implement a reverse stock split to avoid delisting. Votes on proposals to implement a reverse
stock split that do not proportionately reduce the number of shares authorized
for issue should be determined on a case-by-case basis.
Share Repurchase Programs
Generally vote for
management proposals to institute open-market share repurchase plans in which
all shareholders may participate on equal terms.
Stock Distributions:
Splits and Dividends
Generally vote for
management proposals to increase the common share authorization for a stock
split or share dividend, provided that the increase in authorized shares would
not result in an excessive number of shares available for issuance.
Tracking Stock
Votes on the creation of
tracking stock are determined on a case-by-case basis, weighing the strategic value
of the transaction against such factors as: (1) adverse governance
changes; (2) excessive increases in authorized capital stock; (3) unfair
method of distribution; (4) diminution of voting rights; (5) adverse
conversion features; (6) negative impact on stock option plans; (7) other
alternatives such as a spinoff.
Executive and Director
Compensation
Executive and Director
Compensation
Votes on compensation
plans for directors are determined on a case-by-case basis.
16
Stock Plans in Lieu of
Cash
Votes for plans which
provide participants with the option of taking all or a portion of their cash
compensation in the form of stock are determined on a case-by-case basis. Generally vote for plans which provide a
dollar-for-dollar cash for stock exchange.
Votes for plans which do not provide a dollar-for-dollar cash for stock
exchange should be determined on a case-by-case basis.
Director Retirement Plans
Generally vote against
retirement plans for nonemployee directors.
Generally vote for shareholder proposals to eliminate retirement plans
for nonemployee directors.
Management Proposals
Seeking Approval to Reprice Options
Votes on management
proposals seeking approval to reprice options are evaluated on a case-by-case
basis giving consideration to the following: (1) historic trading
patterns; (2) rationale for the repricing; (3) value-for-value
exchange; (4) option vesting; (5) term of the option; (6) exercise
price; (7) participants; (8) employee stock purchase plans. Votes on employee stock purchase plans should
be determined on a case-by-case basis.
Generally vote for employee stock purchase plans where: (1) purchase
price is at least 85 percent of fair market value; (2) offering period is
27 months or less, and (3) potential voting power dilution (VPD) is ten
percent or less. Generally vote against
employee stock purchase plans where either: (1) purchase price is less
than 85 percent of fair market value; (2) Offering period is greater than
27 months, or (3) VPD is greater than ten percent
Incentive Bonus Plans and
Tax Deductibility Proposals
Generally vote for
proposals that simply amend shareholder-approved compensation plans to include
administrative features or place a cap on the annual grants any one participant
may receive. Generally vote for
proposals to add performance goals to existing compensation plans. Votes to amend existing plans to increase
shares reserved and to qualify for favorable tax treatment considered on a
case-by-case basis. Generally vote for
cash or cash and stock bonus plans that are submitted to shareholders for the
purpose of exempting compensation from taxes if no increase in shares is
requested.
Employee Stock Ownership
Plans (ESOPs)
Generally vote for
proposals to implement an ESOP or increase authorized shares for existing
ESOPs, unless the number of shares allocated to the ESOP is excessive (more
than five percent of outstanding shares.)
17
401(k) Employee
Benefit Plans
Generally vote for
proposals to implement a 401(k) savings plan for employees.
Shareholder Proposals
Regarding Executive and Director Pay
Generally vote for
shareholder proposals seeking additional disclosure of executive and director
pay information, provided the information requested is relevant to shareholders
needs, would not put the company at a competitive disadvantage relative to its
industry, and is not unduly burdensome to the company. Generally vote against shareholder proposals
seeking to set absolute levels on compensation or otherwise dictate the amount
or form of compensation. Generally vote
against shareholder proposals requiring director fees be paid in stock only. Generally vote for shareholder proposals to
put option repricings to a shareholder vote.
Vote for shareholders proposals to exclude pension fund income in the
calculation of earnings used in determining executive
bonuses/compensation. Vote on a
case-by-case basis for all other shareholder proposals regarding executive and
director pay, taking into account company performance, pay level versus peers,
pay level versus industry, and long term corporate outlook.
Performance-Based Option
Proposals
Generally vote for shareholder proposals advocating
the use of performance-based equity awards (indexed, premium-priced, and
performance-vested options), unless: (1) the proposal is overly
restrictive; or (2) the company demonstrates that it is using a
substantial portion of performance-based awards for its top executives.
Stock Option Expensing
Generally vote for
shareholder proposals asking the company to expense stock options unless the
company has already publicly committed to start expensing by a specific date.
Golden and Tin Parachutes
Generally vote for
shareholder proposals to require golden and tin parachutes to be submitted for
shareholder ratification, unless the proposal requires shareholder approval
prior to entering into employment contracts.
Vote on a case-by-case basis on proposals to ratify or cancel golden or
tin parachutes.
May 14,
2008
Item
8. Portfolio Managers of Closed-End
Management Investment Companies.
Information pertaining to the Chief Investment Officer
of The Indonesia Fund, Inc., as of December 31, 2008, is set forth
below.
18
Boon Hong Yeo
Chief Investment Officer Since 2003
Year of Birth: 1960
|
Director
and Head of Asia ex-Japan Equities of Credit Suisse Asset Management
Singapore Limited; Director of AIB Govett (Asia) Limited from October 2001
to April 2002; Managing Director of Zenith Asset Singapore from
January 2001 to September 2001; Associate Director of CMG First
State Singapore from 1994 to 2000
|
Registered Investment Companies, Pooled Investment
Vehicles and Other Accounts Managed
As reported to
the Registrant, the information in the following table reflects the number of
registered investment companies, pooled investment vehicles and other accounts
managed by Boon Hong Yeo and the total assets managed within each category as
of December 31, 2008.
|
|
Registered Investment
Companies
|
|
Other Pooled Investment
Vehicles
|
|
Other Accounts
|
|
Boon Hong Yeo
|
|
1
|
|
$47 million
|
|
10
|
|
$651 million
|
|
1
|
|
$31 million
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No advisory fee is paid based on performance for any of the accounts
listed above.
Potential
Conflicts of Interest
It is possible
that conflicts of interest may arise in connection with the portfolio managers
management of the Portfolios investments on the one hand and the investments
of other accounts on the other. For example, the portfolio managers may have
conflicts of interest in allocating management time, resources and investment
opportunities among the Portfolio and other accounts they advise. In addition
due to differences in the investment strategies or restrictions between the
Portfolio and the other accounts, the portfolio managers may take action with
respect to another account that differs from the action taken with respect to
the Portfolio. Credit Suisse has adopted
policies and procedures that are designed to minimize the effects of these
conflicts.
If Credit
Suisse believes that the purchase or sale of a security is in the best interest
of more than one client, it may (but is not obligated to) aggregate the orders
to be sold or purchased to seek favorable execution or lower brokerage
commissions, to the extent permitted by applicable laws and regulations. Credit Suisse may aggregate orders if all
participating client accounts benefit equally (i.e., all receive an average price
of the aggregated orders). In the event Credit Suisse aggregates an order for
participating accounts, the method of allocation will generally be determined
prior to the trade execution. Although no specific method of allocation of
transactions (as well as expenses incurred in the transactions) is expected to
be used, allocations will be designed to ensure that over time all clients
receive fair treatment consistent with Credit Suisses fiduciary duty to its
clients (including its duty to seek to obtain best execution of client trades).
The accounts aggregated may
19
include
registered and unregistered investment companies managed by Credit Suisses
affiliates and accounts in which Credit Suisses officers, directors, agents,
employees or affiliates own interests. Applicant may not be able to aggregate
securities transactions for clients who direct the use of a particular
broker-dealer, and the client also may not benefit from any improved execution
or lower commissions that may be available for such transactions.
Compensation
Credit Suisses
compensation to Mr. Yeo includes both a fixed base salary component and a
bonus component. The bonus component is
composed of two parts. The first part of
the bonus component is discretionary and generally is determined by considering
various factors, such as the assets held in the Fund and other accounts managed
by a portfolio manager, business growth, teamwork, management, corporate
citizenship, etc. The second part of the
bonus generally is determined by the pre-tax investment performance of
products, including the Fund, for which the portfolio manager is responsible (Performance-Based
Bonus). Credit Suisse considers both
the short-term (generally one-year) and long-term (generally three-year)
performance of a portfolio manager relative to selected benchmarks in
determining the portfolio managers bonus.
The following table sets forth the benchmark used over a one-year period
in determining each portfolio managers Performance-Based Bonus.
Portfolio Manager
|
|
Benchmark
|
|
Peer Group
|
Boon Hong
Yeo
|
|
MSCI AC Far
East ex Japan
MSCI AC Golden Dragon
MSCI Indonesia
MSCI AC Asia ex Japan
LIBOR + 4%
GPR General PSI Asia
|
|
Lipper
Global Equity Asia Pac (Ex Japan)
|
A portion of the bonus may be paid in phantom shares
of Credit Suisse Group stock as deferred compensation. Phantom shares are shares representing an
unsecured right to receive on a particular date a specified number of
registered shares subject to certain terms and conditions. A portion of the bonus will receive the
notional return of the fund(s) the portfolio manager manages and a portion
of the bonus will receive the notional return of a basked of other Credit
Suisse funds along the product line of the portfolio manager.
Like all employees of Credit Suisse, all portfolio
managers participate in Credit Suisses profit sharing.
Securities
Ownership. As of December 31, 2008,
Mr. Yeo did not own any shares of the registrant.
20
Item 9.
Purchases of Equity Securities by Closed-End Management Investment Company and
Affiliated Purchasers.
None.
Item
10. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which
shareholders may recommend nominees to the registrants board of directors
since the registrant last provided disclosure in response to the requirements
of Item 7(d)(2)(ii)(g) of Schedule 14A in its definitive proxy statement
dated March 3, 2008.
Item
11. Controls and Procedures.
(a) As of
a date within 90 days from the filing date of this report, the principal
executive officer and principal financial officer concluded that the registrants
disclosure controls and procedures (as defined in Rule 30a-3(c) under
the Investment Company Act of 1940 (the Act)) were effective based on their
evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under
the Act and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934.
(b) There
were no changes in registrants internal control over financial reporting (as
defined in Rule 30a-3(d) under the Act) that occurred during the
second fiscal quarter of the period covered by this report that have materially
affected, or are reasonably likely to materially affect, the registrants
internal control over financial reporting.
Item 12.
Exhibits.
(a)(1)
Registrants
Code of Ethics is an exhibit to this report.
(a)(2)
The
certifications of the registrant as required by Rule 30a-2(a) under
the Act are exhibits to this report.
(a)(3)
Not
applicable.
(b)
The
certifications of the registrant as required by Rule 30a-2(b) under
the Act are an exhibit to this report.
21
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934 and the Investment Company Act of 1940, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
|
THE
INDONESIA FUND, INC.
|
|
|
|
|
/s/ George
R. Hornig
|
|
|
Name:
|
George R.
Hornig
|
|
Title:
|
Chief
Executive Officer
|
|
Date:
|
March 6,
2009
|
|
|
|
|
Pursuant to the requirements of the
Securities Exchange Act of 1934 and the Investment Company Act of 1940, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
|
/s/ George
R. Hornig
|
|
|
Name:
|
George R.
Hornig
|
|
Title:
|
Chief
Executive Officer
|
|
Date:
|
March 6,
2009
|
|
|
|
|
/s/ Michael
A. Pignataro
|
|
|
Name:
|
Michael A.
Pignataro
|
|
Title:
|
Chief
Financial Officer
|
|
Date:
|
March 6,
2009
|
|
|
|
|
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