<PAGE>
THE
PORTUGAL
FUND, INC.
575 LEXINGTON AVENUE
NEW YORK, NY 10022
DIRECTORS AND CORPORATE OFFICERS
Ralph W. Bradshaw Chairman of the Board of
Directors and President
William A. Clark Director, Secretary and
Treasurer
Scott B. Rogers Director
Andrew A. Strauss Director
Glenn W. Wilcox, Sr. Director
INVESTMENT ADVISER SHAREHOLDER SERVICING AGENT
Credit Suisse Asset Equiserve L.P.
Management, LLC P.O. Box 1865
466 Lexington Avenue Mail Stop 45-02-62
New York, NY 10017 Boston, MA 02105
ADMINISTRATOR INDEPENDENT ACCOUNTANTS
Bear Stearns Funds PricewaterhouseCoopers LLP
Management Inc. Two Commerce Square
575 Lexington Avenue Suite 1700
New York, NY 10022 2001 Market Street
Philadelphia, PA 19103
CUSTODIAN
Brown Brothers Harriman & Co. LEGAL COUNSEL
40 Water Street Spitzer & Feldman P.C.
Boston, MA 02109 405 Park Avenue
New York, NY 10022
[LOGO]
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 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.
3912-SAR-00
THE PORTUGAL FUND, INC.
SEMI-ANNUAL REPORT
JUNE 30, 2000
<PAGE>
CONTENTS
<TABLE>
<S> <C>
Letter to Shareholders .....................................................1
Portfolio Summary ..........................................................5
Schedule of Investments ....................................................6
Statement of Assets and Liabilities ........................................8
Statement of Operations ....................................................9
Statement of Changes in Net Assets ........................................10
Financial Highlights ......................................................11
Notes to Financial Statements .............................................12
Results of Annual Meeting of Shareholders .................................16
Description of InvestLink-SM- Program .....................................17
</TABLE>
================================================================================
<PAGE>
LETTER TO SHAREHOLDERS
July 19, 2000
DEAR SHAREHOLDER:
I am writing to report on the activities of The Portugal Fund, Inc. (the "Fund")
for the six months ended June 30, 2000.
At June 30, 2000, the Fund's net assets were $68,830,183. Net asset value
("NAV") per share was $15.14, as compared to $15.46 at December 31, 1999.
PERFORMANCE:
For the six months ended June 30, 2000, the Fund's total return, based on NAV,
was -2.1%, versus -1.8% for the Morgan Stanley Capital International Portugal
Index (the "Index").*
From the commencement of investment operations on November 9, 1989 through June
30, 2000, the Fund's annualized total return, based on NAV and assuming
reinvestment of dividends and distributions, was 8.1%. The Index's annualized
return was 6.7% during this same period.
The Fund modestly underperformed its benchmark Index during the period primarily
due to my approach in a couple of industry sectors. By far, the one that
contributed most negatively to performance was business and public services,
which contains one large company that operates and maintains Portuguese highways
under a government concession. I did not own this stock because I felt its
fundamentals were unattractive, but its price rose on takeover speculation
nonetheless.
The other sector that most hurt performance was merchandising, in which I chose
to emphasize Jeronimo Martins S.G.P.S., S.A. ("Jeronimo," the fourth-biggest
position in the Fund at June 30), which had significantly underperformed in
1999. Unfortunately, the stock continued to lag during the period. I'm confident
that Jeronimo's management team will ultimately prove effective at sorting out
some of the problems that have dogged the company's shares.
To a large extent, the Fund's exposure to banking and insurance companies offset
these negatives. My biggest banking holding was Banco Comercial Portugues, S.A.
("BCP," the fifth biggest position in the Fund at June 30), which was the
strongest Portuguese bank stock year-to-date; and the stock price of a non-Index
insurer that we owned rallied as a consequence of a successful takeover bid.
THE MARKET: LED UP AND DOWN BY TMT
In the first quarter of this year, the Portuguese equity market received a
significant boost from buying interest in companies in the technology, media and
telecommunications sectors (collectively known as "TMT"), as investors all over
the world sought to grab their respective pieces of the global TMT phenomenon.
Investor enthusiasm for TMT was such that first-quarter forecasts called for TMT
to represent over 45% of the total Portuguese market by the close of 2000. By
all accounts, it had reached--if not exceeded--this level by the end of the
second quarter.
================================================================================
1
<PAGE>
LETTER TO SHAREHOLDERS
Unfortunately, this was a matter of bad timing: as was the case in most of the
world's equity markets during the second quarter, Portugal fell victim to NASDAQ
volatility in April and most of May. Investors abandoned high-flying,
information-based "New Economy" stocks exemplified by TMTs and shifted into
previously neglected non-technology "Old Economy" names.
With TMT companies now accounting for roughly half its capitalization, the
Portuguese market absorbed a direct hit from such volatility, one from which it
began to recover in line with NASDAQ's modest rally in late May and early June.
The market was additionally affected by notable corporate activity during the
year's first half, which included:
- Cimpor-Cimentos de Portugal, S.G.P.S., S.A. ("Cimpor"), Portugal's largest
cement manufacturer and a prominent blue-chip in which the government still
holds an ownership stake, was the target of an unsolicited takeover bid. The
unfolding battle for Cimpor will undoubtedly test the government's willingness
to surrender its effective control of several major Portuguese corporations.
As such, it may usher in a new wave of consolidation in the country's telecom,
banking, retail and other sectors. [Note: Cimpor was the Fund's sixth-largest
holding at June 30.]
- Despite generally unfavorable market conditions for new offerings,
particularly in the TMT sector, there were successful initial public offerings
of two major Portuguese Internet companies, the spin-offs of existing
telecommunications franchises.
- Internet-based competition also resulted in a number of agreements between
Portugal's largest banking, retail, media and telecom players in the ongoing
fight for customers and content.
Elsewhere, domestic funds continued to flow out of local stocks and into
European equities more broadly, as part of a general rotation into larger and
more liquid companies beyond Portugal's borders.
================================================================================
2
<PAGE>
LETTER TO SHAREHOLDERS
PORTFOLIO STRUCTURE AND STRATEGY: FOCUSING ON BLUE-CHIPS AND GOOD VALUES
TOP 10 HOLDINGS AT 6/30/00, BY ISSUER *
<TABLE>
<CAPTION>
% OF
HOLDING SECTOR NET ASSETS
------- ------------------------- ----------
<S> <C> <C>
1. Portugal Telecom Telecommunications 25.1
2. EDP Electric-Integrated 19.8
3. Sumolis Food/Bev./Tobacco 5.5
4. Jeronimo Martins Food/Bev./Tobacco 5.4
5. BCP Banking 5.3
6. Cimpor Construction & Public Works 5.2
7. Sonae Consumer Products 4.5
8. BPI Banking 3.9
9. Semapa Construction & Public Works 3.4
10. BES Banking 2.6
----
Total 80.7
----
----
</TABLE>
-----------
* Company names are abbreviations of those found in the chart on page 5.
SECTOR BREAKDOWN
(% of net assets)
<TABLE>
<S> <C>
Banking 11.74
Construction 8.57
Consumer Products 4.46
Electric-Integrated 19.83
Food/Bev./Tobacco 10.91
Forest Products 3.83
Telecom. 25.12
Cash & Other Assets 5.98
Other* 9.56
</TABLE>
-----------
* Other includes chemicals & petroleum products, crystal & giftware, insurance,
non-metallic mineral products, retail trade, satellite telecommunications,
steel, transportation & warehousing and wholesale.
Within the environment I have described, my strategy for the Fund remains
essentially unchanged. I am emphasizing blue-chip telecom names, but have
elected not to participate in the more speculative plays involving the Internet.
I also continue to hunt for value at reasonable prices, which is particularly
available these days in the retail sector. Retail has been disappointing lately,
but I expect it to prosper as domestic demand strengthens going forward.
Of additional note is that I am using the cash generated from successful tender
offers for some of the portfolio's holdings to buy back shares in the Fund
itself. This will be accretive to the Fund's NAV, and may help to reduce the
discount to NAV at which the Fund's shares trade in the open market.
OUTLOOK: GOOD REASONS TO BE OPTIMISTIC
My current outlook for Portuguese equities is positive, largely based on my
optimism about the macroeconomic environment in Europe. The euro's incipient
recovery from its long slide versus the dollar is indicative of the region's
better macroeconomic prospects.
Portuguese companies (especially exporters) stand to benefit, as Continental
Europe is far and away Portugal's biggest trading partner. Hence, any pick-up in
regional growth or appreciation by the euro should translate directly to the
bottom lines of Portuguese companies doing substantial business there.
================================================================================
3
<PAGE>
LETTER TO SHAREHOLDERS
In addition, Portugal's outlook from a country-specific perspective seems
reasonable:
- Despite recent turmoil, corporate earnings are projected to end the year with
gains in the double-digit range, helped a bit in this regard by 36% earnings
growth in the first quarter and expected improvements in the trading
environment cited above.
- Privatization is, very definitely, a key government policy for the coming
18-24 months. It could prove to be a prime catalyst for renewed interest in
the Portuguese market, especially since many of the companies targeted for
privatization are currently valued quite cheaply compared to their European
counterparts.
- Portuguese companies with major operations in Brazil are reaping the gains
both of Brazil's own economic recovery and its preferred status among
investors in Latin American equities.
To be sure, there are risks, which are mainly external: the strength of
continued upturn in Europe and the direction of global monetary conditions.
Overall, however, Portuguese equities appear relatively attractive in the benign
global environment that I anticipate.
Respectfully,
/s/ Richard W. Watt
Richard W. Watt
Chief Investment Officer **
FROM CREDIT SUISSE ASSET MANAGEMENT, LLC:
We wish to remind shareholders whose shares are registered in their own name
that they automatically participate in the Fund's dividend reinvestment program
known as the InvestLink-SM- Program (the "Program"). The Program can be of value
to shareholders in maintaining their proportional ownership interest in the Fund
in an easy and convenient way. A shareholder whose shares are held in the name
of a broker/dealer or nominee should contact the Fund's Transfer Agent for
details about participating in the Program. The Program is described on pages 17
through 19 of this report.
-------------------------------------------------------------------------------
* The Morgan Stanley Capital International Portugal Index is an unmanaged index
(with no defined investment objective) of Portuguese equities that includes
reinvestment of dividends, and is the exclusive property of Morgan Stanley
Capital International Inc.
** Richard W. Watt, who is a Managing Director of Credit Suisse Asset
Management, LLC ("CSAM"), is primarily responsible for management of the Fund's
assets. Mr. Watt has served the Fund in such capacity since January 1, 1997. He
joined CSAM on August 2, 1995. Mr. Watt formerly was associated with Gartmore
Investment Limited in London, where he was head of emerging markets investments
and research. Before joining Gartmore Investment Limited in 1992, Mr. Watt was a
Director of Kleinwort Benson International Investments in London, where he was
responsible for research, analysis and trading of equities in Latin America and
other regions. Mr. Watt is Chief Investment Officer of the Fund. He also is
President, Chief Investment Officer and a Director of The Chile Fund, Inc.; The
Emerging Markets Infrastructure Fund, Inc.; The Emerging Markets
Telecommunications Fund, Inc.; and The First Israel Fund, Inc.; and President
and a Director of The Brazilian Equity Fund, Inc.; The Latin America Equity
Fund, Inc.; and The Latin America Investment Fund, Inc.
================================================================================
4
<PAGE>
--------------------------------------------------------------------------------
THE PORTUGAL FUND, INC.
PORTFOLIO SUMMARY - AS OF JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
SECTOR ALLOCATION
--------------------------------------------------------------------------------
[GRAPHIC]
<TABLE>
<CAPTION>
06/30/00 12/31/99
<S> <C> <C>
Banking 11.74 11.66
Construction & Public Works 8.57 7.17
Consumer Products 4.46 5.85
Electric-Integrated 19.83 18.91
Foodstuffs, Beverages & Tobacco 10.91 13.74
Forest Products & Paper 3.83 3.81
Insurance 2.13 7.12
Telecommunications 25.12 21.38
Transportation & Warehousing 1.19 4.72
Other 12.22 5.64
</TABLE>
TOP 10 HOLDINGS, BY ISSUER
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent of
Holding Sector Net Assets
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Portugal Telecom, S.A. Telecommunications 25.1
------------------------------------------------------------------------------------------------------------------------------------
2. Electricidade de Portugal, S.A. Electric-Integrated 19.8
------------------------------------------------------------------------------------------------------------------------------------
3. Sumolis-Companhia Industrial de Frutas e Bebidas, S.A. Foodstuffs, Beverages & Tobacco 5.5
------------------------------------------------------------------------------------------------------------------------------------
4. Jeronimo Martins S.G.P.S., S.A. Foodstuffs, Beverages & Tobacco 5.4
------------------------------------------------------------------------------------------------------------------------------------
5. Banco Comercial Portugues, S.A. Banking 5.3
------------------------------------------------------------------------------------------------------------------------------------
6. Cimpor-Cimentos de Portugal, S.G.P.S., S.A. Construction & Public Works 5.2
------------------------------------------------------------------------------------------------------------------------------------
7. Sonae, S.G.P.S., S.A. Consumer Products 4.5
------------------------------------------------------------------------------------------------------------------------------------
8. BPI-S.G.P.S., S.A. Banking 3.9
------------------------------------------------------------------------------------------------------------------------------------
9. Semapa-Sociedade de Investimento e Gestao S.G.P.S., S.A. Construction & Public Works 3.4
------------------------------------------------------------------------------------------------------------------------------------
10. Banco Espirito Santo, S.A. Banking 2.6
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
5
<PAGE>
--------------------------------------------------------------------------------
THE PORTUGAL FUND, INC.
SCHEDULE OF INVESTMENTS - AS OF JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares/Units (Note A)
--------------------------------------------------------------------------------
EQUITY OR EQUITY-LINKED SECURITIES-94.02%
BANKING-11.74%
<S> <C> <C>
Banco Comercial Portugues, S.A.,
(Registered)........................ 168,696 $ 875,814
Banco Comercial Portugues, S.A.,
Series A............................ 29,000 2,751,375
Banco Espirito Santo, S.A.,
(Registered)........................ 72,635 1,778,237
BPI-S.G.P.S., S.A., (Registered)..... 759,090 2,675,504
-----------
8,080,930
-----------
CHEMICALS & PETROLEUM PRODUCTS-1.15%
Corporacao Industrial do Norte,
S.A. (Bearer)....................... 142,355 790,591
-----------
CONSTRUCTION & PUBLIC WORKS-8.57%
Cimpor-Cimentos de Portugal,
S.G.P.S., S.A. ..................... 188,548 3,592,217
Semapa-Sociedade de Investimento
e Gestao S.G.P.S., S.A. ............ 144,900 2,306,510
-----------
5,898,727
-----------
CONSUMER PRODUCTS-4.46%
Sonae, S.G.P.S., S.A. ............... 371,410 651,002
Sonae, S.G.P.S., S.A., Bonus
Issue............................... 1,114,230 2,080,374
Sonae, S.G.P.S., S.A., Rights
(expiring 7/19/00)+................. 371,410 339,653
-----------
3,071,029
-----------
CRYSTAL & GIFTWARE-1.07%
Atlantis-Cristais de Alcobaca, S.A. . 99,751 741,178
-----------
ELECTRIC-INTEGRATED-19.83%
Electricidade de Portugal, S.A.+..... 753,253 13,647,778
-----------
FOODSTUFFS, BEVERAGES & TOBACCO-10.91%
Jeronimo Martins S.G.P.S., S.A. ..... 225,409 $ 3,706,147
Sumolis-Companhia Industrial
de Frutas e Bebidas, S.A. .......... 288,146 3,801,657
-----------
7,507,804
-----------
FOREST PRODUCTS & PAPER-3.83%
Corticeira Amorim S.G.P.S. S.A. ..... 171,312 1,476,886
Portucel Industrial-Empresa
Produtora de Celulose, S.A. ........ 191,400 1,157,781
-----------
2,634,667
-----------
INSURANCE-2.13%
Companhia de Seguros
Tranquilidade....................... 46,594 1,464,720
-----------
NON-METALLIC MINERAL PRODUCTS-0.86%
Fabrica de Porcelana
Vista Alegre, S.A.+................. 55,226 591,843
-----------
RETAIL TRADE-0.68%
Ibersol S.G.P.S., S.A. .............. 10,300 470,965
-----------
SATELLITE TELECOMMUNICATIONS-0.85%
PT Multimedia- Servicos
de Telecomunicacoes e
Multimedia, S.G.P.S., S.A.+......... 11,800 584,515
-----------
STEEL-0.60%
F. Ramada Acos e Industrias, S.A. ... 38,247 412,798
-----------
TELECOMMUNICATIONS-25.12%
Portugal Telecom, S.A. ADR........... 795,305 8,947,181
Portugal Telecom, S.A., (Registered). 744,555 8,340,934
-----------
17,288,115
-----------
</TABLE>
================================================================================
6
See accompanying notes to financial statements.
<PAGE>
--------------------------------------------------------------------------------
THE PORTUGAL FUND, INC.
SCHEDULE OF INVESTMENTS - AS OF JUNE 30, 2000 (UNAUDITED) (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
--------------------------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION & WAREHOUSING-1.19%
Colep Portugal-Embalagens,
Produtos, Enchimentos e
Equipamentos, S.A. ................. 330,395 $ 818,309
-----------
</TABLE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
No. of Value
Description Shares (Note A)
--------------------------------------------------------------------------------
<S> <C> <C>
WHOLESALE-1.03%
Solucoes Automovel Globais,
S.G.P.S., S.A. 292,375 $ 707,432
-----------
TOTAL INVESTMENTS-94.02%
(Cost $63,072,752) (Notes A,D) 64,711,401
CASH AND OTHER ASSETS
IN EXCESS OF LIABILITIES-5.98% 4,118,782
-----------
NET ASSETS-100.00% $68,830,183
===========
--------------------------------------------------------------------------------
</TABLE>
+ Security is non-income producing.
ADR American Depositary Receipts.
================================================================================
7
See accompanying notes to financial statements.
<PAGE>
--------------------------------------------------------------------------------
THE PORTUGAL FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES - JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments, at value (Cost-$63,072,752) (Note A)......................................... $64,711,401
Cash (Note A)............................................................................. 5,229,191
Dividends receivable...................................................................... 47,412
Prepaid expenses and other assets......................................................... 8,498
-------------
Total Assets.............................................................................. 69,996,502
-------------
LIABILITIES
Payables:
Capital shares repurchased (Note B).................................................... 670,888
Investment advisory fee (Note B)....................................................... 172,648
Administration fees (Note B)........................................................... 14,385
Other accrued expenses................................................................. 308,398
-------------
Total Liabilities......................................................................... 1,166,319
-------------
NET ASSETS (applicable to 4,546,816 shares of common stock outstanding) (Note C).......... $68,830,183
=============
NET ASSET VALUE PER SHARE ($68,830,183 / 4,546,816)....................................... $15.14
=============
NET ASSETS CONSIST OF
Capital stock, $0.001 par value; 4,546,816 shares issued and outstanding
(100,000,000 shares authorized).......................................................... $ 4,547
Paid-in capital........................................................................... 63,387,041
Undistributed net investment income....................................................... 577,487
Accumulated net realized gain on investments and foreign currency related transactions.... 3,222,739
Net unrealized appreciation in value of investments and translation of other assets and
liabilities denominated in foreign currency.............................................. 1,638,369
-------------
Net assets applicable to shares outstanding............................................... $68,830,183
=============
</TABLE>
================================================================================
8
See accompanying notes to financial statements.
<PAGE>
--------------------------------------------------------------------------------
THE PORTUGAL FUND, INC.
STATEMENT OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Income (Note A):
Dividends.............................................................................. $1,648,728
Interest............................................................................... 40,452
Less: Foreign taxes withheld........................................................... (248,265)
-------------
Total Investment Income................................................................ 1,440,915
-------------
Expenses:
Investment advisory fees (Note B)...................................................... 440,110
Audit and legal fees (Note G).......................................................... 234,478
Custodian fees......................................................................... 65,797
Printing............................................................................... 54,782
Administration fees (Note B)........................................................... 41,041
Accounting fees........................................................................ 32,424
Transfer agent fees.................................................................... 19,425
Directors' fees........................................................................ 17,891
NYSE listing fees...................................................................... 8,068
Insurance.............................................................................. 4,694
Other.................................................................................. 16,249
-------------
Total Expenses......................................................................... 934,959
Less: Fee waivers (Note B)............................................................. (68,216)
-------------
Net Expenses......................................................................... 866,743
-------------
Net Investment Income.................................................................. 574,172
-------------
NET REALIZED AND UNREALIZED LOSS ON INVESTMENTS AND FOREIGN CURRENCY
RELATED TRANSACTIONS
Net realized gain/(loss) from:
Investments............................................................................ 2,879,150
Foreign currency related transactions.................................................. (98,898)
Net change in unrealized appreciation in value of investments and translation of other
assets and liabilities denominated in foreign currency.................................... (6,007,813)
-------------
Net realized and unrealized loss on investments and foreign currency related transactions. (3,227,561)
-------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................... $(2,653,389)
=============
</TABLE>
================================================================================
9
See accompanying notes to financial statements.
<PAGE>
--------------------------------------------------------------------------------
THE PORTUGAL FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months For the Year
Ended June 30, 2000 Ended
(unaudited) December 31, 1999
------------------- ------------------
<S> <C> <C>
DECREASE IN NET ASSETS
Operations:
Net investment income........................................................ $ 574,172 $ 500,733
Net realized gain on investments and foreign currency related transactions... 2,780,252 6,244,000
Net change in unrealized appreciation in value of
investments and translation of other assets and liabilities
denominated in foreign currency............................................. (6,007,813) (11,560,816)
-------------- --------------
Net decrease in net assets resulting from operations....................... (2,653,389) (4,816,083)
-------------- --------------
Dividends and distributions to shareholders (Note A):
Net investment income........................................................ -- (423,895)
Net realized gain on investments............................................. -- (10,785,025)
-------------- --------------
Total dividends and distributions to shareholders.......................... -- (11,208,920)
-------------- --------------
Capital share transactions (Note C):
Cost of 537,400 and 271,200 shares repurchased, respectively (Note F)........ (7,126,009) (3,448,980)
-------------- --------------
Total decrease in net assets............................................... (9,779,398) (19,473,983)
-------------- --------------
NET ASSETS
Beginning of period............................................................. 78,609,581 98,083,564
-------------- --------------
End of period (including undistributed net investment income of $577,487
and $3,315, respectively)..................................................... $ 68,830,183 $ 78,609,581
============== ==============
</TABLE>
================================================================================
10
See accompanying notes to financial statements.
<PAGE>
--------------------------------------------------------------------------------
THE PORTUGAL FUND, INC.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Contained below is per share operating performance data for a share of common
stock outstanding, total investment return, ratios to average net assets and
other supplemental data for each period 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 Six
Months Ended For the Years Ended December 31,
June 30, 2000 ---------------------------------------------------------------------------------------
(unaudited) 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning
of period ................... $15.46 $18.31 $19.45 $17.43 $13.29 $14.33 $12.52 $8.90 $10.77 $10.96 $13.79
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- -------
Net investment income ........ 0.12# 0.09# 0.12 0.05 0.11 0.17 0.06 0.07 0.11 0.13 0.16
Net realized and unrealized
gain/(loss) on investments
and foreign currency
related transactions ........ (0.73) (0.90) 4.43+ 6.11+ 4.11 (1.03) 1.81 3.55 (1.92) (0.21) (2.87)
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- -------
Net increase/(decrease) in
net assets resulting
from operations ............. (0.61) (0.81) 4.55 6.16 4.22 (0.86) 1.87 3.62 (1.81) (0.08) (2.71)
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- -------
Dividends and distributions
to shareholders:
Net investment income ........ -- (0.08) (0.07) (0.01) (0.08) (0.15) (0.06) -- (0.06) (0.11) (0.12)
Net realized gain on
investments and foreign
currency related transactions -- (2.08) (5.62) (4.13) -- (0.03) -- -- -- -- --
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- -------
Total dividends and
distributions to
shareholders ................ -- (2.16) (5.69) (4.14) (0.08) (0.18) (0.06) -- (0.06) (0.11) (0.12)
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- -------
Anti-dilutive effect due to
capital shares repurchased .. 0.29 0.12 -- -- -- -- -- -- -- -- --
------- ------- ------- -------- ------- ------- ------- ------- ------- ------- -------
Net asset value, end of period $15.14 $15.46 $18.31 $19.45 $17.43 $13.29 $14.33 $12.52 $8.90 $10.77 $10.96
======= ======= ======= ======= ======= ======= ======= ======= ====== ====== ======
Market value, end of period .. $12.438 $13.063 $15.625 $15.813 $13.750 $11.125 $13.875 $14.125 $8.000 $9.750 $9.250
======= ======= ======= ======= ======= ======= ======= ======= ====== ====== ======
Total investment return (a) . (4.78)% (1.84)% 32.56% 43.21% 24.28% (18.65)% (1.35)% 76.56% (17.34)% 6.58% (44.91)%
======= ======= ======= ======= ======= ======= ======= ======= ====== ====== ======
RATIOS/SUPPLEMENTAL
DATA
Net assets, end of period
(000 omitted) ............... $68,830 $78,609 $98,084 $103,444 $92,399 $70,431 $75,908 $66,351 $47,134 $57,036 $58,084
Ratio of expenses to
average net assets, net of
fee waivers ................. 2.33%(b) 2.10% 1.50% 1.56% 1.62% 1.58% 1.41% 1.97% 1.92% 1.96% 2.04%
Ratio of expenses to
average net assets,
excluding fee waivers ....... 2.51%(b) 2.28% 1.66% 1.73% 1.81% 1.76% 1.59% 2.00% -- -- --
Ratio of net investment
income to average net assets 1.54%(b) 0.59% 0.51% 0.23% 0.75% 1.18% 0.43% 0.66% 1.07% 1.20% 1.38%
Portfolio turnover rate ...... 1.29% 39.60% 48.52% 72.25% 35.94% 35.73% 15.47% 24.47% 39.07% 13.31% 10.09%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Includes $0.02 and $0.01 per share decrease to the Fund's net asset value
resulting from the dilutive impact of shares issued pursuant to the Fund's
Dividend Reinvestment Plan in 1998 and 1997, respectively.
# Based on average shares outstanding.
(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. Total investment return does not reflect brokerage
commissions or initial underwriting discounts and has not been annualized.
(b) Annualized.
--------------------------------------------------------------------------------
11
See accompanying notes to financial statements.
<PAGE>
-------------------------------------------------------------------------------
THE PORTUGAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
NOTE A. SIGNIFICANT ACCOUNTING POLICIES
-------------------------------------------------------------------------------
The Portugal Fund, Inc. (the "Fund") was incorporated in Maryland on August 11,
1989 and commenced investment operations on November 9, 1989. The Fund is
registered under the Investment Company Act of 1940, as amended, as a
closed-end, non-diversified management investment company. Significant
accounting policies are as follows:
MANAGEMENT ESTIMATES: The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make certain
estimates and assumptions that may affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
PORTFOLIO VALUATION: Investments are stated at value in the accompanying
financial statements. All equity securities shall be valued at the closing price
on the exchange or market on which the security is primarily traded ("Primary
Market"). If the security did not trade on the Primary Market, it shall be
valued at the closing price on another exchange where it trades. If there are no
such sale prices, the value shall be the most recent bid, and if there is no
bid, the security shall be valued at the most recent asked. If no pricing
service is available and there are more than two dealers, the value shall be the
mean of the highest bid and lowest ask. If there is only one dealer, then the
value shall be the mean if bid and ask are available, otherwise the value shall
be the bid. All other securities and assets are valued as determined in good
faith by the Board of Directors. Short-term investments having a maturity of 60
days or less are valued on the basis of amortized cost. The Board of Directors
has established general guidelines for calculating fair value of not readily
marketable securities. At June 30, 2000, the Fund held no securities valued in
good faith by the Board of Directors. The net asset value per share of the Fund
is calculated on each business day with the exception of those days on which the
New York Stock Exchange is closed.
CASH: Deposits held at Brown Brothers Harriman & Co., the Fund's custodian, in a
variable rate account are classified as cash. At June 30, 2000, the interest
rate was 6.00% which resets on a daily basis. Amounts on deposit are generally
available on the same business day.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME: Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
income tax purposes. Interest income is recorded on an accrual basis; dividend
income is recorded on the ex-dividend date.
TAXES: No provision is made for U.S. federal income or excise taxes as it is the
Fund's intention to continue to qualify as a regulated investment company and to
make the requisite distributions to its shareholders which will be sufficient to
relieve it from all or substantially all U.S. federal income and excise taxes.
The Fund may be subject to Portuguese corporate income tax at a maximum rate of
17.50% on dividends received from Portuguese corporations. Capital gains
realized by the Fund on the sale of securities are exempt from Portuguese tax.
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
current rate of exchange; and
(II) purchases and sales of investment securities, income and expenses at
the relevant rates of
-------------------------------------------------------------------------------
12
<PAGE>
-------------------------------------------------------------------------------
THE PORTUGAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
-------------------------------------------------------------------------------
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.
Net currency gains 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 currency.
Net realized foreign exchange losses represent foreign exchange gains and losses
from transactions in foreign currency 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.
federal income tax purposes due to U.S. generally accepted accounting
principles/tax differences in the character of income and expense recognition.
OTHER: Securities denominated in currencies other than U.S. dollars are subject
to changes in value due to fluctuations in exchange rates.
Repatriation of both investment income and capital from Portugal is controlled
under regulations, including, in some cases, the need for certain advance
government notification or authority. Foreign investment in Portugal by the Fund
may be subject to the prior authorization from the Minister of Finance, from the
Bank of Portugal or the Portuguese Foreign Trade Institute, depending on the
type of investment or subject to the rules concerning public trade offers.
The Portuguese securities markets are substantially smaller, less liquid and
more volatile than the major securities markets in the United States.
Consequently, acquisition and disposition of securities by the Fund may be
inhibited. A high proportion of the shares of some Portuguese listed companies
are held by a limited number of persons, which may limit the number of shares
available for acquisition by the Fund. Restrictions on foreign ownership could
also restrict the Fund's ability to acquire shares in certain companies.
-------------------------------------------------------------------------------
NOTE B. AGREEMENTS
-------------------------------------------------------------------------------
Credit Suisse Asset Management, LLC ("CSAM"), formerly known as BEA Associates,
serves as the Fund's investment adviser with respect to all investments. As
compensation for its advisory services, CSAM receives from the Fund an annual
fee, calculated weekly and paid quarterly, equal to 1.20% of the first $50
million of the Fund's average weekly net assets, 1.15% of the next
-------------------------------------------------------------------------------
13
<PAGE>
-------------------------------------------------------------------------------
THE PORTUGAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
-------------------------------------------------------------------------------
$50 million and 1.10% of amounts over $100 million. CSAM has agreed to waive its
portion of the advisory fee previously payable to the Fund's former sub-adviser
calculated weekly, equal to 0.20% of the first $50 million of the Fund's average
weekly net assets, 0.15% of the next $50 million and 0.10% of amounts over $100
million. For the six months ended June 30, 2000, CSAM earned $440,110 for
advisory services, of which CSAM waived $68,216. CSAM also provided certain
administrative services to the Fund and was reimbursed by the Fund for costs
incurred on its behalf through April 28, 2000. For the six months ended June 30,
2000, CSAM was reimbursed $4,107 for administrative services rendered to the
Fund.
Bear Stearns Funds Management Inc. ("BSFM") serves as the Fund's administrator.
For the period January 1, 2000 through May 31, 2000, the Fund paid BSFM a
monthly fee that was computed weekly at an annual rate of 0.09% of the Fund's
average weekly net assets. Effective June 1, 2000, the Fund entered into a new
agreement whereby the Fund will pay BSFM a monthly fee that is computed weekly
at an annual rate of 0.15% of the Fund's average weekly net assets, subject to
an annual minimum fee of $75,000. For the six months ended June 30, 2000, BSFM
earned $36,934 for administrative services.
-------------------------------------------------------------------------------
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 4,546,816 shares outstanding at June 30, 2000, CSAM
owned 7,206 shares. As of July 19, 2000, CSAM no longer owns shares of the Fund.
-------------------------------------------------------------------------------
NOTE D. INVESTMENT IN SECURITIES
-------------------------------------------------------------------------------
For U.S. federal income tax purposes, the cost of securities owned at June 30,
2000 was $63,779,289. Accordingly, the net unrealized appreciation of
investments (including investments denominated in foreign currency) of $932,112
was composed of gross appreciation of $9,491,958 for those investments having an
excess of value over cost and gross depreciation of $8,559,846 for those
investments having an excess of cost over value.
For the six months ended June 30, 2000, purchases and sales of securities, other
than short-term investments, were $931,617 and $11,757,507, respectively.
-------------------------------------------------------------------------------
NOTE E. CREDIT FACILITY
-------------------------------------------------------------------------------
The Fund, together with other funds advised by CSAM, has a $350 million
committed, unsecured, line of credit facility ("Credit Facility") with Deutsche
Bank AG as administrative agent, State Street Bank and Trust Company as
operations agent, Bank of Nova Scotia as syndication agent as well as certain
other lenders, for temporary or emergency purposes. Under the terms of the
Credit Facility, the funds with access to the Credit Facility pay an aggregate
commitment fee at a rate of 0.075% per annum on the average daily balance of the
Credit Facility that is undisbursed and uncanceled during the preceding quarter
allocated among the participating funds in such manner as is determined by the
governing Boards of the various funds. In addition, the participating funds will
pay interest on borrowing at the Federal Funds rate plus 0.50%. At June 30, 2000
and during the six months ended June 30, 2000, the Fund had no borrowings under
the Credit Facility.
-------------------------------------------------------------------------------
NOTE F. SHARE REPURCHASE PROGRAM
-------------------------------------------------------------------------------
On October 21, 1998, the Fund announced that its Board of Directors has
authorized the repurchase of up to 15% of the Fund's outstanding common stock,
for purposes of enhancing shareholder value. The Fund's Board has authorized
management of the Fund to repurchase such shares in open market transactions at
prevailing market prices from time to time in a manner consistent with the Fund
continuing to seek to achieve its investment objectives. The Board's actions
were
-------------------------------------------------------------------------------
14
<PAGE>
-------------------------------------------------------------------------------
THE PORTUGAL FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
-------------------------------------------------------------------------------
taken in light of the significant discounts at which the Fund's shares were
trading. It is intended both to provide additional liquidity to those
shareholders that elect to sell their shares and to enhance the net asset value
of the shares held by those shareholders that maintain their investment.
Effective October 22, 1999, the Fund committed to engage in an enhanced and
aggressive repurchase program of the Fund's shares whenever those shares trade
at more than a nominal discount to net asset value. Shares will be repurchased
in open market transactions at prevailing market prices from time to time in a
manner consistent with the Fund continuing to seek its investment objective. The
repurchase program will be subject to review by the Board of Directors of the
Fund. For the year ended December 31, 1999, the Fund repurchased 271,200 of its
shares for a total cost of $3,448,980 at a weighted average discount of 16.14%
from net asset value. The discount of the individual repurchases ranged from
10.20% - 20.34%. For the six months ended June 30, 2000, the Fund repurchased
537,400 of its shares for a total cost of $7,126,009 at a weighted average
discount of 16.32% from net asset value. The discount of the individual
repurchases ranged from 13.30% - 22.46%.
-------------------------------------------------------------------------------
NOTE G. CONTINGENCIES
-------------------------------------------------------------------------------
Currently, the Fund is a defendant in a purported class action lawsuit along
with CSAM and its former directors (BRAUTIGAM V. PRIEST ET AL.). The complaint
alleges that the defendants breached their fiduciary duties to the Fund in
violation of Sections 36 and 48 of the 1940 Act and Maryland law, by, INTER
ALIA, failing to put the interests of the Fund's shareholders before those of
others, failing to take steps to reduce or eliminate the discount to net asset
value at which shares of the Fund trade, and postponing the annual meeting of
the Fund. The complaint seeks a declaratory judgment, an order directing
defendants to take "serious steps" to reduce the discount and to hold an annual
meeting, compensatory and punitive damages and attorneys' fees.
The defendants, including the Fund, have entered into negotiations with the
plaintiffs to reach a settlement agreement. A proposed settlement is before the
court pending approval. The costs of defending the former directors in this
matter are being advanced by the Fund pursuant to the rights of indemnity set
forth in the Fund's charter documents and are reflected in the Fund's operating
expenses. The investment adviser may be entitled to similar advancement of
expenses and rights of indemnity. Management believes that neither the outcome
of this litigation nor the Fund's related indemnification obligations will have
a material adverse effect on the financial position or future operating results
of the Fund, although there can be no assurance to that effect.
-------------------------------------------------------------------------------
15
<PAGE>
RESULTS OF ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
On April 28, 2000, the annual meeting of shareholders of The Portugal Fund, Inc.
(The "Fund") was held and the following matters were voted upon:
(1) To elect two directors to the Board of Directors of the Fund.
<TABLE>
<CAPTION>
NAME OF DIRECTOR FOR WITHHELD NON-VOTES
---------------- --- -------- ---------
<S> <C> <C> <C>
Scott B. Rogers .......................................................... 3,571,592 326,425 819,299
Glenn W. Wilcox, Sr. ..................................................... 3,573,266 324,751 819,299
</TABLE>
In addition to the directors elected at the meeting, William A. Clark and Andrew
A. Strauss were appointed by other Board members to serve on the Board until the
next annual meeting of shareholders. Ralph W. Bradshaw continues to serve as a
director to the Fund.
(2) To ratify the selection of PricewaterhouseCoopers LLP as independent public
accountants for the year ending December 31, 2000.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN NON-VOTES
--- ------- ------- ---------
<S> <C> <C> <C> <C>
3,856,625 30,366 11,026 819,299
</TABLE>
--------------------------------------------------------------------------------
16
<PAGE>
DESCRIPTION OF INVESTLINK-SM-* PROGRAM
The InvestLink-SM- Program is sponsored and administered by EquiServe, L.P., not
by The Portugal Fund, Inc. (the "Fund"). EquiServe, L.P. will act as program
administrator (the "Program Administrator") of the InvestLink Program (the
"Program"). The purpose of the Program is to provide interested investors with a
simple and convenient way to invest funds and reinvest dividends in shares of
the Fund's common stock ("Shares") at prevailing prices, with reduced brokerage
commissions and fees.
An interested investor may join the Program at any time. 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. 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. First-time investors will be subject to an initial
service charge which will be deducted from their initial cash deposit. 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
Program Administrator uses dividends and funds of participants to purchase
Shares of the Fund's common stock 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.
EquiServe, L.P., as Program Administrator, administers the Program for
participants, keeps records, sends statements of account to participants and
performs other duties relating to the Program.
--------------------------------------------------------------------------------
17
<PAGE>
DESCRIPTION OF INVESTLINK-SM-* PROGRAM (CONTINUED)
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.
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
--------------------------------------------------------------------------------
18
<PAGE>
DESCRIPTION OF INVESTLINK-SM-* PROGRAM (CONTINUED)
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 investor may participate in the Program. To participate in the
Program, an investor who is not already a registered owner of the Shares must
make an initial investment of at least $250.00. 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 investor 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: First Time
Investors--(800) 337-8571; Current Shareholders--(800) 730-6001. All
correspondence regarding the Program should be directed to: EquiServe, L.P.,
InvestLink Program, P.O. Box 8040, Boston, MA 02266-8040.
--------------------------------------------------------------------------------
* InvestLink is a service mark of Boston EquiServe Limited Partnership.
--------------------------------------------------------------------------------
19
<PAGE>
SUMMARY OF GENERAL INFORMATION
The Fund--The Portugal Fund, Inc.--is a closed-end, non-diversified management
investment company whose shares trade on the New York Stock Exchange. Its
investment objective is to seek total return, consisting of capital appreciation
and current income through investing primarily in Portuguese securities. The
Fund is managed and advised by Credit Suisse Asset Management, LLC ("CSAM"),
formerly known as BEAAssociates. CSAM is a diversified asset manager, handling
equity, balanced, fixed income, international and derivative based accounts.
Portfolios include international and emerging market investments, common stocks,
taxable and non-taxable bonds, options, futures and venture capital. CSAM
manages money for corporate pension and profit-sharing funds, public pension
funds, union funds, endowments and other charitable institutions and private
individuals. As of June 30, 2000, CSAM-Americas managed approximately $70.0
billion in assets in the U.S.
SHAREHOLDER INFORMATION
The market price is published in: THE NEW YORK TIMES (daily) under the
designation "Portugal" and THE WALL STREET JOURNAL (daily), and BARRON'S (each
Monday) under the designation "PortugalFd". The Fund's New York Stock Exchange
trading symbol is PGF. Weekly comparative net asset value (NAV) and market price
information about The Portugal 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.cefsource.com.
CLOSED-END FUNDS
SINGLE COUNTRY
The Brazilian Equity Fund, Inc. (BZL)
The Chile Fund, Inc. (CH)
The First Israel Fund, Inc. (ISL)
The Indonesia Fund, Inc. (IF)
MULTIPLE COUNTRY
The Emerging Markets Infrastructure Fund, Inc. (EMG)
The Emerging Markets Telecommunications Fund, Inc. (ETF)
The Latin America Equity Fund, Inc. (LAQ)
The Latin America Investment Fund, Inc. (LAM)
FIXED INCOME
Credit Suisse Asset Management Income Fund, Inc. (CIK)
Credit Suisse Asset Management Strategic Global Income Fund, Inc. (CGF)
--------------------------------------------------------------------------------
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940, as amended, that The Portugal Fund, Inc. may from time to
time purchase shares of its capital stock in the open market.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
