The SPAIN Fund
Semi-Annual Report
May 31, 1995
Alliance
Mutual funds without the Mystery.
(cover)
LETTER TO SHAREHOLDERS THE SPAIN FUND
- -------------------------------------------------------------------------------
July 17, 1995
Dear Shareholder:
Over the quarter under review, investors' attention has been focused on
political events.
The continuing difficulties of the socialist-led coalition were compounded by
the municipal election results of the 28th of May. Overall, the right-wing
Partido Popular scored an impressive victory, winning 10 out of 13 Autonomous
Community contests and making significant gains in municipal contests. The
overall share of the vote for the Partido Popular in the municipal election
rose to 35.2%-up from 25.1% in the last comparable election in 1991-whereas the
socialists' share of the vote fell to 30.8% from 38.4% over the same period.
If these results were to be repeated at a general election, the Partido Popular
would have an overall majority and Spain would enjoy its first right-wing
administration since democracy was re-introduced following the death of Franco.
The crucial question remains, however, as to when the election will be held.
The poor showing of the socialists' coalition partner, the Catalan CIU party,
demonstrated that their support is costing them votes and consequently they
have extended their partnership until only the end of 1996.
Logistically the latest any general election may be held is mid 1997, however,
we are now more optimistic that the first half of 1996 appears to be the more
probable date as the CIU will find it hard to support the budget for that year
amid growing discontent among the electorate with the socialist administration.
Any significant shift in government to the right will prove highly stimulative
for the stock market. Investors have become increasingly concerned about the
government's inability to curb public spending and about revelations of
corruption in government circles, and should respond positively to a new
pro-market administration.
SPANISH ECONOMY
Fundamentally the slow but steady Spanish economic recovery remains intact.
Gross domestic product growth is expected at around 3% for the current year,
led upwards by exports and investment spending. The renewed competitiveness of
the Spanish peseta following the devaluations of the past two years suggests
that this pattern of growth should continue along with a strong growth in
tourist receipts during the summer.
However, the cheapness of the peseta does aggravate inflationary pressures and
the government's original price target for 1995 will not be met. We would
currently estimate a yearly rate of between 4.5% and 5.0%.
Industrial prices, however, are moving up quickly and there must be some
concern as to a prolonged cyclical upturn in Spanish inflation. Without a
significant reduction in government spending and a further liberalization of
the labor market, a return to the rates of inflation seen in the 1980s will be
a concern. This threat is all the more dangerous if the current administration
pursues an expansionary budget path in the hope of regaining votes lost to
their political opponents.
EARNINGS GROWTH FORECAST
Despite the relatively strong recent performance of the stock market in
anticipation of an earlier than expected change in government, the Spanish
equity market still appears undervalued relative to other world markets. At an
historic price to cash-flow multiple of less than 5x, Spain compares favorably
with the U.S. at 9.6x, the United Kingdom at 9.3x and Japan at 9.9x. At the
same time, profits growth in 1995 and 1996 should remain relatively strong with
the average of analysts' forecasts predicting a 21% growth in earnings over the
next twelve months. This combination of growth and value-and the potential
catalyst of a new pro-business government-should ensure a return of the strong
relative long-term performance of the Spanish equity market.
We have continued to pursue the strategy of focusing on growth stocks for your
Fund. We remain relatively underweighted in both the financial and utility
segments of the market and focused on industrial segments where we see strong
relative long-term earnings growth.
In this regard we have been net buyers of Viscofan, the sausage casings
manufacturer; Corporacion Alba, the diversified financial, retail and media
conglomerate; and Zardoya Otis, the lift maintenance company, all of which we
regard as displaying long-term growth characteristics.
1
THE SPAIN FUND
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We also look forward to the resuscitation of the government's privatization
program. The recent successful launch of a further tranche of Repsol and the
paper company Ence, as well as the intended further issues of Telefonica and
Argentaria, should help breathe further life into the stock market.
INVESTMENT RESULTS
For the six months ended May 31, 1995, The Spain Fund had a total return of
+4.02% on a net asset value basis. This compares with a total return of +6.7%
for the benchmark Madrid General Index over the same period with net dividends
reinvested.
Overall we continue to regard Spain as a rewarding place for investors. We
appreciate your continued interest in The Spain Fund and look forward to
updating you on its investment progress in the coming months.
Sincerely,
Dave H. Williams
Chairman and President
Mark H. Breedon
Vice President and Portfolio Manager
2
TEN LARGEST EQUITY HOLDINGS
MAY 31, 1995 (UNAUDITED) THE SPAIN FUND
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COMPANY U.S.$VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Compania Telefonica Nacional de Espana,S.A. $7,177,570 6.9%
Repsol, S.A. 6,010,975 5.8
Centros Comerciales Continente, S.A. 5,246,981 5.0
Endesa 5,213,435 5.0
Argentaria Corporacion Bancaria de Espana,S.A. 5,080,662 4.9
Corporacion Financiera Alba, S.A. 4,503,825 4.3
Banco Bilbao Vizcaya 4,267,840 4.1
Banco Intercontinental 4,219,786 4.1
Iberdrola I, S.A. 4,127,331 4.0
Corporacion Mapfre, S.A. 3,968,235 3.8
$49,816,640 47.9%
3
PORTFOLIO OF INVESTMENTS
MAY 31, 1995 (UNAUDITED) THE SPAIN FUND
- -------------------------------------------------------------------------------
COMPANY SHARES U.S. $ VALUE
- ----------------------------------------------------------------------------
COMMON STOCKS AND OTHER INVESTMENTS-98.1%
FINANCIAL SERVICES-28.5%
BANKING-20.2%
Argentaria Corporacion
Bancaria de Espana, S.A.(a) 144,593 $5,080,662
Banco Bilbao Vizcaya(a)(b) 147,500 4,267,840
Banco Central Hispanoamericano, S.A. 100,000 2,285,377
Banco de Andalucia 6,400 825,348
Banco de Castilla 1,500 647,660
Banco de Galicia 4,000 359,131
Banco de Santander, S.A. 43,428 1,641,159
Banco de Vasconia* 6,200 214,311
Banco Intercontinental 47,000 4,219,786
Banco Popular Espanol, S.A. 10,000 1,497,738
21,039,012
INSURANCE-4.2%
Corporacion Mapfre, S.A. 83,969 3,968,235
new shares* 5,658 260,922
Mapfre Vida de Seguros, S.A. 3,324 156,273
4,385,430
REAL ESTATE-4.1%
Estacionameintos Subterraneos, S.A. 82,500 1,400,610
Filo, S.A. 395,000 2,740,412
4,141,022
29,565,464
UTILITIES-25.7%
ELECTRIC & GAS-18.8%
Electricas Reunidas de Zaragoza S.A. 131,562 2,791,925
Endesa 109,000 5,213,435
Fuerzas Elecricidad de Cataulana, S.A. Series A 89,000 507,770
Gas Natural, S.A. 35,000 3,853,717
Gas Y Electricidad, S.A. 32,000 1,538,385
Iberdrola I, S.A. 589,362 4,127,331
COMPANY SHARES U.S. $ VALUE
Sevillana de Electricidad 265,000 $1,505,411
19,537,974
TELEPHONE-6.9%
Compania Telefonica Nacional de Espana, S.A.(a) 546,200 7,177,570
26,715,544
CAPITAL GOODS-8.8%
ENGINEERING & CONSTRUCTION-7.7%
Compania Levantiade Obras Publicas 20,000 285,672
Cubiertas Y Mzov, S.A. 30,000 2,118,055
Dragados & Construcciones, S.A. 175,000 2,685,318
Fomento de Construcciones Y Contratas, S.A. 29,158 2,915,370
8,004,415
MACHINERY-1.1%
Zardoya Otis S.A. 10,000 1,134,527
9,138,942
CONSUMER SERVICES-8.6%
ENTERTAINMENT & LEISURE TIME-0.1%
Grand Tibidabo, S.A.* 132,660 54,139
PRINTING & PUBLISHING-3.5%
Grupo Anaya* 16,801 429,905
Midesa* 128,654 1,443,863
Unidad Editorial, S.A Series A*(c) 1,511,470 1,760,572
3,634,340
OTHER-5.0%
Centros Comerciales Continente, S.A.*(a) 215,000 5,246,981
8,935,460
CONSUMER STAPLES-7.0%
FOOD-5.0%
El Aguila, S.A.* 175,000 1,396,937
4
THE SPAIN FUND
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COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------------
Natra, S.A.(d) 70,134 $ 658,304
Pascual Hermanos, S.A.* 281,691 528,811
Viscofan Envolturas Celulosicas 180,000 2,740,004
5,324,056
TOBACCO-2.0%
Tabacalera, S.A. Series A 60,899 2,075,231
7,399,287
ENERGY-5.8%
Repsol, S.A.(a) 185,973 6,010,975
CONSUMER MANUFACTURING-4.4%
BUILDING & RELATED-4.4%
Portland Valderrivas, S.A. 19,590 1,565,370
Uralita, S.A.* 247,150 2,965,363
4,530,733
MULTI INDUSTRY-4.3%
Corporacion Financiera Alba, S.A. 89,000 4,503,825
HEALTH CARE-2.0%
Fabrica Espanola de Products Quimicos
y Farmaceuticos 27,000 780,130
Indo Internacional, S.A. 19,119 717,832
Prim, S.A.* 92,026 653,476
2,151,438
BASIC INDUSTRIES-1.4%
MINING & METALS-1.4%
Acerinox, S.A. 7,500 906,600
SHARES,
PRINCIPAL
OR CURRENCY
AMOUNT
COMPANY (000) U.S. $ VALUE
- ----------------------------------------------------------------------------
OTHER-0.0%
Cristaleria Espanola S.A. 9,000 $ 506,128
1,412,728
OTHER INVESTMENTS-1.6%
Asesores Bursatiles
Capital Fund N.V.*(c) 25 693,748
Asesores Bursatiles Capital Fund N.V.II*(c) 25 917,280
1,611,028
Total Common Stocks and Other Investments
(cost $96,849,771) 101,975,424
CONVERTIBLE BOND-0.3%
El Aguila, S.A.
10.00%, 12/02/97(d)
(cost $338,524) ESP 3,833 317,545
TIME DEPOSIT-0.2%
Dresdner Bank
5.96875%, 6/02/95
(cost $200,000) US$ 200 200,000
CURRENCY CALL ACCOUNT-2.1%
Spanish Pesetas
(cost $2,164,964) ESP 265,234 2,164,847
TOTAL INVESTMENTS-100.7%
(cost $99,553,259) 104,657,816
Other assets less liabilities-(0.7%) (731,633)
NET ASSETS-100% $103,926,183
* Non-income producing security.
(a) Securities (with an aggregate market value of $27,784,028) segregated to
collaterize a forward exchange currency contract.
(b) Security represents an affiliated investment.
(c) Restricted security, valued at fair value (see Notes A & F).
(d) Illiquid security, valued at fair value (see Note A).
Glossary:
ESP - Spanish Pesetas.
See notes to financial statements.
5
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995 (UNAUDITED) THE SPAIN FUND
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ASSETS
Investments in securities, at value (cost $99,553,259) $104,657,816
Receivable for investment securities sold 1,037,409
Foreign taxes receivable 382,839
Dividends and interest receivable 81,182
Other assets 21,732
Total assets 106,180,978
LIABILITIES
Payable for investment securities purchased 939,465
Unrealized depreciation of forward exchange currency contract 867,382
Management fee payable 96,965
Accrued expenses 350,983
Total liabilities 2,254,795
NET ASSETS (equivalent to $10.36 per share, based on 10,026,746
shares outstanding) $103,926,183
COMPOSITION OF NET ASSETS
Capital stock, at par $100,267
Additional paid-in capital 106,918,079
Undistributed net investment income 338,409
Accumulated net realized loss on investments and
foreign currency transactions (7,671,616)
Net unrealized appreciation of investments and
foreign currency denominated assets and liabilities 4,241,044
$103,926,183
NET ASSET VALUE PER SHARE $10.36
See notes to financial statements.
6
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1995 (UNAUDITED) THE SPAIN FUND
- -------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $214,250) $1,160,095
Interest 123,016 $1,283,111
EXPENSES
Management fee 508,184
Custodian 209,647
Transfer agency 73,023
Directors' fees and expenses 55,213
Audit and legal 48,430
Printing 14,563
Miscellaneous 35,642
Total expenses 944,702
Net investment income 338,409
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on investment transactions (1,258,125)
Net realized gain on foreign currency transactions 834,483
Net change in unrealized appreciation of investments 5,548,770
Net change in unrealized appreciation of foreign currency
denominated assets and liabilities (1,423,240)
Net gain on investments and foreign currency denominated
assets and liabilities 3,701,888
NET INCREASE IN NET ASSETS FROM OPERATIONS $4,040,297
See notes to financial
7
STATEMENT OF CHANGES IN NET ASSETS THE SPAIN FUND
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SIX MONTHS ENDED YEAR ENDED
MAY 31,1995 NOV. 30,
(UNAUDITED) 1994
------------ -----------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income $ 338,409 $ 542,837
Net realized loss on investments and
foreign currency transactions (423,642) (231,307)
Net change in unrealized appreciation of
investments and foreign currency denominated
assets and liabilities 4,125,530 9,063,062
Net increase in net assets from operations 4,040,297 9,374,592
DIVIDENDS AND DISTRIBUTION TO SHAREHOLDERS FROM:
Net investment income -0- (1,005,103)
Distributions in excess of net investment income -0- (508,431)
Net realized gain on investments and
foreign currency transactions -0- (3,096,153)
CAPITAL STOCK TRANSACTIONS
Reinvestment of dividends resulting in issuance
of common stock -0- 63,476
Total increase 4,040,297 4,828,381
NET ASSETS
Beginning of year 99,885,886 95,057,505
End of period $103,926,183 $99,885,886
See notes to financial statements.
8
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995 (UNAUDITED) THE SPAIN FUND
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NOTE A: SIGNIFICANT ACCOUNTING POLICIES
The Spain Fund, (the 'Fund') was incorporated in the State of Maryland on June
30, 1987 as a non-diversified, closed-end management investment company.
The financial statements include the accounts of the Fund and its wholly-owned
subsidiary (Spain Shares Investments Maryland B.V.). The Fund is currently in
the process of dissolving and liquidating its wholly-owned subsidiary. The
following is a summary of significant accounting policies followed by the Fund.
1. SECURITY VALUATION
Investments are stated at value. Investments for which market quotations are
readily available are valued at the closing price on the day of valuation or at
the last bid price quoted on such day if no such closing price is available. If
there are no quotations available for the day of valuation, the last available
closing price will be used. Securities for which market quotations are not
readily available are valued at fair value as determined in good faith by the
Board of Directors. Such securities have a value of $4,347,449 at May 31, 1995.
In determining fair value, consideration is given to cost, operating and other
financial data. Securities which mature in 60 days or less are valued at
amortized cost, which approximates market value, unless this method does not
represent fair value. Foreign security and currency transactions may involve
certain considerations and risks not normally associated with those of domestic
origin as a result of, among others, the possibility of political and economic
instability and the level of government supervision and regulation of foreign
securities markets.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in Spanish pesetas are translated into U.S.
dollars at the mean of the quoted bid and asked price of the peseta against the
U.S. dollar on the valuation date. Purchases and sales of portfolio securities
are translated into U.S. dollars at the rates of exchange prevailing when such
securities were acquired or sold. Income and expenses are translated at rates
of exchange prevailing when earned or accrued. Net realized gain on foreign
currency transactions of $834,483 represents net foreign exchange gains and
losses from holding of foreign currencies, currency gains or losses realized
between the trade and settlement dates on security transactions, foreign
currency forward contracts and the difference between the amounts of dividends,
interest and foreign taxes recorded on the Fund's books and the U.S. dollar
equivalent amounts actually received or paid. Net unrealized currency gains and
losses from valuing foreign currency denominated assets and liabilities at
period end exchange rates are reflected as a component of net unrealized
appreciation of investments and foreign currency denominated assets and
liabilities.
The exchange rate for the Spanish Peseta at May 31, 1995 was ESP 122.5181 to
US$ 1.00.
3. TAXES
It is the Fund's policy to meet the requirements of the U.S. Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to its
shareholders. Therefore, no provision for federal income or excise taxes are
required. Withholding taxes on foreign interest and dividends have been
provided for in accordance with the Spanish tax rates.
4. INVESTMENT INCOME AND SECURITY TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Security transactions are accounted for on the date securities are
purchased or sold. Realized and unrealized gains and losses from investment and
foreign currency transactions are calculated on the identified cost basis.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital gain distributions are determined in
accordance with income tax regulations, which may differ from generally
accepted accounting principles.
9
NOTES TO FINANCIAL STATEMENTS (CONTINUED) THE SPAIN FUND
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NOTE B: MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under an Investment Management and Administration Agreement, the Fund pays
Alliance Capital Management, L.P. (the 'Investment Manager') a fee, calculated
weekly and paid monthly, at an annualized rate of 1.10% of the Fund's average
weekly net assets up to $50 million, 1.00% of the Fund's average weekly net
assets on the next $50 million, and .90% of the Fund's average weekly net
assets over $100 million.
Brokerage commissions paid on securities transactions for the six months ended
May 31, 1995 amounted to $118,305, none of which was paid to affiliated brokers.
NOTE C: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
aggregated $27,544,702 and $26,581,638, respectively, for the six months ended
May 31, 1995.
The Fund enters into forward exchange currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings. A forward exchange currency contract is a commitment to purchase or
sell a foreign currency at a future date at a negotiated forward rate. The gain
or loss arising from the difference between the original contracts and the
closing of such contracts is included in net realized gains or losses on
foreign currency transactions. Fluctuations in the value of forward exchange
currency contracts are recorded for financial reporting purposes as unrealized
gains or losses by the Fund. Risks may arise from the potential inability of
the counterparty to meet the terms of the contract and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar. At
May 31, 1995, the Fund had an outstanding forward exchange currency contract
with First National Bank of Chicago to sell 3,169,000,000 Spanish Pesetas
expiring on June 26, 1995, with a cost of $25,867,382. The market value of the
forward exchange currency contract at May 31, 1995 was $25,000,000 resulting in
an unrealized depreciation of $867,382.
At May 31, 1995, the cost of securities for federal income tax purposes was the
same as the cost for financial reporting purposes. Accordingly, gross
unrealized appreciation of investments was $15,399,863 and gross unrealized
depreciation of investments was $10,295,306 resulting in net unrealized
appreciation of $5,104,557 (excluding foreign currency). At November 30, 1994
the Fund had a capital loss carryforward of $6,894,268 which expires in the
year 2001. No capital gain distribution is expected to be paid to shareholders
until future net gains have been realized in excess of such carry forward.
NOTE D: CAPITAL STOCK
There are 100,000,000 shares of $.01 par value common stock authorized. For the
six months ended May 31, 1995, no additional shares were issued. During the
year ended November 30, 1994 the Fund issued 5,687 shares in connection with
the Fund's Dividend Reinvestment Plan. Of the 10,026,746 shares outstanding at
May 31, 1995, the Investment Manager owned 9,454 shares.
10
THE SPAIN FUND
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NOTE E: QUARTERLY RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
NET REALIZED AND
UNREALIZED GAIN NET INCREASE
(LOSS) ON (DECREASE)
INVESTMENTS AND IN NET ASSETS
NET INVESTMENT FOREIGN CURRENCY RESULTING FROM MARKET PRICE
INCOME (LOSS) TRANSACTIONS OPERATIONS ON NYSE
---------------- ------------------ ------------------ -----------------
TOTAL PER TOTAL PER TOTAL PER
QUARTER ENDED (000) SHARE (000) SHARE (000) SHARE HIGH LOW
- ---------------------- ------ -------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
May 31, 1995 $(129) $(.01) $ 9,486 $ .94 $ 9,357 $ .93 $ 9.00 $7.25
February 28, 1995 468 .05 (5,784) (.58) (5,316) (.53) $9.125 $7.75
$339 $.04 $3,702 $.36 $4,041 $ .40
November 30, 1994 $(341) $(.03) $(3,067) $(.31) $(3,408) $ (.34) $10.50 $8.88
August 31, 1994 450 .04 (983) (.10) (533) (.06) $10.75 $8.63
May 31, 1994 (297) (.03) (975) (.09) (1,272) (.12) $11.13 $9.00
February 28, 1994 731 .07 13,857 1.38 14,588 1.45 $12.75 $9.25
$ 543 $ .05 $ 8,832 $ .88 $ 9,375 $ .93
</TABLE>
NOTE F: RESTRICTED SECURITIES
DATE ACQUIRED SHARES COST
------------- --------- -----------
Asesores Bursatiles Capital Fund N.V. 10/29/90 25 $1,115,170
Asesores Bursatiles Capital Fund N.V. II 5/24/94 25 839,976
Unidad Editorial S.A. Series A 12/12/89 462,750 513,710
Unidad Editorial S.A. Series A 9/30/92 1,048,720 1,330,964
The securities shown above are restricted as to sale and have been valued at
fair value in accordance with the policy described in Note A.
The value of these securities at May 31, 1995 was $3,371,600, representing 3.2%
of net assets. In connection with its investment in Asesores Bursatiles Capital
Fund N.V. II the fund may be required to invest up to an additional 1,500,000
Netherlands Guilders (US $947,603) upon the request of Asesores Bursatiles
Capital Fund.
11
FINANCIAL HIGHLIGHTS THE SPAIN FUND
- -------------------------------------------------------------------------------
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED NOVEMBER 30,
MAY 31,1995 -----------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990
------------- -------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $9.96 $9.49 $8.28 $11.65 $12.26 $14.40
INCOME FROM INVESTMENT OPERATIONS
Net investment income .04 .05 .10 .16 .15 .15
Net realized and unrealized gain (loss) on
investments and foreign currency transactions .36 .88 1.29 (3.16) .53 (1.31)
Net increase (decrease) in net asset
value from operations .40 .93 1.39 (3.00) .68 (1.16)
LESS: DISTRIBUTIONS
Dividends from net investment income -0- (.10) (.17) (.15) (.14) (.13)
Distributions in excess of net
investment income -0- (.05) -0- -0- -0- -0-
Distributions from net realized gains on
investments and foreign currency transactions -0- (.31) (.01) (.22) (1.15) (.85)
Total dividends and distributions -0- (.46) (.18) (.37) (1.29) (.98)
Net asset value, end of period $10.36 $9.96 $9.49 $8.28 $11.65 $12.26
Market value, end of period $8.50 $9.13 $9.63 $8.38 $13.25 $12.625
TOTAL RETURN (a)
Total investment return based on:
Market value (6.85)% (1.29)% 17.31% (34.82)% 17.62% (53.49)%
Net asset value 4.02% 9.28% 16.99% (26.71)% 6.49% (11.79)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $103,926 $99,886 $95,058 $82,920 $116,665 $122,685
Ratio of expenses to average net assets 1.98%(b) 2.09% 2.24% 2.34% 1.98% 2.22%
Ratio of net investment income to
average net assets .71%(b) .53% 1.10% 1.50% 1.33% 1.14%
Portfolio turnover rate 29% 22% 65% 43% 35% 41%
</TABLE>
(a) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed, for
purposes of this calculation, to be reinvested at prices obtained under the
Fund's dividend reinvestment plan. Generally, total investment return based on
net asset value will be higher than total investment return based on market
value in period where there is an increase in the discount or a decrease in the
premium of the market value to the net asset value from the beginning to the
end of such period. Conversely, total investment return based on net asset
value will be lower than total investment return based on market value in
period where there is a decrease in the discount or an increase in the premium
of the market value to the net asset value from the beginning to the end of
such period. Total investment return calculated for a period of less than one
year is not annualized.
(b) Annualized.
12
BOARD OF DIRECTORS
DAVE H. WILLIAMS, CHAIRMAN AND PRESIDENT
ANGEL CORCOSTEGUI
H.R.H. PILAR DE BORBON Y BORBON
INMACULADA DE HABSBURGO-LORENA
ENRIQUE L. FEVRE
DR. JAMES M. HESTER
JOSE LUIS FEITO HIGUERUELA
MARILYN PERRY
FRANCISCO GOMEZ ROLDAN
JUAN MANUEL SAINZ DE VICUNA
REBA W. WILLIAMS
CARLOS DELCLAUX ZULUETA
OFFICERS
NORMAN S. BERGEL, VICE PRESIDENT
MARK H. BREEDON, VICE PRESIDENT
NICHOLAS CROSSLAND, VICE PRESIDENT
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
EDMUND P. BERGAN, JR., SECRETARY
JOSEPH J. MANTINEO, CONTROLLER
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
40 Water Street
Boston, MA 02109
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, NY 10036-2798
DIVIDEND PAYING AGENT,
TRANSFER AGENT AND REGISTRAR
STATE STREET BANK & TRUST COMPANY
225 Franklin Street
Boston, MA 02110
The financial information included herein is taken from the records of the Fund
without audit by independent accountants who do not express an opinion thereon.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase at market prices from time to
time shares of its common stock in the open market.
This report, including the financial statements herein is transmitted to the
shareholders of The Spain Fund, Inc. for their information. This is not a
prospectus, circular or representation intended for use in the purchase of
shares of the Fund or any securities mentioned in this report.
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THE SPAIN FUND, INC.
Summary of General Information
SHAREHOLDER INFORMATION
Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Transaction section of newspapers under the designation
SpainFd. The Fund's NYSEtrading symbol is 'SNF'. Weekly comparative net asset
value (NAV) and market price information about the Fund is published each
Monday in THE WALL STREET JOURNAL and each Saturday in THE NEW YORK TIMES and
BARRON'S, and other newspapers in a table called 'Closed End Funds'. Additional
information about the fund is available by calling 1-800-221-5672.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
A Dividend Reinvestment Plan is available to shareholders in the Fund, which
provides automatic reinvestment of dividends and capital gain distributions in
additional Fund shares. The Plan also allows you to make optional cash
investments in Fund shares through the Plan Agent. A brochure describing the
Plan is available from the Plan Agent, State Street Bank and Trust Company, by
calling 1-800-219-4218.
If you wish to participate in the Plan and your shares are held in your name,
simply complete and mail the enrollment form in the brochure. If your shares
are held in the name of your brokerage firm, bank or other nominee, you should
ask them whether or how you can participate in the Plan.
THE SPAIN FUND, INC.
1345 Avenue of the Americas
New York, NY 10105
Alliance Capital
Mutual funds without the mystery
R These registered service marks used under license from the owner, Alliance
Capital Management L.P.
SPNSR
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