NEW YORK, June 26 /PRNewswire-FirstCall/ -- The Chile Fund, Inc. (NYSE AMEX: CH) (the "Fund"), a closed-end management investment company, announced today that its Board of Directors (the "Board") has approved a managed distribution policy. The Board has determined that the Fund will pay quarterly distributions at an annual rate, set once a year, that is a percentage of the average of the Fund's prior four calendar quarter-end net asset values. The Board has determined that the initial percentage shall be 10%. This policy will be subject to regular review by the Board. Previously the Fund's policy was to pay a single annual distribution. In addition, in the event the Fund's discount to net asset value exceeds 2% on a volume weighted average basis for the three month period ending December 31, 2009 the Fund will conduct a tender offer for 25% of the outstanding shares of the Fund. Such offer, if implemented, would be made at a price equal to 99% of net asset value per share. The tender offer will commence in the first quarter of 2010, although the exact date and the form (in cash or in-specie) remains to be determined. Managed Distribution The first distribution under the managed distribution policy will be US 36 cents per share and is payable on July 24, 2009, to all shareholders of record on July 14, 2009 (ex-dividend date July 10, 2009). The Fund's previous annual distribution, which was paid in January 2009, was US 72 cents per share, consisting of a special long-term capital gains distribution of US 56 cents per share, and a special income distribution of US 16 cents per share. Among other factors, in approving the managed distribution policy the Board of Directors considered the ability of the Fund to sustain the policy and recognized the significant amount of unrealized capital gains estimated at $81.5 million ($8.01 per share) as of June 24, 2009, represented in the Fund's net assets. It also considered that making periodic distributions could increase liquidity for common shareholders and may assist in narrowing the discount to NAV at which common shares have tended to trade. Of course, there can be no guarantee that these benefits will occur or that any improvement would continue. The distributions will be made from net investment income, net realized capital gains and, to any extent necessary, paid-in capital. As net assets of the Fund may vary from quarter to quarter, the quarterly distribution may represent more or less than one-quarter of 10% of the Fund's net assets at the time of distribution. The Fund will apply for an exemption from the SEC allowing distribution of long-term capital gains more than once per year. While this exemption will not affect the implementation of the managed distribution policy, it is likely to affect the composition of the distributions. Until exemptive relief is obtained, distributions (except for the fourth quarter distribution) are expected to have a significant component of return of capital. For example, the initial distribution of US 36 cents per share is expected to consist of approximately 21 cents of net investment income and 15 cents of return of capital. The Fund is subject to U.S. corporate, tax and securities laws. Under U.S. tax accounting rules, the amount of distributable income for each fiscal year depends on the actual exchange rates during the entire year between the U.S. dollar and the currencies in which Fund assets are denominated, and on the aggregate gains and losses realized by the Fund during the entire year. Therefore, the exact amount of distributable income for each fiscal year can only be determined as of the end of the Fund's fiscal year, December 31. However, under the U.S. Investment Company Act of 1940, the Fund is required to estimate the source of each distribution to shareholders. This estimated distribution composition may vary from quarter to quarter because it may be materially impacted by future realized gains and losses on securities and fluctuations in the value of the currencies in which Fund assets are denominated. Tender Offer In approving the tender offer, the Board considered that the tender offer could enable shareholders to tender a portion of their shares at a price that is greater than what they could realize in the secondary market at that time. Additionally, the Board considered that the tender offer could provide an opportunity for additional liquidity for common shareholders, may have a marginally accretive impact to NAV for common shareholders who remain invested and may assist in narrowing the discount to NAV at which common shares have tended to trade. Also, the Board took into account the anticipated benefits in securing the services of the new adviser and the uncertainty created by the failure of two very large shareholders to support the proposal unless a tender offer was agreed to. The Board considered the tender offer in light of the potential benefits to the Fund as a whole and all shareholders. There can be no assurance that the managed distribution policy or tender offer will cause the discount at which the Fund's common shares have tended to trade to narrow or that the common shares will trade at a price equal to their NAV. The Board also considered the potential negative effects a managed distribution plan and tender offer (or either alone) might have on the Fund's expense ratio and on the management of the Fund's portfolio. Finally, if its advisory agreement with the Fund is approved by shareholders, Aberdeen Asset Management Investment Services Limited (AAMISL) has agreed to voluntarily waive a portion of its fee so that it will be paid the lesser of 1.00% of (1) average weekly net assets or (2) average weekly market value. This waiver will remain in place for one year and continue thereafter subject to agreement of the parties. AAMISL and the Board believe that the voluntary expense waiver could provide an additional benefit to common shareholders who remain invested in the Fund by keeping expenses lower than they otherwise would have been and by mitigating some increases in expenses that may result from a decrease in the Fund's size due to its tender offer. Also, if its sub-advisory agreement with the Fund is approved by shareholders, Celfin Capital Servicios Financieros S.A. has agreed to voluntarily waive a portion of its fee, which is payable by AAMISL, so that it will be paid the lesser of 0.17% of (1) average weekly net assets or (2) average weekly market value. This announcement is not a recommendation, an offer to purchase or a solicitation of an offer to sell shares of the Fund. The Fund has not commenced the tender offer described in this release. Any tender offer will be made only by an offer to purchase, a related letter of transmittal and other documents which will be filed with the Securities and Exchange Commission as exhibits to a tender offer statement on Schedule TO. Shareholders of the Fund should read the relevant offer to purchase and tender offer statement on Schedule TO and related exhibits when those documents are filed and become available, as they will contain important information about the tender offer. Cautionary statement regarding forward-looking information. Statements made in this release that look forward in time involve risks and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such risks and uncertainties include, without limitation, the adverse effect from a decline in the securities markets or a decline in a Fund's performance, a general downturn in the economy, competition from other closed-end investment companies, changes in government policy or regulation, inability of a Fund's investment adviser to attract or retain key employees, inability of a Fund to implement its investment strategy, inability of a Fund to manage rapid expansion and unforeseen costs and other effects related to legal proceedings or investigations of government and self-regulatory organizations. DATASOURCE: The Chile Fund, Inc. CONTACT: Investor Relations, +1-800-293-1232

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