<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)
J. Kevin Gao, 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
Date of reporting period: January 1, 2004 to December 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
<Page>
THE INDONESIA FUND, INC.
ANNUAL REPORT DECEMBER 31, 2004
[AMERICAN STOCK EXCHANGE(R) LISTED IF (TM) LOGO]
3913-AR-04
<Page>
CONTENTS
<Table>
Letter to Shareholders 1
Portfolio Summary 3
Schedule of Investments 4
Statement of Assets and Liabilities 6
Statement of Operations 7
Statement of Changes in Net Assets 8
Financial Highlights 10
Notes to Financial Statements 12
Report of Independent Registered Public Accounting Firm 16
Results of Annual Meeting of Shareholders 17
Tax Information 17
Description of InvestLink(SM) Program 18
Information Concerning Directors and Officers 21
Proxy Policy and Portfolio Holdings Information 23
</Table>
<Page>
LETTER TO SHAREHOLDERS
February 2, 2005
DEAR SHAREHOLDER:
For the year ended December 31, 2004 The Indonesia Fund, Inc. (the "Fund") had a
gain in its net asset value ("NAV") of 32.1%, vs. an increase of 50.6% for the
Morgan Stanley Capital International Indonesia Index.* Based on market price,
the Fund's shares rose 6.7% during the year. As a result, the Fund's discount to
its NAV stood at 0.20% on December 31, 2004, compared with a premium of 23.53%
at the beginning of the year. Over the year the Fund's average premium to NAV
was 0.19%.
The Fund's underperformance against a narrowly defined benchmark (where the top
10 stocks make up more than 80% of the index) was due in part to diversification
efforts; we were underweighted in certain of these stocks that outperformed. The
Fund had positive, yet lagging, returns from its banks, materials, food and
diversified financial stocks. Stocks that contributed to the Fund's absolute and
relative performance included its capital goods, utilities and real estate
holdings.
THE MARKET: INDONESIA CATCHES UP, PULLS AHEAD
The global environment was broadly favorable for emerging markets. Ample
liquidity conditions as a result of low global interest rates, robust global
growth and investor appetite for higher-return and higher-risk assets drove
outperformance versus developed markets for the year as a whole, notwithstanding
a mid-period downturn.
Indonesia had strong performance for the year in both absolute and relative
terms. The market moved mostly sideways through August, but then surged on
optimism over its economy and political environment. The bulk of the gains came
in the year's fourth quarter, when investors responded enthusiastically to
strong economic data--including an improved trade surplus--and good third
quarter earnings results, especially among banks and telecommunications
companies. On the political front, Susilo Bambang Yudhoyono had a solid win in
Indonesia's first direct Presidential election, which concluded in September.
Economically, the consumer supported demand for cars and homes amid a rush by
newly capitalized banks to extend consumer loans. Paradoxically, Indonesia's
trade surplus could have been larger if not for the spike in oil prices: The
government's fuel subsidies (along with a lack of investment in the down-stream
oil industries) countered the benefits of being Asia's largest oil producer.
The politically sensitive issue of fuel subsidies, avoided by previous
governments, was given more publicity under the new administration. The
government announced (before the tsunami) plans to reduce fuel subsidies, except
for kerosene, which is widely used by the poorer population. Price increases can
be expected for gasoline and liquefied petroleum gas if the plans proceed. Since
these subsidies cost the government more than it spends on development, it may
have to choose between adhering to long-term policy goals or increasing its
short-term popularity.
OUTLOOK AND STRATEGY: ROOM FOR CONTINUED GROWTH?
Within the portfolio, our emphasis during the year was on banks, which we added
to as a proxy on the Indonesian economy, along with telecommunications and
consumer staples companies, most specifically tobacco companies. Late in the
year we pared our exposure to non-Indonesian stocks in favor of Indonesian
companies, reflecting our more favorable view of economic and political trends
in the country.
In the wake of the market's outperformance, valuations on Indonesian stocks have
become relatively lofty, standing near the high end of the market's historical
range. However, we believe that several factors could support the market in
2005,
1
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including an accommodative monetary policy, a buoyant commodity backdrop
(Indonesia is rich in natural resources), relative political stability and the
prospects for investment-led growth stemming from an ambitious program of
infrastructure projects.
The tragedy and loss from the December 26 disaster is incalculable. For the
people of Indonesia, and especially the hard hit province of Aceh, where the
army has battled separatist movements for years, this event has united warring
factions in an outpouring of aid. Due to the prolonged military offensive in
Aceh, that province's contribution to the country's economy has been limited.
But this a litmus test for the government, as it addresses the accusations of
corruption that have circulated regarding money destined for impoverished
regions. Furthermore, its resolve to push through cuts in fuel subsidies will be
severely tested in a time of compassion.
In summary, time will tell whether a popularly elected President can pave the
way for meaningful legal and corporate reforms, facilitate investments and job
creation and make better use of the country's natural resources, among other
issues. These efforts may be aided by the recent election of the incumbent Vice
President as leader of the former opposition Golkar party. The President now has
an opportunity to make real changes with a parliament that is likely to be more
cooperative than before, potentially resulting in the eradication of corruption
and the adoption of pro-growth policies.
Sincerely,
/s/ Boon Hong Yeo
Boon Hong Yeo
Chief Investment Officer**
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.
2
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THE INDONESIA FUND, INC.
PORTFOLIO SUMMARY - AS OF DECEMBER 31, 2004 (UNAUDITED)
[CHART]
SECTOR ALLOCATION
<Table>
<Caption>
DECEMBER 31, 2004 DECEMBER 31, 2003
Automotive 9.51% 7.55%
Banks 21.44% 14.11%
Building & Construction-Miscellaneous 1.48% 0.00%
Building Products-Cement/Aggregate 2.64% 3.86%
Food & Kindred Products 2.12% 5.45%
Gas-Distribution 1.46% 0.00%
Machinery-Construction & Mining 4.75% 2.08%
Medical-Drugs 4.59% 5.74%
Metal Products-Fasteners 1.34% 2.28%
Retail-Major Department Stores 1.41% 1.88%
Soap & Cleaning Preparation 1.42% 2.61%
Telecommunications 23.69% 19.73%
Tobacco 18.14% 21.92%
Other 5.02% 12.07%
Cash & Other Assets 0.99% 0.72%
</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 13.9
3. PT Astra International Tbk Automotive 7.9
4. PT Bank Rakyat Indonesia Banks 6.3
5. PT Bank Central Asia Tbk Banks 5.9
6. PT United Tractors Tbk Machinery-Construction & Mining 4.8
7. PT Gudang Garam Tbk Tobacco 4.2
8. PT Bank Mandiri Banks 4.0
9. PT Indosat Tbk Telecommunications 4.0
10. PT Bank Danamon Indonesia Tbk Banks 3.7
</Table>
3
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THE INDONESIA FUND, INC.
SCHEDULE OF INVESTMENTS - DECEMBER 31, 2004
<Table>
<Caption>
NO. OF
DESCRIPTION SHARES VALUE
- ------------------------------------------------------------------------------------
EQUITY SECURITIES-99.01%
INDONESIA-89.89%
AUTOMOTIVE-7.88%
PT Astra International Tbk 3,203,461 $ 3,313,230
---------------
BANKS-19.84%
PT Bank Central Asia Tbk 7,728,000 2,473,985
PT Bank Danamon Indonesia Tbk 3,253,000 1,535,343
PT Bank Mandiri 8,164,000 1,697,986
PT Bank Rakyat Indonesia 8,483,000 2,631,629
---------------
8,338,943
---------------
BUILDING & CONSTRUCTION-MISCELLANEOUS-1.48%
PT Adhi Karya Tbk+ 8,617,000 623,743
---------------
BUILDING PRODUCTS-CEMENT/AGGREGATE-1.63%
PT Indocement Tunggal
Prakarsa Tbk+ 1,855,000 614,964
PT Semen Cibinong Tbk+ 1,105,000 68,633
---------------
683,597
---------------
FINANCE-CONSUMER LOANS-0.97%
PT Adira Dinamika Multi
Finance Tbk+ 1,338,500 407,354
---------------
FOOD & KINDRED PRODUCTS-2.12%
PT Indofood Sukses
Makmur Tbk 10,336,000 892,123
---------------
GAS-DISTRIBUTION-1.46%
PT Perusahaan Gas Negara 2,991,500 611,882
---------------
MACHINERY-CONSTRUCTION & MINING-4.75%
PT United Tractors Tbk 8,134,200 1,994,770
---------------
MEDICAL-DRUGS-4.59%
PT Kalbe Farma Tbk 23,249,800 1,373,499
PT Tempo Scan Pacific Tbk 680,000 554,594
---------------
1,928,093
---------------
REAL ESTATE OPERATIONS/DEVELOPMENT-0.51%
PT Ciputra Surya Tbk 1,350,000 214,021
---------------
RETAIL-MAJOR DEPARTMENT STORES-1.41%
PT Matahari Putra Prima Tbk 3,168,000 $ 196,248
PT Ramyana Lestari
Sentosa Tbk 4,764,500 397,760
---------------
594,008
---------------
SOAP & CLEANING PREPARATION-1.42%
PT Unilever Indonesia Tbk 1,678,000 596,533
---------------
TELECOMMUNICATIONS-23.69%
PT Indosat Tbk 2,723,000 1,692,208
PT Telekomunikasi Indonesia 15,902,560 8,262,381
---------------
9,954,589
---------------
TOBACCO-18.14%
PT Gudang Garam Tbk 1,217,500 1,780,620
PT Hanjaya Mandala
Sampoerna Tbk 8,154,000 5,840,420
---------------
7,621,040
---------------
TOTAL INDONESIA
(Cost $20,104,870) 37,773,926
---------------
HONG KONG-0.74%
APPAREL MANUFACTURERS-0.74%
Ports Design Ltd.+
(Cost $197,664) 578,000 312,324
---------------
INDIA-1.63%
AUTOMOTIVE-1.63%
ABN NV-Maruti Udyog Ltd.
(Cost $597,612) 64,400 683,333
---------------
MALAYSIA-0.19%
OIL & GAS DRILLING-0.19%
SapuraCrest Petroleum Berhad+
(Cost $86,262) 270,000 80,254
---------------
SINGAPORE-3.12%
COMPUTERS-MEMORY DEVICES-0.56%
Norelco Centreline
Holdings Ltd. 591,000 234,134
---------------
</Table>
See accompanying notes to financial statements.
4
<Page>
<Table>
<Caption>
NO. OF
DESCRIPTION SHARES VALUE
- ------------------------------------------------------------------------------------
INTERNET APPLICATION SOFTWARE-1.22%
Global Voice Group Ltd.+ 7,944,000 $ 513,411
---------------
METAL PRODUCTS-FASTENERS-1.34%
Unisteel Technology Ltd. 617,000 561,854
---------------
TOTAL SINGAPORE
(Cost $1,412,226) 1,309,399
---------------
SOUTH KOREA-0.83%
AIRLINES-0.83%
Korean Air Lines Co., Ltd.+
(Cost $284,225) 19,100 347,926
---------------
THAILAND-2.61%
BANKS-1.60%
Siam City Bank Public
Company Ltd. 1,034,000 672,034
---------------
BUILDING PRODUCTS-CEMENT/AGGREGATE-1.01%
Siam Cement Public
Company Ltd. (The) 60,000 426,255
---------------
TOTAL THAILAND
(Cost $869,681) 1,098,289
---------------
TOTAL EQUITY SECURITIES
(Cost $23,552,540) 41,605,451
---------------
SHORT-TERM INVESTMENTS-3.07%
GRAND CAYMAN-3.07%
Wells Fargo Bank N.A.,
overnight deposit,
1.35%, 01/03/05*
(Cost $1,290,000) $ 1,290 $ 1,290,000
---------------
INDONESIA-0.00%
Citibank N.A., Jakarta, overnight
deposit, 0.64%, 01/03/05*
(Cost $35) 0 35
---------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $1,290,035) 1,290,035
---------------
TOTAL INVESTMENTS-102.08%
(Cost $24,842,575) (Notes A,D,F) 42,895,486
---------------
LIABILITIES IN EXCESS OF CASH AND
OTHER ASSETS-(2.08)% (875,732)
---------------
NET ASSETS-100.00% $ 42,019,754
===============
</Table>
+ Non-income producing security.
* Variable rate account. Rate resets on a daily basis; amounts are available on
the same business day.
See accompanying notes to financial statements.
5
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THE INDONESIA FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - DECEMBER 31, 2004
<Table>
ASSETS
Investments, at value (Cost $24,842,575 ) (Notes A,D,F) $ 42,895,486
Cash 921
Dividends receivable 48,811
Prepaid expenses 3,439
---------------
Total Assets 42,948,657
---------------
LIABILITIES
Payables:
Dividends (Note A) 743,958
Investment advisory fees (Note B) 99,002
Administration fees (Note B) 4,934
Directors' fees 1,943
Other accrued expenses 79,066
---------------
Total Liabilities 928,903
---------------
NET ASSETS (applicable to 8,266,202 shares of common stock outstanding) (Note C) $ 42,019,754
===============
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 52,050,643
Undistributed net investment income 12,800
Accumulated net realized loss on investments and foreign currency related transactions (28,104,955)
Net unrealized appreciation in value of investments and translation of other assets and
liabilities denominated in foreign currencies 18,053,000
---------------
Net assets applicable to shares outstanding $ 42,019,754
===============
NET ASSET VALUE PER SHARE ($42,019,754 DIVIDED BY 8,266,202) $ 5.08
===============
MARKET PRICE PER SHARE $ 5.07
===============
</Table>
See accompanying notes to financial statements.
6
<Page>
STATEMENT OF OPERATIONS - FOR THE YEAR ENDED DECEMBER 31, 2004
<Table>
INVESTMENT INCOME
Income (Note A):
Dividends $ 1,740,821
Interest 6,332
Less: Foreign taxes withheld (255,197)
---------------
Total Investment Income 1,491,956
---------------
Expenses:
Investment advisory fees (Note B) 349,356
Custodian fees 74,172
Legal fees 46,722
Printing (Note B) 43,646
Administration fees (Note B) 40,509
Audit fees 38,794
Directors' fees 30,998
Accounting fees 30,001
Transfer agent fees 18,762
Stock exchange listing fees 17,499
Insurance 12,201
Miscellaneous 7,304
---------------
Total Expenses 709,964
---------------
Net Investment Income 781,992
---------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND
FOREIGN CURRENCY RELATED TRANSACTIONS
Net realized gain/(loss) from:
Investments 3,211,181
Foreign currency related transactions (23,005)
Net change in unrealized appreciation in value of investments and translation
of other assets and liabilities denominated in foreign currencies 6,531,330
---------------
Net realized and unrealized gain on investments and foreign currency related transactions 9,719,506
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 10,501,498
===============
</Table>
See accompanying notes to financial statements.
7
<Page>
THE INDONESIA FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
For the Years Ended
December 31,
---------------------------------
2004 2003
--------------- ---------------
INCREASE IN NET ASSETS
Operations:
Net investment income $ 781,992 $ 284,627
Net realized gain on investments and foreign currency
related transactions 3,188,176 2,899,547
Net change in unrealized appreciation/depreciation in value of
investments and translation of other assets and liabilities
denominated in foreign currencies 6,531,330 12,005,604
--------------- ---------------
Net increase in net assets resulting from operations 10,501,498 15,189,778
--------------- ---------------
Dividends to shareholders:
Net investment income (785,289) (203,349)
--------------- ---------------
Total increase in net assets 9,716,209 14,986,429
--------------- ---------------
NET ASSETS
Beginning of year 32,303,545 17,317,116
--------------- ---------------
End of year* $ 42,019,754 $ 32,303,545
=============== ===============
</Table>
- ----------
* Includes undistributed net investment income of $12,800 and $39,102,
respectively.
See accompanying notes to financial statements.
8
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9
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THE INDONESIA FUND, INC.
FINANCIAL HIGHLIGHTS
Contained below is per share operating performance data for a share of common
stock outstanding, total investment return, ratio 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,
---------------------------------------------------
2004 2003 2002 2001
---------- ---------- ---------- ----------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $ 3.91 $ 2.09 $ 1.52 $ 1.72
---------- ---------- ---------- ----------
Net investment income/(loss) 0.09 0.03 0.01 (0.13)*
Net realized and unrealized gain/(loss) on investments and
foreign currency related transactions 1.17 1.81 0.56 (0.07)
---------- ---------- ---------- ----------
Net increase/(decrease) in net assets resulting from operations 1.26 1.84 0.57 (0.20)
---------- ---------- ---------- ----------
Dividends and distributions to shareholders:
Net investment income (0.09) (0.02) -- --
Net realized gain on investments and
foreign currency related transactions -- -- -- --
---------- ---------- ---------- ----------
Total dividends and distributions to shareholders (0.09) (0.02) -- --
---------- ---------- ---------- ----------
Net asset value, end of year $ 5.08 $ 3.91 $ 2.09 $ 1.52
========== ========== ========== ==========
Market value, end of year $ 5.07 $ 4.83 $ 1.65 $ 1.32
========== ========== ========== ==========
Total investment return (a) 6.72% 194.19% 25.00% (15.52)%
========== ========== ========== ==========
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000 omitted) $ 42,020 $ 32,304 $ 17,317 $ 12,545
Ratio of expenses to average net assets 2.03% 2.65% 2.69% 8.89%(b)
Ratio of net investment income/(loss) to average net assets 2.24% 1.23% 0.36% (5.63)%
Portfolio turnover rate 43.59% 95.66% 29.15% 10.23%
</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,
-----------------------------------------
2000 1999 1998
---------- ---------- ----------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $ 4.48 $ 2.71 $ 3.58
---------- ---------- ----------
Net investment income/(loss) (0.13) (0.05) (0.04)
Net realized and unrealized gain/(loss) on investments and
foreign currency related transactions (2.63) 1.87 (0.83)
---------- ---------- ----------
Net increase/(decrease) in net assets resulting from operations (2.76) 1.82 (0.87)
---------- ---------- ----------
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 $ 1.72 $ 4.48 $ 2.71
========== ========== ==========
Market value, end of year $ 1.563 $ 5.438 $ 3.438
========== ========== ==========
Total investment return (a) (71.26)% 59.58% (25.68)%
========== ========== ==========
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000 omitted) $ 7,935 $ 20,669 $ 12,491
Ratio of expenses to average net assets 7.23%(c) 3.18% 4.21%
Ratio of net investment income/(loss) to average net assets (4.85)% (1.43)% (1.37)%
Portfolio turnover rate 16.48% 47.38% 36.58%
<Caption>
For the Years Ended December 31,
--------------------------------------
1997 1996 1995
---------- ---------- ----------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year $ 10.68 $ 9.34 $ 9.18
---------- ---------- ----------
Net investment income/(loss) 0.03 0.01
Net realized and unrealized gain/(loss) on investments and
foreign currency related transactions (7.13) 1.33 0.16
---------- ---------- ----------
Net increase/(decrease) in net assets resulting from operations (7.10) 1.34 0.16
---------- ---------- ----------
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 $ 3.58 $ 10.68 $ 9.34
========== ========== ==========
Market value, end of year $ 4.625 $ 9.750 $ 10.125
========== ========== ==========
Total investment return (a) (52.56)% (3.70)% (15.63)%
========== ========== ==========
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000 omitted) $ 16,486 $ 49,223 $ 43,060
Ratio of expenses to average net assets 1.89% 1.91% 1.96%
Ratio of net investment income/(loss) to average net assets 0.33% 0.10% 0.05%
Portfolio turnover rate 48.19% 34.67% 24.10%
</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 estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
SECURITY VALUATION: The net asset value of the Fund is determined daily as of
the close of regular trading on the New York Stock Exchange, Inc. (the
"Exchange") on each day the Exchange is open for business. 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 it is determined that
this method would not represent fair 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 by, or under the
direction of, the Board of Directors under procedures established by the Board
of Directors. The Fund may utilize a service provided by an independent third
party which has been approved by the Board of Directors to fair value certain
securities. 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 Wells Fargo Bank N.A. 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 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.
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.
Securities denominated in currencies other than U.S. dollars are subject to
changes in value due to fluctuations in exchange rates.
13
<Page>
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, 2004, CSAM earned $349,356 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, 2004, CSAM was reimbursed $5,574 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,
2004, BSFM earned $34,935 for administrative services.
Merrill Corporation ("Merrill"), an affiliate of CSAM, has been engaged by the
Fund to provide certain financial printing services. For year ended December 31,
2004, Merrill was paid $34,503 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, 2004,
CSAM owned 7,169 shares.
NOTE D. INVESTMENT IN SECURITIES
For the year ended December 31, 2004, purchases and sales of securities, other
than short-term investments, were $14,926,344 and $15,134,796, respectively.
NOTE E. CREDIT FACILITY
The Fund, together with other funds/portfolios advised by CSAM (collectively,
the "Participating Funds"), participates in a $75 million committed, unsecured,
line of credit facility ("Credit Facility") with 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
14
<Page>
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%. The Fund had no borrowings
under the Credit Facility at December 31, 2004.
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 foreign currency transactions, post-October losses on foreign
currency transactions and losses deferred due to wash sales.
The tax character of dividends paid during the years ended December 31, for the
Fund were as follows:
<Table>
<Caption>
ORDINARY INCOME
------------------------
2004 2003
---------- ----------
$ 785,289 $ 203,349
</Table>
At December 31, 2004, the components of distributable earnings on a tax basis,
for the Fund were as follows:
<Table>
Undistributed ordinary income $ 12,800
Accumulated net realized loss (26,646,783)
Unrealized appreciation 16,594,828
-------------
Total distributable earnings $ (10,039,155)
=============
</Table>
At December 31, 2004, the Fund had a capital loss carryover for U.S. federal
income tax purposes of $26,646,783 of which $3,265,956 expires in 2005;
$13,254,308 expires in 2006; $1,782,694 expires in 2007; $5,937,713 expires in
2008 ($2,211,704 of capital loss carryfoward expiring in 2008 is subject to
annual limitations of $292,278), $1,720,106 expires in 2009 and $686,006 expires
in 2010. For the year ended December 31, 2004, the Fund utilized capital loss
carryovers of $3,110,515. It is uncertain whether the Fund will be able to
realize the benefits before they expire.
At December 31, 2004, 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 $26,300,747, $18,080,172,
$(1,485,433), and $16,594,739, respectively.
At December 31, 2004, the Fund reclassified $23,005 from accumulated net
realized loss on foreign currency related transactions to undistributed net
investment income. In addition, the Fund reclassified $1,577,896 of capital loss
carryover for U.S. federal income tax purposes which expired in 2004 and
$5,475,154 of capital loss carryover lost from the Fund's merger with Jakarta
Fund in 2001 to paid-in capital, to adjust for current period permanent book/tax
differences. Net assets were not affected by these reclassifications.
15
<Page>
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
of The Indonesia Fund, Inc.:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations, of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Indonesia Fund, Inc. (the
"Fund") at December 31, 2004, 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 the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 2004 by correspondence with the custodian, provide a reasonable
basis for our opinion.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
February 18, 2005
16
<Page>
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
On April 22, 2004, the Annual Meeting of Shareholders of The Indonesia Fund,
Inc. (the "Fund") (the "Meeting") was held and the following matter was voted
upon:
(1) To re-elect a director to the Board of Directors of the Fund:
<Table>
<Caption>
NAME OF DIRECTOR FOR WITHHELD
- ---------------- --------- --------
Richard H. Francis 4,922,632 147,490
</Table>
In addition to the director re-elected at the Meeting, Enrique R. Arzac,
Lawrence J. Fox and William W. Priest, Jr. continue as directors of the Fund.
Effective August 10, 2004, Michael E. Kenneally was appointed as Director,
Chairman of the Board, Chief Executive Officer and President. Joseph D.
Gallagher, who previously held these positions, resigned from the Fund effective
the same day.
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, 2004) as to the U.S. federal tax status of dividends and
distributions received by the Fund's shareholders in respect of such year. The
$0.0950 per share dividend paid in respect of such year, is represented entirely
by net investment income. The Fund has met the requirements to pass through all
ordinary income as qualified dividends as noted on Box 1B on Form 1099-DIV.
Please note that to utilize the lower tax rate for qualifying dividend income
shareholders must have held their shares in the Fund for at least 61 days during
the 121 day period beginning 60 days before the ex-dividend date.
The Fund has made an election under Section 853 to pass through foreign taxes
paid by the Fund to its shareholders. The total amount of foreign taxes that
were passed through to shareholders for the year ended December 31, 2004, were
$244,947, equal to $0.0300 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 should refer to their Form 1099-DIV to determine the
amount includable on their respective tax returns for 2004.
Notification for calendar year 2004 was mailed in January 2005. 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 Trust
Company, N.A., with EquiServe, Inc. acting as service agent to the
aforementioned and, not by The Indonesia Fund, Inc. (the "Fund"). EquiServe
Trust Company, N.A., will act as program administrator (the "Program
Administrator") of the InvestLink(SM) Program (the "Program"). The purpose of
the Program is to provide 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, all sale requests received by the
Program Administrator within thirty (30) days of an
18
<Page>
address change are expected to be submitted in written form.
EquiServe Trust Company, N.A., 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 Trust Company, N.A.
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 THE 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 Express Company (a
Management, LLC Committee ends at the School of Business, closed-end investment
Attn: General Counsel Chairman and 2006 annual Columbia University company); Director of
end investment Audit Committee meeting since 1971 Petroleum and Resources
466 Lexington Avenue Member Corporation (a closed-end
New York, New York investment company)
10017-3140
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) Trust Company
18th & Cherry Streets Audit Committee ends at the since 1972
Philadelphia, Member 2005 annual
Pennsylvania 19103 meeting
Date of Birth: 07/17/43
Richard H. Francis Director; Since 1990; Currently retired 41 None
c/o Credit Suisse Asset Nominating current term
Management, LLC Committee ends at the
Attn: General Counsel Member and 2007 annual
466 Lexington Avenue Audit Committee meeting
New York, New York Chairman
10017-3140
Date of Birth: 04/23/32
INTERESTED DIRECTORS
Michael E. Kenneally*/** Director; Since 2004; Chairman and Global Chief 44 None
c/o Credit Suisse Asset Chairman of the current term Executive Officer of CSAM
Management, LLC Board, Chief ends at the since 2003; Chairman and
466 Lexington Avenue Executive 2005 annual Chief Investment Officer of
New York, New York Officer and meeting Banc of America Capital
10017-3140 President Management from 1998 to
March 2003; Officer of
Date of Birth: 03/30/54 other Credit Suisse Funds
</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 THE PAST FIVE YEARS DIRECTOR HELD BY DIRECTOR
- ------------------------ ---------------- ------------ ---------------------------- ------------- -------------------------
INTERESTED DIRECTORS--(CONCLUDED)
William W. Priest, Jr.** Director Since 1990; Chief Executive Officer of 47 Director of Globe Wireless,
c/o Epoch Investment current term J Net Enterprises, Inc. (a LLC (a maritime
Partners ends at the technology holding communications company);
667 Madison Avenue 2006 annual company) since June 2004; Director of InfraRed X (a
New York, New York meeting Chief Executive Officer of medical device company);
10021 Epoch Investment Partners, Director of J Net
Inc. since April 2004; Enterprises, Inc.
Co-Managing Partner,
Steinberg Priest & Sloane
Capital Management, LLC
from 2001 to March 2004;
Chairman and Managing
Director of CSAM from
2000 to February 2001,
Chief Executive Officer
and Managing Director of
Date of Birth: 09/24/41 CSAM from 1990 to 2000
<Caption>
POSITION(S) LENGTH
NAME, ADDRESS AND HELD WITH OF TIME
DATE OF BIRTH FUND SERVED PRINCIPAL OCCUPATION(S) DURING THE 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
Management, LLC April 2002; Managing Director of Zenith Asset Management
466 Lexington Avenue Singapore from January 2001 to September 2001; Associate
New York, New York Director of CMG First State Singapore from 1994 to 2000
10017-3140
Date of Birth: 05/02/60
Michael A. Pignataro Chief Financial Since 1993 Director and Director of Fund Administration of CSAM; Associated
c/o Credit Suisse Asset Officer and with 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
Emidio Morizio Chief Since 2004 Director and Global Head of Compliance of CSAM; Associated with
c/o Credit Suisse Asset Compliance CSAM since July 2000; Vice President and Director of Compliance
Management, LLC Officer of Forstmann-Leff Associates from 1998 to June 2000; Officer of
466 Lexington Avenue other Credit Suisse Funds
New York, New York
10017-3140
Date of Birth: 09/21/66
</Table>
22
<Page>
<Table>
<Caption>
POSITION(S) LENGTH
NAME, ADDRESS AND HELD WITH OF TIME
DATE OF BIRTH FUND SERVED PRINCIPAL OCCUPATION(S) DURING THE PAST FIVE YEARS
- ------------------------ ---------------- ------------ ---------------------------------------------------------------
OFFICERS--(CONCLUDED)
Ajay Mehra Chief Since 2004 Director and Deputy General Counsel of CSAM since September
c/o Credit Suisse Asset Legal Officer 2004; Senior Associate of Shearman & Sterling LLP from
Management, LLC September 2000 to September 2004; Senior Counsel of the SEC
466 Lexington Avenue Division of Investment Management from June 1997 to September
New York, New York 2000; Officer of other Credit Suisse Funds
10017-3140
Date of Birth: 08/14/70
J. Kevin Gao Senior Vice Since 2004 Vice President and legal counsel of CSAM; Associated with CSAM
c/o Credit Suisse Asset President since July 2003; Associated with the law firm of Willkie Farr &
Management, LLC Gallagher LLP from 1998 to 2003; Officer of other Credit Suisse
466 Lexington Avenue Funds
New York, New York
10017-3140
Date of Birth: 10/13/67
Robert M. Rizza Treasurer Since 1999 Assistant Vice President of CSAM since January 2001; Associated
c/o Credit Suisse Asset with 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>
* Effective August 10, 2004, Michael E. Kenneally was appointed as Director,
Chairman of the Board, Chief Executive Officer and President of the Fund.
Joseph D. Gallagher who previously held these positions has resigned
effective August 10, 2004.
** Designates a director who is an "interested person" of the Fund as defined
under the Investment Company Act 0f 1940, as amended. Mr. Kenneally is an
interested person of the Fund by virtue of his current position as an 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.
PROXY POLICY AND PORTFOLIO HOLDINGS INFORMATION (UNAUDITED)
Information regarding how The Indonesia Fund, Inc. (the "Fund") voted proxies
related to its portfolio securities during the 12-month period ended June 30,
2004 as well as the policies and procedures that the Fund uses to determine how
to vote proxies relating to its portfolio securities are available:
- By calling 1-800-293-1232;
- On the Fund's website, www.csam.com/us
- On the website of the Securities and Exchange
Commission, http://www.sec.gov.
The Fund files a complete schedule of its portfolio holdings for the first and
third quarters of its fiscal year with the SEC on Form N-Q. The Fund's Forms N-Q
are available on the SEC's website at http://www.sec.gov and may be reviewed and
copied at the SEC's Public Reference Room in Washington, DC. Information on the
operation of the SEC's Public Reference Room may be obtained by calling
1-800-SEC-0330.
23
<Page>
OTHER FUNDS MANAGED BY CREDIT SUISSE ASSET MANAGEMENT, LLC
Credit Suisse Capital Appreciation Fund
Credit Suisse Cash Reserve Fund
Credit Suisse Emerging Markets Fund
Credit Suisse Fixed Income Fund
Credit Suisse Global Fixed Income Fund
Credit Suisse Global Small Cap Fund
Credit Suisse High Income Fund
Credit Suisse International Focus Fund
Credit Suisse Japan Equity Fund
Credit Suisse Large Cap Value Fund
Credit Suisse Mid-Cap Growth Fund
Credit Suisse New York Municipal Fund
Credit Suisse Select Equity Fund
Credit Suisse Short Duration Bond Fund
Credit Suisse Small Cap Growth Fund
Credit Suisse Small Cap Value Fund
Fund shares are not deposits or other obligations of Credit Suisse Asset
Management, LLC or any affiliate, are not FDIC-insured and are not guaranteed by
Credit Suisse Asset Management, LLC or any affiliate. Fund investments are
subject to investment risks, including loss of your investment. There are
special risk considerations associated with international, global,
emerging-market, small-company, private equity, high-yield debt,
single-industry, single-country and other special, aggressive or concentrated
investment strategies. Past performance cannot guarantee future results.
More complete information about a fund, including charges and expenses, is
provided in the Prospectus, which should be read carefully before investing. You
may obtain copies by calling Credit Suisse Funds at 800-927-2874. 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
("CSFB"). As of September 30, 2004, CSAM managed over $27 billion in the U.S.
and, together with its global affiliates, managed assets of over $308 billion in
15 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/us.
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
Michael E. Kenneally Director, Chairman of
the Board, Chief Executive
Officer and President
Boon Hong Yeo Chief Investment Officer
J. Kevin Gao Senior Vice President
Ajay Mehra Chief Legal Officer
Emidio Morizio Chief Compliance Officer
Michael A. Pignataro Chief Financial Officer and
Secretary
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
EquiServe Trust Company, N.A.
P. O. Box 43010
Providence, RI 02940
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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-04
<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
12(a)(1) to this Form. There were no amendments to the code during the fiscal
year ended December 31, 2004. There were no waivers or implicit waivers from the
code granted by the registrant during the fiscal year ended December 31, 2004.
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. Each audit committee financial expert is "independent" for purposes
of this item.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) through (d). The information in the table below is provided for services
rendered to the registrant by its independent registered public accounting firm,
PricewaterhouseCoopers LLP ("PwC"), for its fiscal years ended December 31, 2003
and December 31, 2004.
<Table>
<Caption>
2003 2004
- -------------------------------------------------------
Audit Fees $ 32,190 $ 32,000
Audit-Related Fees(1) $ 3,000 $ 4,500
Tax Fees(2) $ 7,482 $ 7,482
All Other Fees -- --
- -------------------------------------------------------
Total $ 42,672 $ 43,982
- -------------------------------------------------------
</Table>
(1) Services include agreed-upon procedures in connection with the registrant's
semi-annual financial statements ($3,000 per year) and the registrant's
third quarter 2004 Form N-Q filing ($1,500).
(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, 2003 and December 31, 2004.
<Table>
<Caption>
2003 2004
- -------------------------------------------------
Audit-Related Fees N/A N/A
</Table>
2
<Page>
<Table>
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 registered public
accounting firm to the registrant and (ii) all permissible non-audit services to
be provided by the independent registered public accounting firm to 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
registered public accounting firm during the fiscal year in which the
permissible non-audit services are provided; (ii) the permissible non-audit
services were not recognized by the registrant at the time of the engagement to
be non-audit services; and (iii) such services are promptly brought to the
attention of the Committee and approved by the Committee (or its delegate(s))
prior to the completion of the audit.
(e)(2) The information in the table below sets forth the percentages of fees for
services (other than audit, review or attest services) rendered by PwC to the
registrant for which the pre-approval requirement was waived pursuant to Rule
2-01(c)(7)(i)(C) of Regulation S-X:
<Table>
<Caption>
2003 2004
- -------------------------------------------------
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>
3
<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, 2003 and December 31, 2004:
<Table>
<Caption>
2003 2004
- -------------------------------------------------
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, 2003 and December 31, 2004 were $10,482 and $11,982, 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, Laurence Fox and
Richard H. Francis.
ITEM 6. SCHEDULE OF INVESTMENTS.
Included as part of the report to shareholders filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
4
<Page>
CREDIT SUISSE ASSET MANAGEMENT, LLC
CREDIT SUISSE FUNDS
CREDIT SUISSE INSTITUTIONAL FUNDS
CSAM CLOSED-END FUNDS
PROXY VOTING POLICY AND PROCEDURES
Introduction
Credit Suisse Asset Management, LLC ("CSAM") is a fiduciary that owes 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
5
<Page>
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.
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;
6
<Page>
- 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.
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.
7
<Page>
Amend Minor Bylaws
Generally vote for bylaw or charter changes that are of a housekeeping
nature.
Change Date, Time, or Location of Annual Meeting
Generally vote for management proposals to change the date/time/location
of the annual meeting unless the proposed change is unreasonable.
Generally vote against shareholder proposals to change the
date/time/location of the annual meeting unless the current scheduling
or location is unreasonable.
Ratify Auditors
Generally vote for proposals to ratify auditors unless: (1) an auditor
has a financial interest in or association with the company, and is
therefore not independent; (2) fees for non-audit services are
excessive, or (3) there is reason to believe that the independent
auditor has rendered an opinion, which is neither accurate nor
indicative of the 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
8
<Page>
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
Generally vote against proposals that provide that directors may be
removed only for cause. Generally vote for proposals to restore
shareholder ability to remove directors with or without cause. Proposals
that provide that only continuing directors may elect replacements to
fill board vacancies will be determined on a case-by-case basis.
Generally vote for proposals that permit shareholders to elect directors
to fill board vacancies.
Independent Chairman (Separate Chairman/CEO)
Generally vote for shareholder proposals requiring the position of
chairman be filled by an independent director unless there are
compelling reasons to recommend against the proposal, including: (1)
designated lead director, elected by and from the independent board
members with clearly delineated duties; (2) 2/3 independent board; (3)
all independent key committees; or (4) established governance
guidelines.
Majority of Independent Directors
Generally vote for shareholder proposals requiring that the board
consist of a majority or substantial majority (two-thirds) of
independent directors unless the board composition already meets the
adequate threshold. Generally vote for shareholder proposals requiring
the board audit, compensation, and/or nominating committees be composed
exclusively of independent directors if they currently do not meet that
standard. Generally withhold votes from insiders and affiliated
outsiders sitting on the audit, compensation, or nominating committees.
Generally withhold votes from insiders and affiliated outsiders on
boards that are
9
<Page>
lacking any of these three panels. Generally withhold votes from
insiders and affiliated outsiders on boards that are not at least
majority independent.
Term Limits
Generally vote against shareholder proposals to limit the tenure of
outside directors.
Proxy Contests
Voting on Director Nominees in Contested Elections
Votes in a contested election of directors should be decided on a
case-by-case basis, with shareholders determining which directors are
best suited to add value for shareholders. The major decision factors
are: (1) company performance relative to its peers; (2) strategy of the
incumbents versus the dissidents; (3) independence of
directors/nominees; (4) experience and skills of board candidates; (5)
governance profile of the company; (6) evidence of management
entrenchment; (7) responsiveness to shareholders; or (8) whether
takeover offer has been rebuffed.
Amend Bylaws without Shareholder Consent
Proposals giving the board exclusive authority to amend the bylaws will
be determined on a case-by-case basis. Proposals giving the board the
ability to amend the bylaws in addition to shareholders will be
determined on a case-by-case basis.
Confidential Voting
Generally vote for shareholder proposals requesting that corporations
adopt confidential voting, use independent vote tabulators and use
independent inspectors of election, as long as the proposal includes a
provision for proxy contests as follows: In the case of a contested
election, management should be permitted to request that the dissident
group honor its confidential voting policy. If the dissidents agree, the
policy may remain in place. If the dissidents will not agree, the
confidential voting policy may be waived. Generally vote for management
proposals to adopt confidential voting.
Cumulative Voting
Proposals to eliminate cumulative voting will be determined on a
case-by-case basis. Proposals to restore or provide for cumulative
voting in the absence of sufficient good governance provisions and/or
poor relative shareholder returns will be determined on a case-by-case
basis.
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<Page>
Antitakeover Defenses and Voting Related Issues
Advance Notice Requirements for Shareholder Proposals/Nominations
Votes on advance notice proposals are determined on a case-by-case
basis.
Amend Bylaws without Shareholder Consent
Proposals giving the board exclusive authority to amend the bylaws will
be determined on a case-by-case basis. Generally vote for proposals
giving the board the ability to amend the bylaws in addition to
shareholders.
Poison Pills (Shareholder Rights Plans)
Generally vote for shareholder proposals requesting that the company
submit its poison pill to a shareholder vote or redeem it. Votes
regarding management proposals to ratify a poison pill should be
determined on a case-by-case basis. Plans should embody the following
attributes: (1) 20% or higher flip-in or flip-over; (2) two to three
year sunset provision; (3) no dead-hand or no-hand features; or (4)
shareholder redemption feature
Shareholders' Ability to Act by Written Consent
Generally vote against proposals to restrict or prohibit shareholders'
ability to take action by written consent. Generally vote for proposals
to allow or make easier shareholder action by written consent.
Shareholders' Ability to Call Special Meetings
Proposals to restrict or prohibit shareholders' ability to call special
meetings or that remove restrictions on the right of shareholders to act
independently of management will be determined on a case-by-case basis.
Supermajority Vote Requirements
Proposals to require a supermajority shareholder vote will be determined
on a case-by-case basis Proposals to lower supermajority vote
requirements will be determined on a case-by-case basis.
Merger and Corporate Restructuring
Appraisal Rights
Generally vote for proposals to restore, or provide shareholders with,
rights of appraisal.
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<Page>
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
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
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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
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private placement if it is expected that the company will file for
bankruptcy if the transaction is not approved.
Prepackaged Bankruptcy Plans
Votes on proposals to increase common and/or preferred shares and to
issue shares as part of a debt restructuring plan are determined on a
case-by-case basis, after evaluating: (1) dilution to existing
shareholders' position; (2) terms of the offer; (3) financial issues;
(4) 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
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Generally vote for management proposals to reduce the par value of
common stock unless the action is being taken to facilitate an
antitakeover device or some other negative corporate governance action.
Generally vote for management proposals to eliminate par value.
Common Stock Authorization
Votes on proposals to increase the number of shares of common stock
authorized for issuance are determined on a case-by-case basis.
Generally vote against proposals at companies with dual-class capital
structures to increase the number of authorized shares of the class of
stock that has superior voting rights. Generally vote for proposals to
approve increases beyond the allowable increase when a 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
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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 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.
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Stock Plans in Lieu of Cash
Votes for plans which provide participants with the option of taking all
or a portion of their cash compensation in the form of stock are
determined on a case-by-case basis. Generally vote for plans which
provide a dollar-for-dollar cash for stock exchange. Votes for plans
which do not provide a dollar-for-dollar cash for stock exchange should
be determined on a case-by-case basis.
Director Retirement Plans
Generally vote against retirement plans for nonemployee directors.
Generally vote for shareholder proposals to eliminate retirement plans
for nonemployee directors.
Management Proposals Seeking Approval to Reprice Options
Votes on management proposals seeking approval to reprice options are
evaluated on a case-by-case basis giving consideration to the following:
(1) historic trading patterns; (2) rationale for the repricing; (3)
value-for-value exchange; (4) option vesting; (5) term of the option;
(6) exercise price; (7) participants; (8) employee stock purchase plans.
Votes on employee stock purchase plans should be determined on a
case-by-case basis. Generally vote for employee stock purchase plans
where: (1) purchase price is at least 85 percent of fair market value;
(2) offering period is 27 months or less, and (3) potential voting power
dilution (VPD) is ten percent or less. Generally vote against employee
stock purchase plans where either: (1) purchase price is less than 85
percent of fair market value; (2) Offering period is greater than 27
months, or (3) VPD is greater than ten percent
Incentive Bonus Plans and Tax Deductibility Proposals
Generally vote for proposals that simply amend shareholder-approved
compensation plans to include administrative features or place a cap on
the annual grants any one participant may receive. Generally vote for
proposals to add performance goals to existing compensation plans. Votes
to amend existing plans to increase shares reserved and to qualify for
favorable tax treatment considered on a case-by-case basis. Generally
vote for cash or cash and stock bonus plans that are submitted to
shareholders for the purpose of exempting compensation from taxes if no
increase in shares is requested.
Employee Stock Ownership Plans (ESOPs)
Generally vote for proposals to implement an ESOP or increase authorized
shares for existing ESOPs, unless the number of shares allocated to the
ESOP is excessive (more than five percent of outstanding shares.)
401(k) Employee Benefit Plans
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Generally vote for proposals to implement a 401(k) savings plan for
employees.
Shareholder Proposals Regarding Executive and Director Pay
Generally vote for shareholder proposals seeking additional disclosure
of executive and director pay information, provided the information
requested is relevant to shareholders' needs, would not put the company
at a competitive disadvantage relative to its industry, and is not
unduly burdensome to the company. Generally vote against shareholder
proposals seeking to set absolute levels on compensation or otherwise
dictate the amount or form of compensation. Generally vote against
shareholder proposals requiring director fees be paid in stock only.
Generally vote for shareholder proposals to put option repricings to a
shareholder vote. Vote for shareholders proposals to exclude pension
fund income in the calculation of earnings used in determining executive
bonuses/compensation. Vote on a case-by-case basis for all other
shareholder proposals regarding executive and director pay, taking into
account company performance, pay level versus peers, pay level versus
industry, and long term corporate outlook.
Performance-Based Option Proposals
Generally vote for shareholder proposals advocating the use of
performance-based equity awards (indexed, premium-priced, and
performance-vested options), unless: (1) the proposal is overly
restrictive; or (2) the company demonstrates that it is using a
substantial portion of performance-based awards for its top executives.
Stock Option Expensing
Generally vote for shareholder proposals asking the company to expense
stock options unless the company has already publicly committed to start
expensing by a specific date.
Golden and Tin Parachutes
Generally vote for shareholder proposals to require golden and tin
parachutes to be submitted for shareholder ratification, unless the
proposal requires shareholder approval prior to entering into employment
contracts. Vote on a case-by-case basis on proposals to ratify or cancel
golden or tin parachutes.
May 19, 2004
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Form N-CSR disclosure requirement is not yet effective with respect to the
registrant.
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ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
None.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which shareholders may
recommend nominees to the registrant's board of directors since the registrant
last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(g)
of Schedule 14A in its definitive proxy statement dated March 1, 2005.
ITEM 11. CONTROLS AND PROCEDURES.
(a) As of a date within 90 days from the filing date of this report, the
principal executive officer and principal financial officer concluded that the
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
second fiscal quarter of the period covered by this report that have materially
affected, or are reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) 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.
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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/ Michael E. Kenneally
------------------------
Name: Michael E. Kenneally
Title: Chief Executive Officer
Date: March 8, 2005
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/ Michael E. Kenneally
------------------------
Name: Michael E. Kenneally
Title: Chief Executive Officer
Date: March 8, 2005
/s/ Michael A. Pignataro
------------------------
Name: Michael A. Pignataro
Title: Chief Financial Officer
Date: March 8, 2005