N-CSRS 1 a2172613zn-csrs.txt N-CSRS 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, 2006 to June 30, 2006 ITEM 1. REPORTS TO STOCKHOLDERS. THE INDONESIA FUND, INC. SEMI-ANNUAL REPORT JUNE 30, 2006 (UNAUDITED) [AMERICAN STOCK EXCHANGE(R) LOGO] LISTED IF (TM) IF-SAR-0606 CONTENTS Letter to Shareholders 1 Portfolio Summary 4 Schedule of Investments 5 Statement of Assets and Liabilities 7 Statement of Operations 8 Statement of Changes in Net Assets 9 Financial Highlights 10 Notes to Financial Statements 12 Results of Annual Meeting of Shareholders 16 Privacy Policy Notice 17 Description of InvestLink(SM) Program 18 Proxy Voting and Portfolio Holdings Information 21
LETTER TO SHAREHOLDERS August 2, 2006 DEAR SHAREHOLDER: For the six month period ended June 30, 2006, The Indonesia Fund, Inc. (the "Fund") had a gain in its net asset value of 21.33%, vs. an increase of 21.63% for the Morgan Stanley Capital International Indonesia Index (net dividends).* Based on market price, the Fund's shares rose 71.01%. As a result, the Fund traded at a 35.30% premium to its NAV on June 30, 2006, compared with a discount of 4.00% at the beginning of the period. MARKET OVERVIEW The world's emerging equity markets had positive, through volatile, performance in the period. The group started the year on a bright note, extending a strong rally begun in 2003. Emerging markets turned sharply down in May, however, when worries over US inflation and global interest-rates sparked a broad sell off that hit riskier asset classes the hardest. The group suffered a peak-to-trough fall of 25%, before staging a partial rebound late in the period. Indonesia was a solid outperformer in the period, though it, too, was volatile. The market surged to new highs in early May, up about 50% year to date, boosted by strength in the country's currency and related optimism over interest rates. Rates had been rising--Indonesia's central bank raised rates six times between August 2005 and December 2005, but the currency rise, along with an improving inflation outlook turned investors more optimistic in the early months of 2006. The central bank indeed lowered rates in May (and again shortly after the end of the period), providing some support to the market as it recovered from the emerging markets plunge. From a sector perspective, the best performers overall were banks, utilities, capital goods companies and materials companies. The retail and diversified financials sectors struggled in the period. THE PORTFOLIO The Fund participated in the market's rally, but modestly underperformed its benchmark. Factors that aided the Fund's performance included its overweighting in the utilities sector and good stock selection in the real estate and telecommunications areas. Stocks that hindered the Fund's performance included its holdings in the retail and food, beverage and tobacco sectors. The Fund's bank stocks had good performance in absolute terms, but trailed the bank component of the benchmark. OUTLOOK Against a global backdrop that we view as more challenging, given our views on an increasingly clouded outlook for global growth, ongoing geopolitical tensions and frequent shifts in risk appetite, here are some of the factors we consider noteworthy: - Fuel subsides have receded as a burden on government finances, which are in much better shape today compared with last year. This may allow for higher fiscal spending on infrastructure, providing support to the market. 1 - Inflation could fall as the effects of the fuel subsidy removal, in October 2005, begin to fade. The Central Bank might have more scope to lower interest rates going forward. - The Indonesian rupiah has strengthened, helped by a weakening US dollar and rising levels of foreign exchange reserves (up about 40% from a September 2005 low). This could also be positive for inflation as it helps keep imported prices in check. - Foreign direct investments have been gaining traction, reaching $3.5 billion (US dollars) in the year's first quarter, a 42% year over year increase. - Discretionary consumption has remained lackluster. Cars, motorcycles, cement and a gauge of retail sales have all been weak in the last six months, with the first two statistics turning in negative growth. All this considered, we believe that the erosion of consumer confidence and loss of purchasing power--due to higher fuel costs and interest expenses--may require more than lower interest rates to stimulate, and sustain, GDP growth. A round of fiscal pump priming would likely be more effective in our opinion, as the actual disbursement of funds and related increase in employment would probably be widespread (in a country faced with 2.5 million entrants into the labor market each year). In terms of investor sentiment, we continue to believe that market expectations are high even taking into consideration the potential for lower interest rates. That said, in our view potentially declining rates could rationalize Indonesia to foreign investors anyway, given a general global backdrop of tightening monetary policies. Overall, Indonesian equity valuations to us appear neither compelling nor extreme. At this point, the Fund maintains a balance of caution against over-projecting the benefits of lower interest rates, while hopefully positioning for a modest recovery of consumption sometime in the second half of the year. Sincerely, /s/ Boon Hong Yeo ---------------------------------------- Boon Hong Yeo Chief Investment Officer** /s/ Steven B. Plump ---------------------------------------- Steven B. Plump Chief Executive Officer and President*** 2 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 Limited ("Credit Suisse Ltd."), the Fund's sub-adviser, is primarily responsible for management of the Fund's assets. He has served the Fund in such capacity since January 17, 2003. Mr. Yeo joined Credit Suisse Ltd. in 2002 from AIB Govett (Asia) Limited in Singapore, where he was Director of Private Equity and managed Asian equity portfolios. Previously, he was founder and Managing Director of Zenith Asset Management Singapore; and held various positions in Asian equity portfolio management, investment banking and corporate banking in Singapore. *** Steven B. Plump is a Managing Director of Credit Suisse Asset Management, LLC ("Credit Suisse") and CEO/President of the Fund. He joined Warburg Pincus Asset Management ("WPAM") in 1995 and came to Credit Suisse in 1999 when it acquired WPAM. 3 THE INDONESIA FUND, INC. PORTFOLIO SUMMARY - AS OF JUNE 30, 2006 (UNAUDITED) SECTOR ALLOCATION [CHART] AS A PERCENT OF NET ASSETS
30-JUN-06 31-DEC-05 --------- --------- Automobiles 5.81% 7.65% Commercial Banks 24.57% 19.52% Diversified Telecommunication 24.90% 25.84% Gas Utilities 8.03% 7.51% Household Products 2.48% 1.47% Industrial Conglomerates 3.27% 2.12% Machinery 4.89% 3.78% Multiline Retail 2.87% 4.65% Oil, Gas & Consumable Fuels 9.82% 8.29% Pharmaceuticals 2.52% 2.48% Real Estate Management & Development 2.46% 0.85% Other Sectors 6.82% 12.30% Cash & Other Assets 1.56% 3.54%
TOP 10 HOLDINGS, BY ISSUER
PERCENT OF HOLDING SECTOR NET ASSETS ---------------------------------------------------------------------------------- 1. PT Telekomunikasi Indonesia Diversified Telecommunication 23.8 2. PT Perusahaan Gas Negara Gas Utilities 8.0 3. PT Bank Central Asia Tbk Commercial Banks 7.5 4. PT Bank Rakyat Indonesia Commercial Banks 6.6 5. PT Astra International Tbk Automobiles 5.8 6. PT Bank Mandiri Commercial Banks 5.0 7. PT United Tractors Tbk Machinerys 4.9 8. PT Medco Energi Internasional Tbk Oil, Gas & Consumable Fuels 3.9 9. PT Bumi Resources Tbk Oil, Gas & Consumable Fuels 3.8 10. PT Bank Danamon Indonesia Tbk Commercial Banks 3.0
4 THE INDONESIA FUND, INC. SCHEDULE OF INVESTMENTS - JUNE 30, 2006 (UNAUDITED)
NO. OF DESCRIPTION SHARES VALUE -------------------------------------------------------------------------------- EQUITY SECURITIES-98.44% INDONESIA-96.24% AUTO COMPONENTS-1.09% PT Gajah Tunggal Tbk 11,659,000 $ 654,952 ----------- AUTOMOBILES-5.81% PT Astra International Tbk 3,312,461 3,493,725 ----------- COMMERCIAL BANKS-24.57% PT Bank Central Asia Tbk 10,112,500 4,485,783 PT Bank Danamon Indonesia Tbk 4,185,000 1,800,340 PT Bank Internasional Indonesia Tbk 77,009,000 1,539,820 PT Bank Mandiri 16,025,000 2,978,968 PT Bank Rakyat Indonesia 8,975,000 3,979,003 ----------- 14,783,914 ----------- CONSTRUCTION & ENGINEERING-0.41% PT Adhi Karya Tbk+ 3,438,000 245,276 ----------- CONSTRUCTION MATERIALS-1.96% PT Indocement Tunggal Prakarsa Tbk 2,603,000 1,181,542 ----------- DIVERSIFIED TELECOMMUNICATION-24.90% PT Indosat Tbk 1,419,000 657,547 PT Telekomunikasi Indonesia 17,938,560 14,326,458 ----------- 14,984,005 ----------- FOOD PRODUCTS-1.99% PT Indofood Sukses Makmur Tbk 12,599,000 1,197,797 ----------- GAS UTILITIES-8.03% PT Perusahaan Gas Negara 3,969,500 4,829,030 ----------- HOUSEHOLD PRODUCTS-2.48% PT Unilever Indonesia Tbk 3,351,000 1,494,106 ----------- INDUSTRIAL CONGLOMERATES-1.38% PT Bakrie and Brothers Tbk+ 50,981,500 829,387 ----------- MACHINERY-4.89% PT United Tractors Tbk 5,044,200 $ 2,943,169 ----------- METALS & MINING-1.06% PT Aneka Tambang Tbk 1,274,000 637,549 ----------- MULTILINE RETAIL-2.87% PT Matahari Putra Prima Tbk 11,668,000 946,433 PT Mitra Adiperkasa Tbk 4,821,000 432,478 PT Ramayana Lestari Sentosa Tbk 4,306,000 349,229 ----------- 1,728,140 ----------- OIL, GAS & CONSUMABLE FUELS-9.82% PT Bumi Resources Tbk 27,487,000 2,291,894 PT Energi Mega Persada Tbk+ 17,624,275 1,240,952 PT Medco Energi Internasional Tbk 5,908,000 2,376,157 ----------- 5,909,003 ----------- PHARMACEUTICALS-2.52% PT Kalbe Farma Tbk 9,690,800 1,308,496 PT Tempo Scan Pacific Tbk 291,500 209,328 ----------- 1,517,824 ----------- REAL ESTATE MANAGEMENT & DEVELOPMENT-2.46% PT Summarecon Agung Tbk 11,674,000 1,479,741 ----------- TOTAL INDONESIA (Cost $35,232,624) 57,909,160 ----------- SINGAPORE-1.89% INDUSTRIAL CONGLOMERATES-1.89% SembCorp Industries Ltd. (Cost $733,964) 554,520 1,137,724 ----------- THAILAND-0.31% HOUSEHOLD DURABLES-0.31% Land and Houses Public Company Ltd. (Cost $238,513) 1,014,000 187,814 ----------- TOTAL EQUITY SECURITIES (Cost $36,205,101) 59,234,698 -----------
See accompanying notes to financial statements. 5
PRINCIPAL DESCRIPTION AMOUNT (000'S) VALUE -------------------------------------------------------------------------------- SHORT-TERM INVESTMENT-0.74% GRAND CAYMAN-0.74% Wells Fargo Bank N.A., overnight deposit, 4.25%, 07/03/06* (Cost $446,000) $446 $ 446,000 ----------- TOTAL INVESTMENTS-99.18% (Cost $36,651,101) (Notes B,E,G) 59,680,698 ----------- CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES-0.82% 490,671 ----------- NET ASSETS-100.00% $60,171,369 ===========
+ 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. 6 THE INDONESIA FUND, INC. STATEMENT OF ASSETS AND LIABILITIES - JUNE 30, 2006 (UNAUDITED) ASSETS Investments, at value (Cost $36,651,101) (Notes B,E,G) $ 59,680,698 Cash (including $351,034 of foreign currencies with a cost of $351,618) 351,988 Receivables: Dividends 437,301 Investments sold 31,205 Prepaid expenses 5,679 ------------ Total Assets 60,506,871 ------------ LIABILITIES Payables: Investment advisory fees (Note C) 160,644 Investments purchased 62,153 Directors' fees 21,797 Administration fees (Note C) 5,404 Other accrued expenses 85,504 ------------ Total Liabilities 335,502 ------------ NET ASSETS (applicable to 8,266,202 shares of common stock outstanding) (Note D) $ 60,171,369 ============ 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 238,815 Accumulated net realized loss on investments and foreign currency related transactions (15,159,508) Net unrealized appreciation in value of investments and translation of other assets and liabilities denominated in foreign currencies 23,033,153 ------------ Net assets applicable to shares outstanding $ 60,171,369 ============ NET ASSET VALUE PER SHARE ($60,171,369 / 8,266,202) $ 7.28 ============ MARKET PRICE PER SHARE $ 9.85 ============
See accompanying notes to financial statements. 7 THE INDONESIA FUND, INC. STATEMENT OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 30, 2006 (UNAUDITED) INVESTMENT INCOME Income (Note B): Dividends $ 837,511 Interest 24,417 Less: Foreign taxes withheld (124,345) ----------- Total Investment Income 737,583 ----------- Expenses: Investment advisory fees (Note C) 300,477 Custodian fees 57,958 Directors' fees 30,522 Administration fees (Note C) 24,084 Audit and tax fees 22,786 Printing (Note C) 17,963 Legal fees 17,178 Accounting fees 14,876 Stock exchange listing fees 8,679 Shareholder servicing fees 8,413 Insurance 811 Miscellaneous 5,963 ----------- Total Expenses 509,710 ----------- Net Investment Income 227,873 ----------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY RELATED TRANSACTIONS Net realized gain/(loss) from: Investments 2,754,430 Foreign currency related transactions (24,061) Net change in unrealized appreciation in value of investments and translation of other assets and liabilities denominated in foreign currencies 7,637,502 ----------- Net realized and unrealized gain on investments and foreign currency related transactions 10,367,871 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $10,595,744 ===========
See accompanying notes to financial statements. 8 THE INDONESIA FUND, INC. STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED FOR THE JUNE 30, 2006 YEAR ENDED (UNAUDITED) DECEMBER 31, 2005 ------------- ----------------- INCREASE IN NET ASSETS Operations: Net investment income $ 227,873 $ 196,304 Net realized gain on investments and foreign currency related transactions 2,730,369 10,049,981 Net change in unrealized appreciation in value of investments and translation of other assets and liabilities denominated in foreign currencies 7,637,502 (2,657,349) ----------- ----------- Net increase in net assets resulting from operations 10,595,744 7,588,936 ----------- ----------- Dividends to shareholders: Net investment income -- (33,065) ----------- ----------- Total increase in net assets 10,595,744 7,555,871 ----------- ----------- NET ASSETS Beginning of period 49,575,625 42,019,754 ----------- ----------- End of period* $60,171,369 $49,575,625 =========== ===========
---------- * Includes undistributed net investment income of $238,815 and $10,942, respectively. See accompanying notes to financial statements. 9 THE INDONESIA FUND, INC. FINANCIAL HIGHLIGHTS Contained below is per share operating performance data for a share of common stock outstanding, total investment return, ratio to average net assets and other supplemental data for each period indicated. This information has been derived from information provided in the financial statements and market price data for the Fund's shares.
FOR THE SIX MONTHS FOR THE ENDED YEARS ENDED DECEMBER 31, JUNE 30, 2006 --------------------------- (UNAUDITED) 2005 2004 2003 ------------- ------- ------- ------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $ 6.00 $ 5.08 $ 3.91 $ 2.09 ------- ------- ------- ------- Net investment income/(loss) 0.03 0.02 0.09 0.03 Net realized and unrealized gain/(loss) on investments and foreign currency related transactions 1.25 0.90 1.17 1.81 ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations 1.28 0.92 1.26 1.84 ------- ------- ------- ------- Dividends and distributions to shareholders: Net investment income -- 0.00+ (0.09) (0.02) Net realized gain on investments and foreign currency related transactions -- -- -- -- ------- ------- ------- ------- Total dividends and distributions to shareholders -- 0.00+ (0.09) (0.02) ------- ------- ------- ------- Net asset value, end of period $ 7.28 $ 6.00 $ 5.08 $ 3.91 ======= ======= ======= ======= Market value, end of period $ 9.85 $ 5.76 $ 5.07 $ 4.83 ======= ======= ======= ======= Total investment return (a) 71.01% 13.69% 6.72% 194.19% ======= ======= ======= ======= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $60,171 $49,576 $42,020 $32,304 Ratio of expenses to average net assets 1.70%(d) 1.81% 2.03% 2.65% Ratio of net investment income/(loss) to average net assets 0.76%(d) 0.42% 2.24% 1.23% Portfolio turnover rate 19.54% 67.87% 43.59% 95.66%
* 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. + Amount is less than a $0.01. (a) Total investment return at market value is based on the changes in market price of a share during the period 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%. (d) Annualized. See accompanying notes to financial statements. 10 THE INDONESIA FUND, INC. FINANCIAL HIGHLIGHTS
FOR THE YEARS ENDED DECEMBER 31, ----------------------------------------------------------------------- 2002 2001 2000 1999 1998 1997 1996 ------- ------- ------- ------- ------- ------- ------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period $ 1.52 $ 1.72 $ 4.48 $ 2.71 $ 3.58 $ 10.68 $ 9.34 ------- ------- ------- ------- ------- ------- ------- Net investment income/(loss) 0.01 (0.13)* (0.13) (0.05) (0.04) 0.03 0.01 Net realized and unrealized gain/(loss) on investments and foreign currency related transactions 0.56 (0.07) (2.63) 1.87 (0.83) (7.13) 1.33 ------- ------- ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations 0.57 (0.20) (2.76) 1.82 (0.87) (7.10) 1.34 ------- ------- ------- ------- ------- ------- ------- Dividends and distributions to shareholders: Net investment income -- -- -- -- -- -- -- Net realized gain on investments and foreign currency related transactions -- -- -- (0.05) -- -- -- ------- ------- ------- ------- ------- ------- ------- Total dividends and distributions to shareholders -- -- -- (0.05) -- -- -- ------- ------- ------- ------- ------- ------- ------- Net asset value, end of period $ 2.09 $ 1.52 $ 1.72 $ 4.48 $ 2.71 $ 3.58 $ 10.68 ======= ======= ======= ======= ======= ======= ======= Market value, end of period $ 1.65 $ 1.32 $ 1.563 $ 5.438 $ 3.438 $ 4.625 $ 9.750 ======= ======= ======= ======= ======= ======= ======= Total investment return (a) 25.00% (15.52)% (71.26)% 59.58% (25.68)% (52.56)% (3.70)% ======= ======= ======= ======= ======= ======= ======= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000 omitted) $17,317 $12,545 $ 7,935 $20,669 $12,491 $16,486 $49,223 Ratio of expenses to average net assets 2.69% 8.89%(b) 7.23%(c) 3.18% 4.21% 1.89% 1.91% Ratio of net investment income/(loss) to average net assets 0.36% (5.63)% (4.85)% (1.43)% (1.37)% 0.33% 0.10% Portfolio turnover rate 29.15% 10.23% 16.48% 47.38% 36.58% 48.19% 34.67%
11 THE INDONESIA FUND, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED) NOTE A. ORGANIZATION The Indonesia Fund, Inc. (the "Fund") was incorporated in Maryland on January 8, 1990 and commenced investment operations on March 9, 1990. The Fund is registered under the Investment Company Act of 1940, as amended, as a closed-end, non-diversified management investment company. NOTE B. SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. SECURITY VALUATION: The net asset value of the Fund is determined daily as of the close of regular trading on the New York Stock Exchange, Inc. (the "Exchange") on each day the Exchange is open for business. Equity investments are valued at market value, which is generally determined using the closing price on the exchange or market on which the security is primarily traded at the time of valuation (the "Valuation Time"). If no sales are reported, equity investments are generally valued at the most recent bid quotation as of the Valuation Time or at the lowest ask quotation in the case of a short sale of securities. Debt securities with a remaining maturity greater than 60 days are valued in accordance with the price supplied by a pricing service, which may use a matrix, formula or other objective method that takes into consideration market indices, yield curves and other specific adjustments. Debt obligations that will mature in 60 days or less are valued on the basis of amortized cost, which approximates market value, unless it is determined that this method would not represent fair value. Investments in mutual funds are valued at the mutual fund's closing net asset value per share on the day of valuation. Securities and other assets for which market quotations are not readily available, or whose values have been materially affected by events occurring before the Fund's Valuation Time, but after the close of the securities' primary market, are valued at fair value as determined in good faith by, or under the direction of, the Board of Directors under procedures established by the Board of Directors. The Fund may utilize a service provided by an independent third party which has been approved by the Board of Directors to fair value certain securities. When fair-value pricing is employed, the prices of securities used by a fund to calculate its net asset value may differ from quoted or published prices for the same securities. The Fund's estimate of fair value assumes a willing buyer and a willing seller neither acting under the compulsion to buy or sell. SHORT-TERM INVESTMENT: The Fund sweeps available cash into a short-term time deposit available through Brown Brothers Harriman & Co., the Fund's custodian. The short-term time deposit is a variable rate account classified as a short-term investment. INVESTMENT TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are accounted for on a trade date basis. The cost of investments sold is determined by use of the specific identification method for both financial reporting and U.S. income tax purposes. Interest income is accrued as earned; dividend income is recorded on the ex-dividend date. TAXES: No provision is made for 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. 12 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. FOREIGN CURRENCY TRANSLATIONS: The books and records of the Fund are maintained in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on the following basis: (I) market value of investment securities, assets and liabilities at the valuation date rate of exchange; and (II) purchases and sales of investment securities, income and expenses at the relevant rates of exchange prevailing on the respective dates of such transactions. The Fund does not isolate that portion of gains and losses on investments in equity securities which is due to changes in the foreign exchange rates from that which is due to changes in market prices of equity securities. Accordingly, realized and unrealized foreign currency gains and losses with respect to such securities are included in the reported net realized and unrealized gains and losses on investment transactions balances. The Fund reports certain foreign currency related transactions and foreign taxes withheld on security transactions as components of realized gains for financial reporting purposes, whereas such foreign currency related transactions are treated as ordinary income for U.S. federal 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 invests in securities of foreign countries and governments which involve certain risks in addition to those inherent in domestic investments. Such risks generally include, among others, currency risk (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 Investment in Indonesian and other foreign securities requires consideration of certain factors that are not normally involved in investments in U.S. securities. The Indonesian securities market is an emerging market characterized by a small number of company listings, high price volatility and a relatively illiquid secondary trading environment. These factors, coupled with restrictions on investment by foreigners and other factors, limit the supply of securities available for investment by the Fund. This will affect the rate at which the Fund is able to invest in Indonesian and other foreign securities, the purchase and sale prices for such securities and the timing of purchases and sales. The limited liquidity of the Indonesian and other foreign securities markets may also affect the Fund's ability to acquire or dispose of securities at a price and time that it wishes to do so. Accordingly, in periods of rising market prices, the Fund may be unable to participate in such price increases fully to the extent that it is unable to acquire desired portfolio positions quickly; conversely the Fund's inability to dispose fully and promptly of positions in declining markets will cause its net asset value to decline as the value of unsold positions is marked to lower prices. NOTE C. AGREEMENTS Credit Suisse Asset Management, LLC ("Credit Suisse"), serves as the Fund's investment adviser with respect to all investments. Credit Suisse receives as compensation for its advisory services from the Fund, an annual fee, calculated weekly and paid quarterly, equal to 1.00% of the Fund's average weekly net assets. For the six months ended June 30, 2006, Credit Suisse earned $300,477 for advisory services. Credit Suisse also provides certain administrative services to the Fund and is reimbursed by the Fund for costs incurred on behalf of the Fund (up to $20,000 per annum). For the six months ended June 30, 2006, Credit Suisse was reimbursed $3,050 for administrative services rendered to the Fund. Credit Suisse Asset Management Limited ("Sub-Adviser") serves as the Fund's sub-investment adviser. Credit Suisse currently pays the Sub-Adviser on a quarterly basis a fee of 90% of the net quarterly amount received by Credit Suisse as the Fund's investment adviser. The Fund does not pay the Sub-Adviser. Bear Stearns Funds Management Inc. ("BSFM") serves as the Fund's administrator. The Fund pays BSFM a monthly fee that is calculated weekly based on the Fund's average weekly net assets. For the six months ended June 30, 2006, BSFM earned $21,034 for administrative services. Merrill Corporation ("Merrill"), an affiliate of Credit Suisse, has been engaged by the Fund to provide certain financial printing services. For the six months ended June 30, 2006, Merrill was paid $13,613 for its services to the Fund. The Independent Directors receive fifty percent (50%) of their annual retainer in the form of shares purchased by the Fund's transfer agent in the open market. Directors as a group own less than 1% of the Fund's outstanding shares. NOTE D. CAPITAL STOCK The authorized capital stock of the Fund is 100,000,000 shares of common stock, $0.001 par value. Of the 8,266,202 shares outstanding at June 30, 2006, Credit Suisse owned 7,169 shares. NOTE E. INVESTMENT IN SECURITIES For the six months ended June 30, 2006, purchases and sales of securities, other than short-term investments, were $12,400,778 and $11,373,588, respectively. NOTE F. CREDIT FACILITY The Fund, together with other funds/portfolios advised by Credit Suisse (collectively, the "Participating Funds"), participates in a $75 million committed, unsecured, line of credit facility ("Credit Facility") with Deutsche Bank, 14 A.G. as administrative agent and syndication agent and State Street Bank and Trust Company as operations agent for temporary or emergency purposes. Under the terms of the Credit Facility, the Participating Funds pay an aggregate commitment fee at a rate of 0.10% per annum on the average unused amount of the Credit Facility, which is allocated among the Participating Funds in such manner as is determined by the governing Boards of the Participating Funds. In addition, the Participating Funds pay interest on borrowings at the Federal Funds rate plus 0.50%. During the six months ended June 30, 2006, the Fund had no borrowings under the Credit Facility. NOTE G. FEDERAL INCOME TAXES Income and capital gain distributions are determined in accordance with federal income tax regulations, which may differ from GAAP. These differences are primarily due to differing treatments of foreign currency transactions, losses deferred due to wash sales, and excise tax regulations. At June 30, 2006, 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 $37,220,207, $23,599,036, $(1,138,545) and $22,460,491, respectively. NOTE H. CONTINGENCIES In the normal course of business, the Fund may provide general indemnifications pursuant to certain contracts and organizational documents. The Fund's maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated; however, based on experience, the risk of loss from such claims is considered remote. 15 RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED) On April 20, 2006, the Annual Meeting of Shareholders of the Fund (the "Meeting") was held and the following matter was voted upon: (1) To re-elect two directors (Mr. Arzac and Mr. Rappaport) and to elect one director (Mr. Haber) to the Board of Directors of the Fund:
NAME OF DIRECTOR FOR WITHHELD ---------------- --------- -------- Enrique R. Arzac (Class III) 5,500,447 75,605 Steven N. Rappaport (Class II) 5,505,907 70,145 Lawrence D. Haber (Class I) 5,499,023 77,029
In addition to the directors elected at the Meeting, Lawrence J. Fox and Richard H. Francis continue to serve as directors of the Fund. 16 IMPORTANT PRIVACY CHOICES FOR CONSUMERS (UNAUDITED) We are committed to maintaining the privacy of every current and prospective customer. We recognize that you entrust important personal information to us, and we wish to assure you that we take seriously our responsibilities in protecting and safeguarding this information. In connection with making available investment products and services to current and potential customers, we may obtain nonpublic personal information about you. This information may include your name, address, e-mail address, social security number, account number, assets, income, financial situation, transaction history and other personal information. We may collect nonpublic information about you from the following sources: - Information we receive on applications, forms, questionnaires, web sites, agreements or in the course of establishing or maintaining a customer relationship; and - Information about your transactions with us, our affiliates, or others. We do not disclose any nonpublic personal information about our customers or former customers to anyone, except with your consent or as otherwise permitted by law. In cases where we believe that additional products and services may be of interest to you, we may share the information described above with our affiliates. We may also disclose this information to firms that perform services on our behalf. These agents and service providers are required to treat the information confidentially and use it only for the purpose for which it is provided. We restrict access to nonpublic personal information about you to those employees, agents or other parties who need to know that information to provide products or services to you or in connection with your investments with or through us. We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information. NOTE: THIS NOTICE IS PROVIDED TO CLIENTS AND PROSPECTIVE CLIENTS OF CREDIT SUISSE ASSET MANAGEMENT, LLC ("CREDIT SUISSE"), AND CREDIT SUISSE ASSET MANAGEMENT SECURITIES, INC., AND SHAREHOLDERS AND PROSPECTIVE SHAREHOLDERS IN CREDIT SUISSE SPONSORED AND ADVISED INVESTMENT COMPANIES, INCLUDING CREDIT SUISSE FUNDS, AND OTHER CONSUMERS AND CUSTOMERS, AS APPLICABLE. THIS NOTICE IS NOT INTENDED TO BE INCORPORATED IN ANY OFFERING MATERIALS BUT IS MERELY A STATEMENT OF OUR CURRENT PRIVACY POLICY, AND MAY BE AMENDED FROM TIME TO TIME UPON NOTICE TO YOU. THIS NOTICE IS DATED AS OF MAY 18, 2006. 17 DESCRIPTION OF INVESTLINK(SM) PROGRAM (UNAUDITED) The InvestLink(SM) Program is sponsored and administered by Computershare Trust Company N.A. ("Computershare"), not by the Fund. Computershare 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 Computershare. 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 18 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 address change are expected to be submitted in written form. Computershare, 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 19 the Program, participants should consult with their own tax advisors. The Program Administrator in administering the Program will not be liable for any act done in good faith or for any good faith omission to act. However, the Program Administrator will be liable for loss or damage due to error caused by its negligence, bad faith or 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: Computershare Trust Company, N.A., InvestLink(SM) Program, P.O. Box 43010, Providence, RI 02940-3010. InvestLink is a service mark of Computershare Trust Company, N.A. 20 PROXY VOTING AND PORTFOLIO HOLDINGS INFORMATION (UNAUDITED) Information regarding how the Fund voted proxies related to its portfolio securities during the 12-month period ended June 30, of each year, as well as the policies and procedures that the Fund uses to determine how to vote proxies relating to its portfolio securities are available: - By calling 1-800-293-1232; - On the Fund's website, www.credit-suisse.com/us - On the website of the Securities and Exchange Commission, 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 1-202-551-8090. 21 OTHER FUNDS MANAGED BY CREDIT SUISSE ASSET MANAGEMENT, LLC CLOSED-END FUNDS SINGLE COUNTRY 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) LITERATURE REQUEST--Call today for free descriptive information on the closed-end funds listed above at 1-800-293-1232 or visit our website on the Internet: http://www.credit-suisse.com/us. OPEN-END FUNDS Credit Suisse Capital Appreciation Fund Credit Suisse Cash Reserve Fund Credit Suisse Commodity Return Strategy 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 Blend Fund Credit Suisse Large Cap Value Fund Credit Suisse Mid-Cap Growth Fund Credit Suisse New York Municipal Fund Credit Suisse Short Duration Bond Fund Credit Suisse Small Cap Growth Fund Credit Suisse Small Cap Value Fund Credit Suisse Strategic Allocation Fund Fund shares are not deposits or other obligations of Credit Suisse Asset Management, LLC or any affiliate, are not FDIC-insured and are not guaranteed by Credit Suisse Asset Management, LLC or any affiliate. Fund investments are subject to investment risks, including loss of your investment. There are special risk considerations associated with international, global, emerging-market, small-company, private equity, high-yield debt, single-industry, single-country and other special, aggressive or concentrated investment strategies. Past performance cannot guarantee future results. More complete information about a fund, including charges and expenses, is provided in the Prospectus, which should be read carefully before investing. You may obtain copies by calling Credit Suisse Funds at 800-927-2874. Performance information current to the most recent month-end is available at www.credit-suisse.com/us. Credit Suisse Asset Management Securities, Inc., Distributor. 22 SUMMARY OF GENERAL INFORMATION (UNAUDITED) The Fund is a closed-end, non-diversified management investment company whose shares trade on the American Stock Exchange, LLC ("AMEX"). The Fund's AMEX trading symbol is IF. 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, the Fund's investment adviser, is part of the Asset Management business of Credit Suisse, a leading global financial services organization headquartered in Zurich, with offices focused on asset management in 18 countries. SHAREHOLDER INFORMATION The Fund's market price is published in: THE NEW YORK TIMES (daily), THE WALL STREET JOURNAL (daily), and BARRON'S (each Monday) under the designation "Indonesia". Weekly comparative net asset value (NAV) and market price information about the Fund'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." This page left intentionally blank. DIRECTORS AND CORPORATE OFFICERS Enrique R. Arzac Chairman of the Board of Directors Richard H. Francis Director Lawrence J. Fox Director Lawrence D. Haber Director Steven N. Rappaport Director Steven B. Plump Chief Executive Officer and President Boon Hong Yeo Chief Investment Officer J. Kevin Gao Senior Vice President and Secretary Ajay Mehra Chief Legal Officer Emidio Morizio Chief Compliance Officer Michael A. Pignataro Chief Financial Officer Karen Regan Assistant Secretary Robert Rizza Treasurer John E. Smith Jr. Assistant Treasurer Brooke Brown Assistant Secretary
INVESTMENT ADVISER Credit Suisse Asset Management, LLC 466 Lexington Avenue New York, NY 10017 INVESTMENT SUB-ADVISER Credit Suisse Asset Management 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 Computershare 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. The financial information included herein is taken from the records of the Fund without examination by independent registered public accountants who do not express an opinion thereon. 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) LOGO] LISTED IF (TM) IF-SAR-0606 ITEM 2. CODE OF ETHICS. This item is inapplicable to a semi-annual report on Form N-CSR. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. This item is inapplicable to a semi-annual report on Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. This item is inapplicable to a semi-annual report on Form N-CSR. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. This item is inapplicable to a semi-annual report on Form N-CSR. 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. This item is inapplicable to a semi-annual report on Form N-CSR. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. This item is inapplicable to a semi-annual report on Form N-CSR. 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, 2006. 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 registrant's last fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Not applicable. (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. 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/ Steven B. Plump ------------------------------ Name: Steven B. Plump Title: Chief Executive Officer Date: September 5, 2006 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/ Steven B. Plump ------------------------------- Name: Steven B. Plump Title: Chief Executive Officer Date: September 5, 2006 /s/ Michael A. Pignataro ------------------------------- Name: Michael A. Pignataro Title: Chief Financial Officer Date: September 5, 2006