<Page>
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 No. 811-06024
---------------------------------------------------
THE INDONESIA FUND, INC.
---------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
466 Lexington Avenue, New York, New York 10017-3140
---------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Hal Liebes, Esq.
The Indonesia Fund, Inc.
466 Lexington Avenue
New York, New York 10017-3140
Registrant's telephone number, including area code: (212) 875-3500
Date of fiscal year end: December 31, 2003
Date of reporting period: January 1, 2003 to December 31, 2003
<Page>
ITEM 1. REPORTS TO STOCKHOLDERS.
<Page>
THE INDONESIA FUND, INC.
ANNUAL REPORT
DECEMBER 31, 2003
[AMERICAN STOCK EXCHANGE(R) LISTED IF(TM) LOGO]
3913-AR-03
<Page>
CONTENTS
<Table>
Letter to Shareholders 1
Portfolio Summary 4
Schedule of Investments 5
Statement of Assets and Liabilities 7
Statement of Operations 8
Statement of Changes in Net Assets 9
Financial Highlights 10
Notes to Financial Statements 12
Report of Independent Auditors 16
Results of Annual Meeting of Shareholders 17
Tax Information 17
Description of InvestLink(SM) Program 18
Information Concerning Directors and Officers 21
</Table>
<Page>
LETTER TO SHAREHOLDERS
February 5, 2004
DEAR SHAREHOLDER:
For the year ended December 31, 2003, The Indonesia Fund, Inc. (the "Fund") had
a gain in its net asset value of 88.01% (assuming reinvestment of dividends),
compared with an increase of 76.53% for the Morgan Stanley Capital International
Indonesia Index.* The Fund benefited from a broad based rally in Indonesian as
well as regional equities in the period. Stocks that helped the Fund outperform
included cement, banks, pharmaceuticals and heavy-equipment companies within
Indonesia, while holding in real estate, shipping and technology companies
outside of Indonesia also added value to the Fund.
THE MARKET: A BULL BY ANY MEASURE
Indonesian equities as a group performed very strongly in 2003, the beneficiary
of reasonable political stability, notable improvements in the domestic economy,
progress in the war on terror and increasing risk tolerance by international
investors, among other positive developments. Highlights of the year included:
- - POLITICS. Indonesia's political environment was far from normal during 2003,
meaning that there was much less violence and much more progress than has
been the norm in recent years, if not decades. While separatist-related
issues remained in the background, Indonesia took an enormous step toward
true democracy when its Parliament approved the first direct elections of
government representatives, including the office of President, in 2004.
Surprising to some, if not most, there was very little politically related
violence leading up to the first of these national elections, one for
national legislators, currently scheduled to take place in April 2004.
- - THE ECONOMY. Indonesia's economy was bolstered by the announcement of a key
government economic reform package in the third quarter, along with generally
positive macroeconomic developments. Interest rates fell sharply with yields
on government debt falling nearly 5% during the year to end at 8%. In
inflation-related news, Bank Indonesia announced that it expects the consumer
price index (CPI) to come in at 4.5% for all of 2003, much lower than the
6.5% rate forecast by the government and the nearly 12% average for 2002.
Elsewhere, the government announced its intention to award up to 15 new oil
and gas exploration contracts, as part of its efforts to attract foreign
direct investment. However, on the external front, Indonesian exports
declined, suggesting that the stronger Rupiah in 2003 may be curbing demand
for exports. To cap the year's achievement, the Indonesian government will be
exiting the International Monetary Fund program, gaining monetary
independence in the process.
- - THE WAR ON TERROR. Although there were massive protests leading up to and
through the U.S.-led war with Iraq, and fears of violence directed toward
westerners and their assets, these fears proved to be unfounded, at least for
the most part. In fact, in this largely Muslim country, public opinion
appeared to turn against the terrorists following the August 5th bombing of
the Jakarta Marriott, a terrorist attack that killed several people and
wounded more. As part of ongoing government efforts to quell domestic
terrorism, the perpetrators of the 2002 Bali nightclub bombing were swiftly
brought to trial and sentenced.
1
<Page>
- - INCREASING RISK TOLERANCE. While geopolitical jitters (the war with Iraq,
North Korea's nuclear standoff, etc.), hurt most equity markets worldwide
during the first quarter, investor appetite for risk increased considerably
after the end of major armed conflict in Iraq. This development benefited
regional Asian equity markets in the second, third and fourth quarters,
including that of Indonesia. Even a major banking scandal, a notable
accounting-related inquiry and only middling corporate performance could not
keep investors away from the country's equity marketplace. In the end,
abundant liquidity (courtesy of exceedingly risk tolerant foreign investors)
proved to be the deciding factor in the strong performance of Indonesian
equities during 2003.
OUTLOOK: EVER CONSCIOUS OF VOLATILITY
Despite, and perhaps owing to, the spectacular advance of Indonesian equities as
a group in 2003, we continue to view the local stock market with a jaundiced
eye, at least relative to opportunities available elsewhere in the region.
Among our concerns is money politics and the elections in 2004 for parliament
and the President. Given the lack of meaningful reforms toward reducing
corruption, particularly in the legal arena, it is reasonable to conclude that
more than parliamentary seats and the positions of President and Vice President
are at stake. These prolonged elections will be anything but cordial, with a
high risk of a policy vacuum for much of 2004. All this will likely make for a
highly volatile market environment during the coming year.
We acknowledge that there are bright spots that could continue to drive
Indonesian equities upward. One is brisk global asset allocation towards Asia.
So long as there is growth in Asia-wide GDP, liquidity could drive the markets,
rather than corporate fundamentals and valuation. This trend should benefit most
Asian stock exchanges, including that of Indonesia. Relatively low interest
rates are also supportive of local stocks.
Even so, we continue to be worried by the country's lack of job creation, where
there is still little evidence of a turnaround. Perhaps this situation may
change when the political environment stabilizes. And, while domestic
consumption may rise with the coming elections, we fear that Indonesia risks
being marginalized by the might of China's economy.
We will likely remain focused on higher growth opportunities, both within and
outside of Indonesia. We may, in fact, look to increase our exposure to
Indonesia's banking sector, which could benefit from lower interest rates,
restructured balance sheets and an increase in consumer borrowings,
notwithstanding the earlier scandals.
Sincerely,
/s/ Boon Hong Yeo
Boon Hong Yeo
Chief Investment Officer**
2
<Page>
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 INVESTMENT PORTFOLIO. 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 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
(Australia), Limited, is primarily responsible for management of the Fund's
assets. He has served the Fund in such capacity since January 17, 2003. Mr. Yeo
joined Credit Suisse Asset Management (Australia) Limited 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.
3
<Page>
THE INDONESIA FUND, INC.
PORTFOLIO SUMMARY - AS OF DECEMBER 31, 2003 (UNAUDITED)
[CHART]
SECTOR ALLOCATION
<Table>
<Caption>
AS A PERCENT OF NET ASSETS
DECEMBER 31, 2003 DECEMBER 31, 2002
Agriculture 2.33% 3.05%
Automotive 7.55% 8.67%
Banks 14.11% 8.47%
Building Products-Cement/Aggregate 3.86% 2.87%
Diversified Operations 0.00% 6.47%
Food & Kindred Products 5.45% 2.78%
Internet Application Software 2.32% 0.00%
Medical-Drugs 5.74% 7.29%
Metal Products-Fasteners 2.28% 0.00%
Oil & Gas 0.00% 4.62%
Soap & Cleaning Preparation 2.61% 4.59%
Telecommunications 19.73% 27.77%
Tobacco 21.92% 15.61%
Other 11.38% 5.06%
Cash & Other Assets 0.72% 2.75%
</Table>
TOP 10 HOLDINGS, BY ISSUER
<Table>
<Caption>
PERCENT OF
HOLDING SECTOR NET ASSETS
- --------------------------------------------------------------------------------------------------
1. PT Telekomunikasi Indonesia Telecommunications 19.7
2. PT Hanjaya Mandala Sampoerna Tbk Tobacco 14.0
3. PT Gudang Garam Tbk Tobacco 7.9
4. PT Astra International Tbk Automotive 7.6
5. PT Kalbe Farma Tbk Medical-Drugs 4.3
6. PT Bank Rakyat Indonesia Banks 3.5
7. PT Indofood Sukses Makmur Tbk Food & Kindred Products 3.4
8. PT Bank Central Asia Tbk Banks 3.1
9. PT Indocement Tunggal Prakarsa Tbk Building Products-Cement/Aggregate 2.8
10. PT Unilever Indonesia Tbk Soap & Cleaning Preparation 2.6
</Table>
4
<Page>
THE INDONESIA FUND, INC.
SCHEDULE OF INVESTMENTS - DECEMBER 31, 2003
<Table>
<Caption>
NO. OF
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------------
EQUITY SECURITIES-99.28%
INDONESIA-83.30%
AGRICULTURE-2.33%
PT Astra Agro Lestari Tbk 3,675,000 $ 752,671
PT Perusahaan
Perkebunan London Sumatra
Indonesia Tbk+ 100 12
---------------
752,683
---------------
AUTOMOTIVE-7.55%
PT Astra International Tbk+ 4,107,461 2,438,386
---------------
BANKS-12.15%
PT Bank Central Asia Tbk 2,575,000 1,016,548
PT Bank Mandiri 6,400,000 759,869
PT Bank Nisp Tbk 7,517,400 325,776
PT Bank Pan Indonesia Tbk 11,414,000 386,226
PT Bank Rakyat Indonesia+ 7,595,000 1,127,189
PT Lippo Bank Tbk+ 5,803,824 310,089
---------------
3,925,697
---------------
BUILDING PRODUCTS-CEMENT/AGGREGATE-3.86%
PT Indocement Tunggal
Prakarsa Tbk+ 3,630,000 915,850
PT Semen Cibinong Tbk+ 6,877,000 330,684
---------------
1,246,534
---------------
FOOD & KINDRED PRODUCTS-3.44%
PT Indofood Sukses
Makmur Tbk 11,720,000 1,113,209
---------------
MACHINERY-CONSTRUCTION & MINING-2.08%
PT United Tractors Tbk+ 4,519,000 670,674
---------------
MEDICAL-DRUGS-5.75%
PT Kalbe Farma Tbk+ 11,624,900 1,380,220
PT Tempo Scan Pacific Tbk 680,000 476,343
---------------
1,856,563
---------------
RETAIL-MAJOR DEPARTMENT STORES-1.88%
PT Matahari Putra
Prima Tbk 6,389,000 $ 398,246
PT Ramayana Lestari
Sentosa Tbk 406,500 209,947
---------------
608,193
---------------
SOAP & CLEANING PREPARATION-2.61%
PT Unilever Indonesia Tbk 1,960,000 843,574
---------------
TELECOMMUNICATIONS-19.73%
PT Telekomunikasi
Indonesia 7,951,280 6,372,353
---------------
TOBACCO-21.92%
PT Gudang Garam Tbk 1,582,500 2,555,298
---------------
PT Hanjaya Mandala
Sampoerna Tbk 8,519,500 4,526,538
---------------
7,081,836
---------------
TOTAL INDONESIA
(Cost $17,138,704) 26,909,702
---------------
HONG KONG-5.31%
APPAREL MANUFACTURERS-1.44%
Ports Design Ltd.+ 259,000 465,374
---------------
AUDIO/VIDEO PRODUCTS-1.88%
Ngai Lik Industrial
Holding Ltd. 1,469,000 605,481
---------------
REAL ESTATE OPERATING/DEVELOPMENT-1.99%
Sino Land Company Ltd. 1,128,000 642,911
---------------
TOTAL HONG KONG
(Cost $1,196,926) 1,713,766
---------------
SINGAPORE-6.71%
INTERNET APPLICATION SOFTWARE-2.32%
Horizon Education and
Technologies Ltd.+ 5,526,000 748,384
---------------
</Table>
See accompanying notes to financial statements.
5
<Page>
<Table>
<Caption>
NO. OF
DESCRIPTION SHARES VALUE
- --------------------------------------------------------------------------------------
METAL PRODUCTS-FASTENERS-2.28%
Unisteel Technology Ltd. 987,000 $ 738,085
---------------
TRANSPORTATION-MARINE-2.11%
Neptune Orient Lines Ltd.+ 536,000 681,717
---------------
TOTAL SINGAPORE
(Cost $1,336,256) 2,168,186
---------------
SOUTH KOREA-2.01%
FOOD & KINDRED PRODUCTS-2.01%
ORION Corp.+
(Cost $366,074) 8,870 650,640
---------------
THAILAND-1.95%
BANKS-1.95%
Siam City Bank Public
Company Ltd.
(Cost $511,851) 1,034,000 628,920
---------------
TOTAL EQUITY SECURITIES
(Cost $20,549,811) 32,071,214
---------------
</Table>
<Table>
<Caption>
PRINCIPAL
DESCRIPTION AMOUNT(000'S) VALUE
- --------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS-1.66%
GRAND CAYMAN-1.66%
Brown Brothers Harriman & Co.,
overnight deposit,
0.10%, 01/02/04*
(Cost $535,000) $ 535 $ 535,000
---------------
INDONESIA-0.00%
Citibank N.A., Jakarta, overnight
deposit, 4.88%, 01/02/04*
(Cost $35) 0 35
---------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $535,035) 535,035
---------------
TOTAL INVESTMENTS-100.94%
(Cost $21,084,846) (Notes A,D,F) 32,606,249
---------------
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS-(0.94)% (302,704)
---------------
NET ASSETS-100.00% $ 32,303,545
===============
</Table>
+ Security is non-income producing.
* Variable rate account. Rate resets on a daily basis; amounts are available
on the same business day.
See accompanying notes to financial statements.
6
<Page>
THE INDONESIA FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 2003
<Table>
ASSETS
Investments, at value (Cost $21,084,846) (Notes A,D,F) $ 32,606,249
Cash 212
Dividends receivable 45,539
Prepaid expenses 11,110
---------------
Total Assets 32,663,110
---------------
LIABILITIES
Payables:
Distributions (Note A) 190,123
Investment advisory fees (Note B) 75,405
Administration fees (Note B) 3,897
Directors' fees 121
Other accrued expenses 90,019
---------------
Total Liabilities 359,565
---------------
NET ASSETS (applicable to 8,266,202 shares of common stock
outstanding) (Note C) $ 32,303,545
===============
NET ASSETS CONSIST OF
Capital stock, $0.001 par value; 8,266,202 shares issued and outstanding
(100,000,000 shares authorized) $ 8,266
Paid-in capital 59,103,693
Undistributed net investment income 39,102
Accumulated net realized loss on investments and foreign currency
related transactions (38,369,186)
Net unrealized appreciation in value of investments and translation
of other assets and liabilities denominated in foreign currency 11,521,670
---------------
Net assets applicable to shares outstanding $ 32,303,545
===============
NET ASSET VALUE PER SHARE ($32,303,545 DIVIDED BY 8,266,202) $ 3.91
===============
MARKET PRICE PER SHARE $ 4.83
===============
</Table>
See accompanying notes to financial statements.
7
<Page>
THE INDONESIA FUND, INC.
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 2003
<Table>
INVESTMENT INCOME
Income (Note A):
Dividends $ 1,045,331
Interest 4,059
Less: Foreign taxes withheld (152,677)
---------------
Total Investment Income 896,713
---------------
Expenses:
Investment advisory fees (Note B) 230,622
Custodian fees 79,273
Legal fees 77,969
Audit fees 45,971
Printing (Note B) 41,728
Accounting fees 30,000
Administration fees (Note B) 27,238
Directors' fees 26,898
Transfer agent fees 23,907
Insurance 10,790
Stock exchange listing fees 10,339
Miscellaneous 7,351
---------------
Total Expenses 612,086
---------------
Net Investment Income 284,627
---------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND
FOREIGN CURRENCY RELATED TRANSACTIONS
Net realized gain/(loss) from:
Investments 2,954,365
Foreign currency related transactions (54,818)
Net change in unrealized depreciation in value of investments
and translation of other assets and liabilities denominated
in foreign currency 12,005,604
---------------
Net realized and unrealized gain on investments and foreign currency
related transactions 14,905,151
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 15,189,778
===============
</Table>
See accompanying notes to financial statements.
8
<Page>
THE INDONESIA FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------------
2003 2002
-------------- --------------
INCREASE IN NET ASSETS
Operations:
Net investment income $ 284,627 $ 64,311
Net realized gain/(loss) on investments and foreign currency
related transactions 2,899,547 (3,179,345)
Net change in unrealized depreciation in value of investments and
translation of other assets and liabilities denominated in
foreign currency 12,005,604 7,887,517
-------------- --------------
Net increase in net assets resulting from operations 15,189,778 4,772,483
-------------- --------------
Dividends to shareholders:
Net investment income (203,349) --
-------------- --------------
Total increase in net assets 14,986,429 4,772,483
-------------- --------------
NET ASSETS
Beginning of year 17,317,116 12,544,633
-------------- --------------
End of year* $ 32,303,545 $ 17,317,116
============== ==============
</Table>
- ----------
* Includes undistributed net investment income of $39,102 and $12,642,
respectively.
See accompanying notes to financial statements.
9
<Page>
THE INDONESIA FUND, INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of common
stock outstanding, total investment return, ratios to average net assets and
other supplemental data for each year indicated. This information has been
derived from information provided in the financial statements and market price
data for the Fund's shares.
<Table>
<Caption>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------
2003 2002 2001 2000
------------ ------------ ------------ ---------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $ 2.09 $ 1.52 $ 1.72 $ 4.48
------------ ------------ ------------ ---------
Net investment income/(loss) 0.03 0.01 (0.13)* (0.13)
Net realized and unrealized gain/(loss) on investments
and foreign currency related transactions 1.81 0.56 (0.07) (2.63)
------------ ------------ ------------ ---------
Net increase/(decrease) in net assets resulting from operations 1.84 0.57 (0.20) (2.76)
------------ ------------ ------------ ---------
Dividends and distributions to shareholders:
Net investment income (0.02) -- -- --
Net realized gain on investments and
foreign currency related transactions -- -- -- --
------------ ------------ ------------ ---------
Total dividends and distributions to shareholders (0.02) -- -- --
------------ ------------ ------------ ---------
Net asset value, end of year $ 3.91 $ 2.09 $ 1.52 $ 1.72
============ ============ ============ =========
Market value, end of year $ 4.83 $ 1.65 $ 1.32 $ 1.563
============ ============ ============ =========
Total investment return (a) 194.19% 25.00% (15.52)% (71.26)%
============ ============ ============ =========
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000 omitted) $ 32,304 $ 17,317 $ 12,545 $ 7,935
Ratio of expenses to average net assets 2.65% 2.69% 8.89%(b) 7.23%(c)
Ratio of net investment income/(loss) to average net assets 1.23% 0.36% (5.63)% (4.85)%
Portfolio turnover rate 95.66% 29.15% 10.23% 16.48%
</Table>
* 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.
(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
<Page>
<Table>
<Caption>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------
1999 1998 1997 1996
------------ ------------ ------------ ---------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $ 2.71 $ 3.58 $ 10.68 $ 9.34
------------ ------------ ------------ ---------
Net investment income/(loss) (0.05) (0.04) 0.03 0.01
Net realized and unrealized gain/(loss) on investments
and foreign currency related transactions 1.87 (0.83) (7.13) 1.33
------------ ------------ ------------ ---------
Net increase/(decrease) in net assets resulting from operations 1.82 (0.87) (7.10) 1.34
------------ ------------ ------------ ---------
Dividends and distributions to shareholders:
Net investment income -- -- -- --
Net realized gain on investments and
foreign currency related transactions (0.05) -- -- --
------------ ------------ ------------ ---------
Total dividends and distributions to shareholders (0.05) -- -- --
------------ ------------ ------------ ---------
Net asset value, end of year $ 4.48 $ 2.71 $ 3.58 $ 10.68
============ ============ ============ =========
Market value, end of year $ 5.438 $ 3.438 $ 4.625 $ 9.750
============ ============ ============ =========
Total investment return (a) 59.58% (25.68)% (52.56)% (3.70)%
============ ============ ============ =========
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000 omitted) $ 20,669 $ 12,491 $ 16,486 $ 49,223
Ratio of expenses to average net assets 3.18% 4.21% 1.89% 1.91%
Ratio of net investment income/(loss) to average net assets (1.43)% (1.37)% 0.33% 0.10%
Portfolio turnover rate 47.38% 36.58% 48.19% 34.67%
<Caption>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1995 1994
-------------- --------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $ 9.18 $ 14.03
-------------- --------------
Net investment income/(loss) -- (0.03)
Net realized and unrealized gain/(loss) on investments
and foreign currency related transactions 0.16 (4.82)
-------------- --------------
Net increase/(decrease) in net assets resulting from operations 0.16 (4.85)
-------------- --------------
Dividends and distributions to shareholders:
Net investment income -- --
Net realized gain on investments and
foreign currency related transactions -- --
-------------- --------------
Total dividends and distributions to shareholders -- --
-------------- --------------
Net asset value, end of year $ 9.34 $ 9.18
============== ==============
Market value, end of year $ 10.125 $ 12.000
============== ==============
Total investment return (a) (15.63)% (42.17)%
============== ==============
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000 omitted) $ 43,060 $ 42,297
Ratio of expenses to average net assets 1.96% 1.83%
Ratio of net investment income/(loss) to average net assets 0.05% (0.25)%
Portfolio turnover rate 24.10% 31.56%
</Table>
11
<Page>
THE INDONESIA FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A. SIGNIFICANT ACCOUNTING POLICIES
The Indonesia Fund, Inc. (the "Fund") was incorporated in Maryland on January 8,
1990 and commenced investment operations on March 9, 1990. The Fund is
registered under the Investment Company Act of 1940, as amended, as a
closed-end, non-diversified management investment company.
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 certain 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 reported 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. The Fund's 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 the Board of Directors
determines that using this method would not reflect an investment's value.
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 under procedures
established by the Board of Directors. The Fund's estimate of fair value assumes
a willing buyer and a willing seller neither acting under a compulsion to buy or
sell.
SHORT-TERM INVESTMENTS: The Fund sweeps available U.S. dollar cash into a
short-term deposit issued by Brown Brothers Harriman & Co., the Fund's
custodian. The Fund also sweeps available cash denominated in Indonesian rupiah
into a short-term deposit issued by Citibank N.A., Jakarta. These short-term
time deposits are variable rate accounts classified as short-term investments.
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 U.S. income or excise taxes as it is the Fund's
intention to continue to qualify as a regulated investment company and to make
the requisite distributions to its shareholders which will be sufficient to
relieve it from all or substantially all U.S. 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.
12
<Page>
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 in investments in
equity securities which is due to changes in the foreign exchange rates from
that which is due to changes in market prices of equity securities. Accordingly,
realized and unrealized foreign currency gains and losses with respect to such
securities are included in the reported net realized and unrealized gains and
losses on investment transactions balances.
The Fund reports certain foreign currency related transactions 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.
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.
On December 12, 2003, a dividend in the aggregate amount of $190,123, equal to
$0.023 per share from net investment income was declared. This dividend was
payable on January 9, 2004 to shareholders of record as of December 23, 2003.
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.
OTHER: The Fund may invest 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.
13
<Page>
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 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 B. AGREEMENTS
Credit Suisse Asset Management, LLC ("CSAM"), serves as the Fund's investment
adviser with respect to all investments. CSAM 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, 2003, CSAM earned $230,622 for advisory services. CSAM also
provides certain administrative services to the Fund and is reimbursed by the
Fund for costs incurred on behalf of the Fund (up to $20,000 per annum). For the
year ended December 31, 2003, CSAM was reimbursed $4,295 for administrative
services rendered to the Fund.
Credit Suisse Asset Management (Australia) Limited ("Sub-Adviser") serves as the
Fund's sub-investment adviser. CSAM currently pays the Sub-Adviser on a
quarterly basis a fee of 90% of the net quarterly amount received by CSAM as the
Fund's investment adviser. The Fund does not pay the Sub-Adviser.
Bear Stearns Funds Management Inc. ("BSFM") serves as the Fund's administrator.
The Fund pays BSFM a monthly fee that is computed weekly at an annual rate of
0.10% of the first $100 million of the Fund's average weekly net assets and
0.08% of amounts in excess of $100 million. For the year ended December 31,
2003, BSFM earned $22,943 for administrative services.
Merrill Corporation ("Merrill"), an affiliate of CSAM, has been engaged by the
Fund to provide certain financial printing services. For the year ended December
31, 2003, Merrill was paid $23,688 for its services to the Fund.
NOTE C. CAPITAL STOCK
The authorized capital stock of the Fund is 100,000,000 shares of common stock,
$0.001, par value. Of the 8,266,202 shares outstanding at December 31, 2003,
CSAM owned 7,169 shares.
NOTE D. INVESTMENT IN SECURITIES
For the year ended December 31, 2003, purchases and sales of securities, other
than short-term investments, were $23,281,576 and $21,715,259, respectively.
NOTE E. CREDIT FACILITY
The Fund, together with other funds/portfolios advised by CSAM (collectively,
the "Participating Funds"), participates in a $100 million committed, unsecured
line of credit facility (the "Credit Facility") with
14
<Page>
Deutsche Bank, A.G. as administrative agent and syndication agent and State
Street Bank and Trust Company as operations agent 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%. During the year ended December 31, 2003, the Fund
had no borrowings under the Credit Facility.
NOTE F. FEDERAL INCOME TAXES
Income and capital gain distributions are determined in accordance with federal
income tax regulations, which may differ from GAAP. These differences are
primarily due to differing treatments of foreign currency transactions, losses
deferred due to wash sales and Post-October losses (as later defined), and
excise tax regulations.
The tax character of dividends paid during the years ended December 31 for the
Fund were as follows:
<Table>
<Caption>
ORDINARY INCOME
--------------------
2003 2002
---------- --------
$ 203,349 -
</Table>
At December 31, 2003, the components of distributable earnings on a tax basis,
for the Fund were as follows:
<Table>
Undistributed ordinary income $ 39,102
Accumulated net realized loss (36,810,348)
Unrealized appreciation 9,962,832
---------------
Total distributable earnings $ (26,808,414)
===============
</Table>
Under current tax law, certain capital losses realized after October 31 within a
taxable year may be deferred and treated as occurring on the first day of the
following tax year ("Post-October losses"). For the tax period ended December
31, 2003, the Fund incurred but elected not to defer net realized foreign
currency losses of $4,595.
At December 31, 2003, the Fund had a capital loss carryover for U.S. federal
income tax purposes of $36,810,348 (of which $7,686,858 is subject to Internal
Revenue Code Section limitations) of which $5,731,003 expires in 2004;
$4,600,826 expires in 2005; $14,881,456 expires in 2006; $3,253,238 expires in
2007; $5,937,713 expires in 2008, $1,720,106 expires in 2009 and $686,006
expires in 2010. It is uncertain whether the Fund will be able to realize the
benefits before they expire.
At December 31, 2003, the identified cost for federal income tax purposes, as
well as the gross unrealized appreciation from investments for those securities
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 $22,643,684, $10,139,202,
$(176,637) and $9,962,565, respectively.
At December 31, 2003, the Fund reclassified from accumulated net realized loss
on investments and foreign currency related transactions of $54,818 to
undistributed net investment income. In addition, the Fund reclassified
$6,899,900 of capital loss carryover for U.S. federal income tax purposes which
expired in 2003 to paid-in capital, to adjust for current period permanent
book/tax differences. Net assets were not affected by these reclassifications.
NOTE G. 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.
15
<Page>
REPORT OF INDEPENDENT AUDITORS
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, 2003, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the ten years in the period
ended, 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 auditing standards generally accepted in
the United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2003 by
correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Two Commerce Square
Philadelphia, Pennsylvania
February 17, 2004
16
<Page>
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
On April 24, 2003, the Annual Meeting of Shareholders of The Indonesia Fund,
Inc. (the "Fund") was held and the following matter was voted upon:
(1) To re-elect two directors to the Board of Directors of the Fund.
<Table>
<Caption>
NAME OF DIRECTOR FOR WITHHELD
- ---------------- --------- --------
Enrique R. Arzac 4,582,415 155,075
William W. Priest, Jr. 4,577,661 159,829
</Table>
In addition to the directors re-elected at the meeting, Lawrence J. Fox and
Richard H. Francis continued as directors of the Fund.
Effective May 19, 2003, Joseph D. Gallagher was appointed as Chairman of the
Board of Directors, Chief Executive Officer and President. Laurence R. Smith who
previously held these positions has resigned from the Fund effective May 19,
2003.
TAX INFORMATION (UNAUDITED)
The Fund is required by Subchapter M of the Internal Revenue Code of 1986, as
amended, to advise its shareholders within 60 days of the Fund's year end
(December 31, 2003) as to the U.S. federal tax status of dividends and
distributions received by the Fund's shareholders in respect of such year. The
$0.0246 per share dividend paid in respect of such year, is represented entirely
by net investment income. Of the $0.0246 per share ordinary income dividend,
$0.023 per share represents qualifying dividend income, which is subject to a
maximum tax rate of 15%. Please note that to utilize the lower tax rate for
qualifying dividend income, shareholders must have held their shares in the Fund
for 60 days or more. There were no distributions which qualified for the
dividend received deduction available to corporate shareholders.
The Fund has made an election under Section 853 to pass through foreign taxes
paidby the Fund to its shareholders. The total amount of foreign taxes that were
passed through to shareholders for the year ended December 31, 2003, were
$144,022, equal to $0.0170 per share from Indonesia. The entire amount of
foreign source income is from qualifying dividend income. This information is
given to meet certain requirements of the Internal Revenue Code of 1986, as
amended. Shareholders shouldrefer to their Form1099-DIV to determine the amount
includable on their respective tax returns for 2003.
Notification for calendar year 2003 was mailed in January 2004. The notification
along with Form 1099-DIV reflects the amount to be used by calendar year
taxpayers on their U.S. federal income tax returns.
Foreign shareholders will generally be subject to U.S. withholding tax on the
amount of the actual ordinary dividends paid by the Fund. They will generally
not be entitled to foreign tax credit or deduction for the withholding taxes
paid by the Fund.
In general, dividends and distributions received by tax-exempt recipients (e.g.,
IRAs and Keoghs) need not be reported as taxable income for U.S. federal income
tax purposes. However, some retirement trusts (e.g., corporate, Keogh and
403(b)(7) plans) may need this information for their annual information
reporting.
Shareholders are advised to consult their own tax advisers with respect to the
tax consequences of their investment in the Fund.
17
<Page>
DESCRIPTION OF INVESTLINK(SM) PROGRAM (UNAUDITED)
The InvestLink(SM) Program is sponsored and administered by EquiServe, L.P., not
by The Indonesia Fund, Inc. (the "Fund"). EquiServe, L.P., will act as program
administrator (the "Program Administrator") of the InvestLink(SM) Program (the
"Program"). The purpose of the Program is to provide existing shareholders with
a simple and convenient way to invest additional funds and reinvest dividends in
shares of the Fund's common stock ("Shares") at prevailing prices, with reduced
brokerage commissions and fees.
In order to participate in the Program, you must be a registered holder of at
least one Share of stock of the Fund. Purchases of Shares with funds from a
participant's cash payment or automatic account deduction will begin on the next
day on which funds are invested. All cash payments must be drawn on a U.S. bank
and payable in U.S. dollars. Checks must be made payable to EquiServe. If a
participant selects the dividend reinvestment option, automatic investment of
dividends generally will begin with the next dividend payable after the Program
Administrator receives his enrollment form. Once in the Program, a person will
remain a participant until he terminates his participation or sells all Shares
held in his Program account, or his account is terminated by the Program
Administrator. A participant may change his investment options at any time by
requesting a new enrollment form and returning it to the Program Administrator.
A participant will be assessed certain charges in connection with his
participation in the Program. All optional cash deposit investments will be
subject to a service charge. Sales processed through the Program will have a
service fee deducted from the net proceeds, after brokerage commissions. In
addition to the transaction charges outlined above, participants will be
assessed per share processing fees (which include brokerage commissions.)
Participants will not be charged any fee for reinvesting dividends.
The number of Shares to be purchased for a participant depends on the amount of
his dividends, cash payments or bank account or payroll deductions, less
applicable fees and commissions, and the purchase price of the Shares. The
investment date for cash payments is the 25th day of each month (or the next
trading day if the 25th is not a trading day). The investment date for dividend
reinvestment is the dividend payment date. The Program Administrator uses
dividends and funds of participants to purchase Shares of the Fund in the open
market. Such purchases will be made by participating brokers as agent for the
participants using normal cash settlement practices. All Shares purchased
through the Program will be allocated to participants as of the settlement date,
which is usually three business days from the purchase date. In all cases,
transaction processing will occur within 30 days of the receipt of funds, except
where temporary curtailment or suspension of purchases is necessary to comply
with applicable provisions of the Federal Securities laws or when unusual market
conditions make prudent investment impracticable. In the event the Program
Administrator is unable to purchase Shares within 30 days of the receipt of
funds, such funds will be returned to the participants.
The average price of all Shares purchased by the Program Administrator with all
funds received during the time period from two business days preceding any
investment date up to the second business day preceding the next investment date
shall be the price per share allocable to a participant in connection with the
Shares purchased for his account with his funds or dividends received by the
Program Administrator during such time period. The average price of all Shares
sold by the Program Administrator pursuant to sell orders received during such
time period shall be the price per share allocable to a participant in
connection with the Shares sold for his account pursuant to his sell orders
received by the Program Administrator during such time period. All sale requests
having an anticipated market value of $100,000.00 or more are expected to be
submitted in written form. In addition,
18
<Page>
all sale requests received by the Program Administrator within thirty (30) days
of an address change are expected to be submitted in written form.
EquiServe L.P., as Program Administrator, administers the Program for
participants, keeps records, sends statements of account to participants and
performs other duties relating to the Program. Each participant in the Program
will receive a statement of his account following each purchase of Shares. The
statements will also show the amount of dividends credited to such participant's
account (if applicable), as well as the fees paid by the participant. In
addition, each participant will receive copies of the Fund's annual and
semi-annual reports to shareholders, proxy statements and, if applicable,
dividend income information for tax reporting purposes.
If the Fund is paying dividends on the Shares, a participant will receive
dividends through the Program for all Shares held on the dividend record date on
the basis of full and fractional Shares held in his account, and for all other
Shares of the Fund registered in his name. The Program Administrator will send
checks to the participants for the amounts of their dividends that are not to be
automatically reinvested at no cost to the participants.
Shares of the Fund purchased under the Program will be registered in the name of
the accounts of the respective participants. Unless requested, the Fund will not
issue to participants certificates for Shares of the Fund purchased under the
Program. The Program Administrator will hold the Shares in book-entry form until
a Program participant chooses to withdraw his Shares or terminate his
participation in the Program. The number of Shares purchased for a participant's
account under the Program will be shown on his statement of account. This
feature protects against loss, theft or destruction of stock certificates.
A participant may withdraw all or a portion of the Shares from his Program
account by notifying the Program Administrator. After receipt of a participant's
request, the Program Administrator will issue to such participant certificates
for the whole Shares of the Fund so withdrawn or, if requested by the
participant, sell the Shares for him and send him the proceeds, less applicable
brokerage commissions, fees, and transfer taxes, if any. If a participant
withdraws all full and fractional Shares in his Program account, his
participation in the Program will be terminated by the Program Administrator. In
no case will certificates for fractional Shares be issued. The Program
Administrator will convert any fractional Shares held by a participant at the
time of his withdrawal to cash.
Participation in any rights offering, dividend distribution or stock split will
be based upon both the Shares of the Fund registered in participants' names and
the Shares (including fractional Shares) credited to participants' Program
accounts. Any stock dividend or Shares resulting from stock splits with respect
to Shares of the Fund, both full and fractional, which participants hold in
their Program accounts and with respect to all Shares registered in their names
will be automatically credited to their accounts.
All Shares of the Fund (including any fractional share) credited to his account
under the Program will be voted as the participant directs. The participants
will be sent the proxy materials for the annual meetings of shareholders. When a
participant returns an executed proxy, all of such Shares will be voted as
indicated. A participant may also elect to vote his Shares in person at the
Shareholders' meeting.
A participant will receive tax information annually for his personal records and
to help him prepare his U.S. federal income tax return. The automatic
reinvestment of dividends does not relieve him of any income tax which may be
payable on dividends. For further information as to tax consequences of
participation in the Program, participants should consult with their own tax
advisors.
19
<Page>
The Program Administrator in administering the Program will not be liable for
any act done in good faith or for any good faith omission to act. However, the
Program Administrator will be liable for loss or damage due to error caused by
its negligence, bad faith or willful misconduct. Shares held in custody by the
Program Administrator are not subject to protection under the Securities
Investors Protection Act of 1970.
The participant should recognize that neither the Fund nor the Program
Administrator can provide any assurance of a profit or protection against loss
on any Shares purchased under the Program. A participant's investment in Shares
held in his Program account is no different than his investment in directly held
Shares in this regard. The participant bears the risk of loss and the benefits
of gain from market price changes with respect to all of his Shares. Neither the
Fund nor the Program Administrator can guarantee that Shares purchased under the
Program will, at any particular time, be worth more or less than their purchase
price. Each participant must make an independent investment decision based on
his own judgment and research.
While the Program Administrator hopes to continue the Program indefinitely, the
Program Administrator reserves the right to suspend or terminate the Program at
any time. It also reserves the right to make modifications to the Program.
Participants will be notified of any such suspension, termination or
modification in accordance with the terms and conditions of the Program. The
Program Administrator also reserves the right to terminate any participant's
participation in the Program at any time. Any question of interpretation arising
under the Program will be determined in good faith by the Program Administrator
and any such good faith determination will be final.
Any interested shareholder may participate in the Program. All other cash
payments or bank account deductions must be at least $100.00, up to a maximum of
$100,000.00 annually. An interested shareholder may join the Program by reading
the Program description, completing and signing the enrollment form and
returning it to the Program Administrator. The enrollment form and information
relating to the Program (including the terms and conditions) may be obtained by
calling the Program Administrator at one of the following telephone numbers:
(800) 730-6001 (U.S. and Canada) or (781) 575-3100 (outside U.S. and Canada).
All correspondence regarding the Program should be directed to: EquiServe Trust
Company N.A., InvestLink(SM) Program, P.O. Box 43010, Providence, RI
02940-3010.
InvestLink is a service mark of EquiServe, L.P.
20
<Page>
INFORMATION CONCERNING DIRECTORS AND OFFICERS (UNAUDITED)
<Table>
<Caption>
TERM NUMBER OF
OF OFFICE PORTFOLIOS IN
AND FUND
POSITION(S) LENGTH PRINCIPAL COMPLEX OTHER
NAME, ADDRESS AND HELD WITH OF TIME OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS
DATE OF BIRTH FUND SERVED PAST FIVE YEARS DIRECTOR HELD BY DIRECTOR
- --------------------------- ------------------ ------------- --------------------------- -------------- ----------------------
INDEPENDENT DIRECTORS
Enrique R. Arzac Director; Since 2000; Professor of Finance and 8 Director of The Adams
c/o Credit Suisse Asset Nominating current term Economics, Graduate School Express Company (a
Attn: General Counsel Committee ends at the of Business, Columbia closed-end investment
Management, LLC Chairman and Audit 2006 annual University since 1971 company); Director of
466 Lexington Avenue Committee Member meeting Petroleum and
New York, New York Resources Corporation
10017-3140 (a closed-end
investment company)
Date of Birth: 10/02/41
Lawrence J. Fox Director; Since 2000; Partner, Drinker Biddle & 3 Director, Winthrop
One Logan Square Nominating and current term Reath (law firm) since 1972 Trust Company
18th & Cherry Streets Audit Committee ends at the
Philadelphia, Member 2005 annual
Pennsylvania 19103 meeting
Date of Birth: 07/17/43
Richard H. Francis Director; Since 1990; Currently retired 43 None
c/o Credit Suisse Asset Nominating current term
Management, LLC Committee Member ends at the
Attn: General Counsel and Audit 2004 annual
466 Lexington Avenue Committee Chairman meeting
New York, New York
10017-3140
Date of Birth: 04/23/32
INTERESTED DIRECTOR
William W. Priest, Jr.* Director Since 1990; Co-Managing Partner, 49 Director of Globe
Steinberg Priest & Sloane current term Steinberg Priest & Sloane Wireless, L.L.C. (a
Capital Management, LLC ends at the Capital Management, LLC maritime
12 East 49th Street 2006 annual since March 2001; Chairman communications
12th Floor meeting and Managing Director of company); Director of
New York, New York CSAM from 2000 to February InfraRed X (a medical
10017 2001, Chief Executive device company)
Officer and Managing
Date of Birth: 09/24/41 Director of CSAM from 1990
to 2000
</Table>
21
<Page>
<Table>
<Caption>
TERM NUMBER OF
OF OFFICE PORTFOLIOS IN
AND FUND
POSITION(S) LENGTH PRINCIPAL COMPLEX OTHER
NAME, ADDRESS AND HELD WITH OF TIME OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS
DATE OF BIRTH FUND SERVED PAST FIVE YEARS DIRECTOR HELD BY DIRECTOR
- --------------------------- ------------------ ------------- --------------------------- -------------- ----------------------
INTERESTED DIRECTOR--(CONCLUDED)
Joseph D. Gallagher*/** Chairman of the Since 2003; Managing Director, Chief 45 None
c/o Credit Suisse Asset Board of current term Executive Officer of CSAM
Management, LLC Directors, Chief ends at the and Global Chief Operating
466 Lexington Avenue Executive Officer 2006 annual Officer of Credit Suisse
New York, New York and President meeting Asset Management since
10017-3140 2003; Global Chief
Financial Officer, Credit
Date of Birth: 12/14/62 Suisse Asset Management
from 1999 to 2003; Chief
Executive Officer and
Director of Credit Suisse
Asset Management Limited,
London, England, from June
2000 to 2003; Director of
Credit Suisse Asset
Management Funds (UK)
Limited, London, England,
from June 2000 to 2003;
Managing Director,
Head-Asian Corporate
Finance and M&A, Credit
Suisse First Boston, Hong
Kong, China, from January
1998 to May 1999; Officer
of other Credit Suisse
Funds
</Table>
<Table>
<Caption>
POSITION(S) LENGTH
NAME, ADDRESS AND HELD WITH OF TIME
DATE OF BIRTH FUND SERVED PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
- ------------------------- ----------------- ----------- ----------------------------------------------------------------------
OFFICERS
Boon Hong Yeo Chief Investment Since 2003 Director of Credit Suisse Asset Management (Australia) Limited;
c/o Credit Suisse Asset Officer Director of AIB Govett (Asia) Limited from October 2001 to April 2002;
Management, LLC Managing Director of Zenith Asset Management Singapore from
466 Lexington Avenue January 2001 to September 2001; Associate Director of CMG First State
New York, New York Singapore from 1994 to 2000
10017-3140
Date of Birth: 05/02/60
Hal Liebes Senior Vice Since 1997 Managing Director and Global General Counsel of CSAM; Associated
c/o Credit Suisse Asset President with CSAM since 1997; Officer of other Credit Suisse Funds
Management, LLC
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 07/06/64
</Table>
22
<Page>
<Table>
<Caption>
POSITION(S) LENGTH
NAME, ADDRESS AND HELD WITH OF TIME
DATE OF BIRTH FUND SERVED PRINCIPAL OCCUPATION(S) DURING PAST FIVE YEARS
- ------------------------- ----------------- ----------- ----------------------------------------------------------------------
OFFICERS--(CONCLUDED)
Michael A. Pignataro Chief Financial Since 1993 Director and Director of Fund Administration of CSAM; Associated with
c/o Credit Suisse Asset Officer and CSAM since 1984; Officer of other Credit Suisse Funds
Management, LLC Secretary
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 11/15/59
Rocco A. Del Guercio Vice President Since 1997 Vice President of CSAM; Associated with CSAM since 1996; Officer of
c/o Credit Suisse Asset other Credit Suisse Funds
Management, LLC
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 04/28/63
Robert M. Rizza Treasurer Since 1999 Assistant Vice President of CSAM since January 2001; Associated with
c/o Credit Suisse Asset CSAM since 1998; Officer of other Credit Suisse Funds
Management, LLC
466 Lexington Avenue
New York, New York
10017-3140
Date of Birth: 12/09/65
</Table>
- ----------
* Designates a director who is an "interested person" of the Fund as defined
under the Investment Company Act of 1940, as amended. Mr. Gallagher is an
interested person of the Fund by virtue of his current positions as
director and/or officer of CSAM. Mr. Priest is an interested person of the
Fund because up to December 31, 2002 he was retained by CSAM to provide
consulting services.
** Effective May 19, 2003, Joseph D. Gallagher was appointed as Chairman of
the Board of Directors, Chief Executive Officer and President of the Fund.
Laurence R. Smith who previously held these positions has resigned
effective May 19, 2003.
23
<Page>
OTHER FUNDS MANAGED BY CREDIT SUISSE ASSET MANAGEMENT, LLC
Credit Suisse Capital Appreciation Fund
Credit Suisse Cash Reserve Fund
Credit Suisse Emerging Growth Fund
Credit Suisse Emerging Markets Fund
Credit Suisse Fixed Income Fund
Credit Suisse Global Fixed Income Fund
Credit Suisse Global Post-Venture Capital Fund
Credit Suisse High Income Fund
Credit Suisse International Focus Fund
Credit Suisse Japan Equity Fund
Credit Suisse Large Cap Value Fund
Credit Suisse Municipal Money Fund
Credit Suisse New York Municipal Fund
Credit Suisse New York Tax Exempt Fund
Credit Suisse Select Equity Fund
Credit Suisse Short Duration Bond Fund
Credit Suisse Small Cap Growth Fund
Credit Suisse Small Cap Value Fund
Credit Suisse Strategic Small Cap Fund
Credit Suisse U.S. Government Money 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, 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. For up-to-date
performance, please look in the mutual fund section of your newspaper under
Credit Suisse.
Credit Suisse Asset Management Securities, Inc., Distributor.
24
<Page>
SUMMARY OF GENERAL INFORMATION
The Fund--The Indonesia Fund, Inc.--is a closed-end, non-diversified management
investment company whose shares trade on the American Stock Exchange, LLC. Its
principal investment objective is long-term capital appreciation with income as
a secondary objective through investments primarily in Indonesian equity and
debt securities. Credit Suisse Asset Management, LLC (New York), the Fund's
investment adviser, is part of Credit Suisse Asset Management ("CSAM"), the
institutional and mutual-fund asset-management arm of Credit Suisse First
Boston. As of December 31, 2003, CSAM managed over $51 billion in the U.S. and,
together with its global affiliates, managed assets of over $317 billion in 14
countries.
SHAREHOLDER INFORMATION
The market price is published in: THE NEW YORK TIMES (daily) under the
designation "Indones" and THE WALL STREET JOURNAL (daily), and BARRON'S (each
Monday) under the designation "Indonesia". The Fund's American Stock Exchange,
LLC trading symbol is IF. Weekly comparative net asset value (NAV) and market
price information about The Indonesia Fund, Inc.'s shares are published each
Sunday in THE NEW YORK TIMES and each Monday in THE WALL STREET JOURNAL and
BARRON'S, as well as other newspapers, in a table called "Closed-End Funds."
THE CSAM GROUP OF FUNDS
LITERATURE REQUEST--Call today for free descriptive information on the
closed-end funds listed below at 1-800-293-1232 or visit our website on the
Internet: http://www.csam.com.
CLOSED-END FUNDS
SINGLE COUNTRY
The Brazilian Equity Fund, Inc. (BZL)
The Chile Fund, Inc. (CH)
The First Israel Fund, Inc. (ISL)
MULTIPLE COUNTRY
The Emerging Markets Telecommunications Fund, Inc. (ETF)
The Latin America Equity Fund, Inc. (LAQ)
FIXED INCOME
Credit Suisse Asset Management Income Fund, Inc. (CIK)
Credit Suisse High Yield Bond Fund (DHY)
<Page>
DIRECTORS AND CORPORATE OFFICERS
Enrique R. Arzac Director
Lawrence J. Fox Director
Richard H. Francis Director
William W. Priest, Jr. Director
Joseph D. Gallagher Chairman of the Board of Directors, Chief Executive
Officer and President
Boon Hong Yeo Chief Investment Officer
Hal Liebes Senior Vice President
Michael A. Pignataro Chief Financial Officer and Secretary
Rocco A. Del Guercio Vice President
Robert M. Rizza Treasurer
INVESTMENT ADVISER
Credit Suisse Asset Management, LLC
466 Lexington Avenue
New York, NY 10017
INVESTMENT SUB-ADVISER
Credit Suisse Asset Management (Australia) Limited
Level 32, Gateway Building
1 Macquarie Place
Sydney NSW 2000
ADMINISTRATOR
Bear Stearns Funds Management Inc.
383 Madison Avenue
New York, NY 10179
CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
SHAREHOLDER SERVICING AGENT
Fleet National Bank
(c/o EquiServe, L.P.)
P. O. Box 43010
Providence, RI 02940
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
Two Commerce Square
Philadelphia, PA 19103
LEGAL COUNSEL
Willkie Farr & Gallagher LLP
787 Seventh Avenue
New York, NY 10019
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.
[AMERICAN STOCK EXCHANGE(R) LISTED IF(TM) LOGO]
3913-AR-03
<Page>
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
11(a)(1) to this Form. There were no amendments to the code during the fiscal
year ended December 31, 2003. There were no waivers or implicit waivers from the
code granted by the registrant during the fiscal year ended December 31, 2003.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
The registrant's governing board has determined that it has two audit committee
financial experts serving on its audit committee: Enrique R. Arzac and Richard
H. Francis. The audit committee financial experts are "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 principal auditors, PricewaterhouseCoopers LLP
("PwC"), for its fiscal years ended December 31, 2002 and December 31, 2003.
<Table>
<Caption>
2002 2003
- --------------------------------------------------------
Audit Fees $ 35,300 $ 32,190
Audit-Related Fees(1) -- 3,000
Tax Fees(2) 8,600 7,482
All Other Fees -- --
Total $ 43,900 $ 42,672
</Table>
(1) Services include agreed-upon procedures in connection with the registrant's
semi-annual financial statements.
(2) Tax services in connection with the registrant's excise tax calculations and
review of the registrant's applicable tax returns.
The information in the table below is provided with respect to non-audit
services that directly relate to the registrant's operations and financial
reporting and that were rendered by PwC to the registrant's investment adviser,
Credit Suisse Asset Management, LLC ("CSAM"), and any service provider to the
registrant controlling, controlled by or under common control with CSAM that
provided ongoing services to the registrant ("Covered Services Provider"), for
the registrant's fiscal years ended December 31, 2002 and December 31, 2003.
<Page>
<Table>
<Caption>
2002 2003
- --------------------------------------------------
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
</Table>
(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 auditors to the registrant
and (ii) all permissible non-audit services to be provided by the independent
auditors to CSAM 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 Chairperson's 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 Committee's pre-approval
responsibilities to other persons (other than CSAM or the registrant's
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, CSAM and any Covered
Services Provider constitutes not more than 5% of the total amount of revenues
paid by the registrant to its independent auditors 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:
<Table>
<Caption>
2002 2003
- --------------------------------------------------
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
</Table>
<Page>
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 CSAM
and any Covered Services Provider required to be approved pursuant to Rule
2-01(c)(7)(ii)of Regulation S-X, for the registrant's fiscal years ended
December 31, 2002 and December 31, 2003:
<Table>
<Caption>
2002 2003
- --------------------------------------------------
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
</Table>
(f) Not Applicable.
(g) The aggregate fees billed by PwC for non-audit services rendered to the
registrant, CSAM and Covered Service Providers for the fiscal years ended
December 31, 2002 and December 31, 2003 were $8,600 and $10,482, 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, Lawrence J. Fox
and Richard H. Francis.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
CREDIT SUISSE ASSET MANAGEMENT, LLC
CSAM CAPITAL INC.
CREDIT SUISSE FUNDS
CREDIT SUISSE INSTITUTIONAL FUNDS
CSAM CLOSED-END FUNDS
<Page>
PROXY VOTING POLICY AND PROCEDURES
Introduction
Credit Suisse Asset Management, LLC and CSAM Capital Inc.
(collectively, "CSAM") are fiduciaries that owe each of its clients duties of
care and loyalty with respect to proxy voting. The duty of care requires CSAM to
monitor corporate events and to vote proxies. To satisfy its duty of loyalty,
CSAM must cast proxy votes in the best interests of each of its clients.
The Credit Suisse Funds, Credit Suisse Institutional Funds, and CSAM
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 CSAM's clients. The
Policy addresses particular issues and gives a general indication of how CSAM
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 CSAM's
clients.
For the reasons disclosed below under "Conflicts," the Proxy Voting
Committee has engaged the services of an independent third party (initially,
Institutional Shareholder Services ("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 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.
<Page>
CSAM 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
CSAM is the institutional and mutual fund asset management arm of
Credit Suisse First Boston, which is part of Credit Suisse Group, one of the
world's largest financial organizations. As part of a global, full service
investment-bank, broker-dealer, and asset-management organization, CSAM 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 CSAM for its clients' accounts. The interests of CSAM
and/or its affiliates and personnel may conflict with the interests of CSAM's
clients in connection with any proxy issue. In addition, CSAM 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
CSAM is required to maintain in an easily accessible place for five
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 CSAM clients;
a record of each vote cast on behalf of CSAM clients;
a copy of all documents created by CSAM 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 CSAM
voted proxies, as well as a copy of any written response.
<Page>
CSAM reserves the right to maintain certain required proxy records
with ISS in accordance with all applicable regulations.
Disclosure
CSAM will describe the Policy to each client. Upon request, CSAM will
provide any client with a copy of the Policy. CSAM 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. CSAM has engaged ISS as an independent third party proxy voting service
to assist in the voting of client proxies. ISS will coordinate with each
client's custodian to ensure that proxy materials reviewed by the custodians are
processed in a timely fashion. ISS will provide CSAM 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.
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.
<Page>
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 company's 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
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 director's
or officer's 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 director's legal expenses
would be covered.
Filling Vacancies/Removal of Directors
<Page>
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 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
<Page>
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.
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
<Page>
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.
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 (company's 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: company's financial situation and degree of
need for capital; effect of the transaction on the company's 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: arm's 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) management's 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
<Page>
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) management's 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.
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) management's 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) management's efforts to pursue alternatives such as
mergers; (5) control issues; (6) conflict of interest. Generally vote for the
private placement if it is expected that the company will file for bankruptcy if
the transaction is not approved.
Prepackaged Bankruptcy Plans
<Page>
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) management's 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.
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.
<Page>
Generally vote for proposals to approve increases beyond the allowable increase
when a company's shares are in danger of being delisted or if a company's
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 preferred shares after analyzing
the number of preferred shares available for issue given a company's 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
<Page>
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.
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
<Page>
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.)
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
<Page>
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.
January 13, 2004
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Form N-CSR disclosure requirement not yet effective with respect to the
registrant.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Form N-CSR disclosure requirement not yet applicable to the registrant.
ITEM 10. 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
registrant's 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 registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the
registrant's second fiscal half-year that have materially affected, or are
reasonably likely to materially affect, the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS.
(a)(1) The registrant's 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.
<Page>
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/ Joseph D. Gallagher
-----------------------
Name: Joseph D. Gallagher
Title: Chief Executive Officer
Date: March 5, 2004
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/ Joseph D. Gallagher
-----------------------
Name: Joseph D. Gallagher
Title: Chief Executive Officer
Date: March 5, 2004
/s/ Michael A. Pignataro
------------------------
Name: Michael A. Pignataro
Title: Chief Financial Officer
Date: March 5, 2004