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001 C000000 2013677403
002 A000000 100 MULBERRY STREET GATEWAY THREE
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008 D060001 2000
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008 B000002 A
008 C000002 801-25823
008 D010002 ST. HELIER
008 D050002 JERSEY CHANNEL ISLES
010 A000001 PRUDENTIAL MUTUAL FUND MANAGEMENT, INC.
010 B000001 8-27154
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011 A000001 PRUDENTIAL SECURITIES INC
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011 C010001 NEW YORK
<PAGE> PAGE 2
011 C020001 NY
011 C030001 10292
011 A000002 BEAR STEARNS & CO., INC.
011 B000002 8-35008
011 C010002 NEW YORK
011 C020002 NY
011 C030002 10041
011 A000003 NIKKO SECURITIES CO., INT'L, INC.
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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SIGNATURE EUGENE STARK
TITLE ASSISTANT TREASURER
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000790500
<NAME> THE FIRST AUSTRALIA PRIME INCOME FUND,INC.
<SERIES>
<NUMBER> 001
<NAME> THE FIRST AUSTRALIA PRIME INCOME FUND,INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 2,283,456,022
<INVESTMENTS-AT-VALUE> 2,488,163,044
<RECEIVABLES> 63,095,539
<ASSETS-OTHER> 1,181,386
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,552,439,969
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 20,545,789
<TOTAL-LIABILITIES> 20,545,789
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,274,262,985
<SHARES-COMMON-STOCK> 194,559,756
<SHARES-COMMON-PRIOR> 155,079,102
<ACCUMULATED-NII-CURRENT> 21,750,150
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 152,874,030
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 83,007,015
<NET-ASSETS> 2,531,894,180
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 170,176,632
<OTHER-INCOME> 0
<EXPENSES-NET> 20,985,268
<NET-INVESTMENT-INCOME> 149,191,364
<REALIZED-GAINS-CURRENT> 96,775,912
<APPREC-INCREASE-CURRENT> 104,837,565
<NET-CHANGE-FROM-OPS> 350,804,841
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (166,056,163)
<DISTRIBUTIONS-OF-GAINS> (8,031,624)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 422,730,382
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 5,241,634
<NET-CHANGE-IN-ASSETS> 604,689,070
<ACCUMULATED-NII-PRIOR> 12,065,169
<ACCUMULATED-GAINS-PRIOR> 90,255,049
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 11,251,987
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 20,985,268
<AVERAGE-NET-ASSETS> 1,627,916,000
<PER-SHARE-NAV-BEGIN> 9.36
<PER-SHARE-NII> 0.87
<PER-SHARE-GAIN-APPREC> 1.13
<PER-SHARE-DIVIDEND> (0.97)
<PER-SHARE-DISTRIBUTIONS> (0.05)
<RETURNS-OF-CAPITAL> (0.41)
<PER-SHARE-NAV-END> 9.93
<EXPENSE-RATIO> 1.29
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
December 10, 1996
To the Board of Directors and Shareholders of
The First Australia Prime Income Fund, Inc.
In planning and performing our audit of the financial
statements of The First Australia Prime Income Fund, Inc.
(the "Fund") for the year ended October 31, 1996, we
considered its internal control structure, including
procedures for safeguarding securities, in order to
determine our auditing procedures for the purposes of
expressing our opinion on the financial statements and to
comply with the requirements of Form N-SAR, and not to
provide assurance on the internal control structure.
The management of the Fund is responsible for establishing
and maintaining an internal control structure. In
fulfilling this responsibility, estimates and judgments by
management are required to assess the expected benefits
and related costs of internal control structure policies
and procedures. Two of the objectives of an internal
control structure are to provide management with
reasonable, but not absolute, assurance that assets are
appropriately safeguarded against loss from unauthorized
use or disposition and that transactions are executed in
accordance with management's authorization and recorded
properly to permit preparation of financial statements in
conformity with generally accepted accounting principles.
Because of inherent limitations in any internal control
structure, errors or irregularities may occur and not be
detected. Also, projection of any evaluation of the
structure to future periods is subject to the risk that it
may become inadequate because of changes in conditions or
that the effectiveness of the design and operation may
deteriorate.
Our consideration of the internal control structure would
not necessarily disclose all matters in the internal
control structure that might be material weaknesses under
standards established by the American Institute of
Certified Public Accountants. A material weakness is a
condition in which the design or operation of the specific
internal control structure elements does not reduce to a
relatively low level the risk that errors or
irregularities in amounts that would be material in
relation to the financial statements being audited may
occur and not be detected within a timely period by
employees in the normal course of performing their
assigned functions. However, we noted no matters
involving the internal control structure, including
procedures for safeguarding securities, that we consider
to be material weaknesses as defined above as of October
31, 1996.
This report is intended solely for the information and use
of management and the Securities and Exchange Commission.
PRICE WATERHOUSE LLP
