THE SPAIN FUND
ALLIANCE CAPITAL
SEMI-ANNUAL REPORT
MAY 31, 1997
LETTER TO SHAREHOLDERS THE SPAIN FUND
_______________________________________________________________________________
July 14, 1997
Dear Shareholder:
We are pleased to provide you with an update of your Fund's performance and
market activity for the semi-annual period ended May 31, 1997.
INVESTMENT RESULTS
As you can see by the table below, your Fund outperformed its benchmark, the
Madrid General Index, in the last six and twelve month periods ended May 31,
1997. Your Fund returned 24.19% on a net asset value basis for the six month
period and 41.01% on a net asset value basis for the twelve month period
compared with the Madrid General Index which reported 23.29% and 39.98% returns
for the same periods.
INVESTMENT RESULTS*
Period Ended May 31, 1997
TOTAL RETURN
3 MONTHS 6 MONTHS 12 MONTHS
-------- -------- ---------
THE SPAIN FUND 16.02% 24.19% 41.01%
MADRID GENERAL INDEX 17.73% 23.29% 39.98%
* THE FUND'S INVESTMENT RESULTS ARE CUMULATIVE TOTAL RETURNS FOR THE PERIOD
AND ARE BASED ON THE NET ASSET VALUE AS OF MAY 31, 1997. ALL FEES AND EXPENSES
RELATED TO THE OPERATION OF THE FUND HAVE BEEN DEDUCTED. RETURNS FOR THE FUND
INCLUDE THE REINVESTMENT OF ANY DISTRIBUTIONS PAID DURING THE PERIOD. THE INDEX
IS UNMANAGED AND REFLECTS NO FEES OR EXPENSES.
ECONOMIC OVERVIEW
Several developments over the past quarter have contributed to better economic
times in Spain. Spain's economic transformation under the new Partido Popular
government has continued at a feverish pace. The Spanish stock market continued
to post record breaking gains. And estimates for Gross Domestic Product (GDP)
growth in 1997 have risen towards the 3% and above level. As a result,
investors have become excited by the continued upward revision of growth
prospects and the lowering of expectations for inflation.
This upward revision in GDP growth was driven by the growth in private
consumption. After seven years of concern over unemployment and falling asset
values, the Spanish consumer has finally regained confidence, and from a strong
liquidity position, has begun to spend again. At the same time, inflation
continues to decline. Most recent figures show a year-on-year rate of increase
of 1.6% for the month of June. Few observers now believe that inflation will
rise above 2% during 1997.
Despite considerable skepticism only 12 months ago, it is now evident that
Spain will easily meet the criteria for Maastricht. If European Monetary Union
(EMU) continues on schedule, Spain should be one of the single currency's
founding members. The impact of this change in perception on the stock and bond
markets has been enormous. Historically, Spain always seemed to possess strong
growth potential but weak fundamentals and poor economic management.
Consequently, investors had always demanded a discount for holding Spanish
bonds and equities. This discount manifested itself in relatively high real
yields for government paper and significantly lower P/E and cash flow multiples
for Spanish stocks relative to the European average. These discounts have now
been eliminated as equity and bond prices have risen in the face of these
dramatic changes in growth and inflation perspectives.
Given that Spanish securities have performed so well recently and that
valuations are up to European averages, is there still room for growth in the
Spanish market? Assuming that Spain's new found rigor in economic management is
maintained, and that EMU is completed, Spain does offer some clear advantages
relative to other European countries in terms of its longer term growth
prospects. There are several reasons for this opinion.
First, Spain's demographics are more favorable than most of Europe's--Spain's
population is younger and still growing, and is well educated. Since Spain's
GDP per head is low relative to Europe, Spain has much more room for growth.
More than any other country in Europe, with the exception of the United
Kingdom, Spain has embraced the ideas of free market capitalism. Although
Spain's labor laws remain unnecessarily rigid, changes have increased the
competitiveness of Spain's companies in world markets. Spain's traditional
links with Latin America and other Hispanic speaking cultures around the globe
offer Spanish companies extraordinary growth opportunities. Lastly, the Spanish
government's commitment to privatization is unshakable. The impending
1
THE SPAIN FUND
_______________________________________________________________________________
withdrawal by the state from a large number of industries, ranging from tobacco
to airlines, will provide investors with new growth opportunities over the next
few years.
Recently, we have seen an unprecedented number of new issues on the Madrid
stock exchange. With the increasing involvement of domestic investors in the
market, we anticipate that the Spanish Bolsa will take up an increasingly
important role as a provider of capital, and at the same time, offer a more
diversified arena for investors.
PORTFOLIO STRATEGY
Our long term optimism in the Spanish market is reflected in the fully invested
position taken by your Fund. We continue to emphasize what we consider to be
quality Spanish companies that are well managed market leaders because it is
our belief that these groups will provide the best long term potential in the
rejuvenated Spanish stock market.
Our strategy for your Fund continues to emphasize growth with overweighted
positions in consumer related sectors of the market and underweighted positions
in electrical utilities.
Currently, we are maintaining approximately 12% of your Fund's peseta assets
hedged back into the US dollar since we consider the US dollar to be
undervalued against the peseta.
We thank you for your continued interest in The Spain Fund and look forward to
reporting to you again in the near future.
Sincerely,
Dave H. Williams
Chairman and President
Mark H. Breedon
Vice President
2
TEN LARGEST HOLDINGS
MAY 31, 1997 (UNAUDITED) THE SPAIN FUND
_______________________________________________________________________________
PERCENT OF
COMPANY U.S. $ VALUE NET ASSETS
- -------------------------------------------------------------------------------
Endesa $15,107,825 9.2%
Compania Telefonica Nacional de Espana, S.A. 14,992,501 9.1
Banco Bilbao Vizcaya 12,562,209 7.6
Banco de Santander, S.A. 12,180,022 7.4
Repsol, S.A. 9,925,545 6.0
Corporacion Financiera Alba, S.A. 8,186,930 5.0
Acerinox, S.A. 7,799,394 4.7
Iberdrola I, S.A. 6,506,365 3.9
Banco Intercontinental 6,252,422 3.8
Banco Popular Espanol, S.A. 4,899,780 3.0
$98,412,993 59.7%
3
PORTFOLIO OF INVESTMENTS
MAY 31, 1997 (UNAUDITED) THE SPAIN FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
COMMON STOCKS AND OTHER INVESTMENTS-98.8%
UTILITIES-29.6%
ELECTRIC & GAS-20.5%
Electricas Reunidas de Zaragoza, S.A. 111,587 $ 4,203,178
Emp Ribagorzan Series B 79,000 1,823,649
Endesa (a) 198,000 15,107,825
Gas Natural, S.A. 23,750 4,523,874
Iberdrola I, S.A. 530,362 6,506,365
Sevillana de Electricidad 179,015 1,713,590
------------
33,878,481
TELEPHONE-9.1%
Compania Telefonica Nacional
de Espana, S.A. 520,200 14,992,501
------------
48,870,982
FINANCIAL SERVICES-27.9%
BANKING-23.0%
Banco Bilbao Vizcaya (a)(b) 177,500 12,562,209
Banco de Andalucia 6,400 1,030,632
Banco de Castilla 1,500 984,878
Banco de Santander, S.A. 142,928 12,180,022
Banco Intercontinental (a) 37,000 6,252,422
Banco Popular Espanol, S.A. 23,100 4,899,780
------------
37,909,943
INSURANCE-2.3%
Catalana Occidente, S.A. 42,500 2,153,082
Mapfre Vida De Seguros, S.A. 25,000 1,688,116
------------
3,841,198
REAL ESTATE-2.6%
Inmobiliaria Urbis, S.A. 100,000 742,978
Vallehermoso, S.A. 141,000 3,556,966
------------
4,299,944
------------
46,051,085
BASIC INDUSTRIES-7 .6%
MINING AND METALS-4.7%
Acerinox, S.A. 46,516 7,799,394
PAPER PRODUCTS-2.9%
Empresa Celulosas 329,400 4,860,592
------------
12,659,986
ENERGY-7.5%
Compania Espanola de Petroleos, S.A. 70,200 2,450,170
Repsol, S.A. (a) 237,373 9,925,545
------------
12,375,715
CONSUMER SERVICES-7.4%
PRINTING & PUBLISHING-1.0%
Unidad Editorial, S.A. Series A (c)(d) 1,511,470 1,671,426
RESTAURANTS & LODGING-2.0%
Sol Melia, S.A. (c) 90,000 3,334,072
RETAIL-4.4%
Adolfo Dominguez, S.A. 20,000 702,201
Centros Comerciales Continente, S.A. 90,500 1,729,463
Cortefiel, S.A. 128,983 4,760,378
------------
7,192,042
------------
12,197,540
CONSUMER STAPLES-6.1%
FOOD-3.6%
El Aguila, S.A. (c) 175,000 864,792
Natra, S.A. 70,134 969,452
Telepizza, S.A. (c) 56,402 2,989,906
Viscofan Envolturas Celulosicas (a) 58,503 1,180,670
------------
6,004,820
TOBACCO-2.5%
Tabacalera, S.A. Series A (a) 80,779 4,097,908
------------
10,102,728
MULTI INDUSTRY-5.0%
Corporacion Financiera Alba, S.A. 74,500 8,186,930
CAPITAL GOODS-3.7%
ENGINEERING & CONSTRUCTION-3.7%
Fomento de Construcciones
Y Contratas, S.A. 29,158 3,242,511
Grupo Nacional, S.A. 26,000 2,812,259
------------
6,054,770
4
THE SPAIN FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $ VALUE
- -------------------------------------------------------------------------
CONSUMER MANUFACTURING-1.8%
BUILDING & RELATED-1.8%
Portland Valderrivas, S.A. (a) 19,590 $ 1,356,656
Uralita, S.A. 161,650 1,564,125
------------
2,920,781
HEALTHCARE-1.2%
Fabrica Espanol de Productos
Quimicos y Farmaceuticos 28,075 1,222,441
Indo Internacional, S.A. 19,119 709,589
------------
1,932,030
OTHER-1.0%
Asesores Bursatiles
Capital Fund N.V. (d) 25 528,215
Capital Fund II N.V. (d) 25 1,166,638
------------
1,694,853
Total Common Stocks And Other
Investments (cost $113,669,050) 163,047,400
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $ VALUE
- -------------------------------------------------------------------------
RIGHTS-0.1%
HEALTHCARE-0.1%
Fabrica Espanol de Productos Quimicos
y Farmaceuticos, Rts. 6/09/97 (c)
(cost $106,521) 28,075 $ 124,185
TIME DEPOSIT-0.1%
Sumitomo Bank 5.66%, 6/02/97
(cost $100,000) 100 100,000
TOTAL INVESTMENTS-99.0%
(cost $113,875,571) 163,271,585
Other assets less liabilities-1.0% 1,581,662
NET ASSETS-100% $164,853,247
(a) Securities, or portion thereof, with an aggregate market value of
$30,754,120 have been segregated to collateralize forward exchange currency
contracts.
(b) Security represents investment in an affiliate.
(c) Non-income producing security.
(d) Restricted and illiquid securities, valued at fair value. (See Notes A and
E.)
See notes to financial statements.
5
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1997 (UNAUDITED) THE SPAIN FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $113,875,571) $163,271,585
Foreign cash, at value (cost $1,245,221) 1,237,627
Cash 11,401
Receivable for investment securities sold 960,552
Foreign taxes receivable 154,608
Unrealized appreciation of forward exchange
currency contracts 146,181
Interest receivable and other assets 20,645
Total assets 165,802,599
LIABILITIES
Payable for investment securities purchased 412,264
Management fee payable 137,147
Accrued expenses 399,941
Total liabilities 949,352
NET ASSETS $164,853,247
COMPOSITION OF NET ASSETS
Capital stock, at par $ 100,267
Additional paid-in capital 106,918,079
Undistributed net investment income 270,221
Accumulated net realized gain on investments and foreign
currency transactions 8,044,391
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 49,520,289
$164,853,247
NET ASSET VALUE PER SHARE
(based on 10,026,746 shares outstanding) $16.44
See notes to financial statements.
6
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED) THE SPAIN FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of
$300,024) $1,361,792
77,660 $ 1,439,452
EXPENSES
Management fee 735,770
Custodian 160,796
Audit and Legal 67,567
Directors' fees and expenses 66,874
Transfer agency 46,836
Printing 21,101
Registration 10,608
Miscellaneous 3,603
Total expenses 1,113,155
Net investment income 326,297
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Net realized gain on investment transactions 9,397,051
Net realized gain on foreign currency transactions 2,336,985
Net change in unrealized appreciation (depreciation) of:
Investments 19,926,907
Foreign currency denominated assets and liabilities (87,613)
Net gain on investments and foreign currency transactions 31,573,330
NET INCREASE IN NET ASSETS FROM OPERATIONS $31,899,627
See notes to financial statements.
7
STATEMENT OF CHANGES IN NET ASSETS THE SPAIN FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
MAY 31,1997 NOVEMBER 30,
(UNAUDITED) 1996
---------------- --------------
INCREASE IN NET ASSETS FROM OPERATIONS
Net investment income $ 326,297 $ 1,097,373
Net realized gain on investments and
foreign currency transactions 11,734,036 5,150,521
Net change in unrealized appreciation of
investments and foreign currency
denominated assets and liabilities 19,839,294 23,549,203
Net increase in net assets from operations 31,899,627 29,797,097
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income (1,554,146) (300,802)
Total increase 30,345,481 29,496,295
NET ASSETS
Beginning of year 134,507,766 105,011,471
End of period (including undistributed net
investment income of $270,221 and
$1,498,070, respectively) $164,853,247 $134,507,766
See notes to financial statements.
8
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997 (UNAUDITED) THE SPAIN FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
The Spain Fund, Inc. (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. In determining fair value, consideration is given to cost,
operating and other financial data of the issuer. 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.
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. Purchases and sales of portfolio securities are translated at the
rates of exchange prevailing when such securities were acquired or sold. Income
and expenses are translated at rates of exchange prevailing when accrued. Net
realized gain on foreign currency transactions 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 forward exchange currency 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, 1997 was 144.687 ESP to
U.S. $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 provisions 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 INVESTMENT TRANSACTIONS
Dividend income is recorded on the ex-dividend date or as soon as the Fund is
informed of the dividend. Interest income is accrued daily. Investment
transactions are accounted for on the date securities are purchased or sold.
Realized gains and losses from security and 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 tax regulations, which may differ from generally accepted
accounting principles.
For federal income tax purposes, the Fund's distributions of income and capital
gains are subject to recharacterization, which may include a tax return of
capital, at the end of the year to reflect the final investment results for
that year.
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.
9
NOTES TO FINANCIAL STATEMENTS (CONTINUED) THE SPAIN FUND
_______________________________________________________________________________
The Fund and the Investment Manager have entered into a Sub-Advisory Agreement
with Privanza Banco Personal, S.A. (the "Sub-Adviser"). Under this agreement
the Sub-Adviser receives a fee at the annual rate of .25 of 1% of the Fund's
average weekly net assets. All amounts paid to the Sub-Adviser are payable by
the Investment Manager from its fee. An officer of the Fund is a director of
the Sub-Adviser.
Under the terms of a Shareholder Inquiry Agency Agreement with Alliance Fund
Services, Inc. ("AFS"), an affiliate of the Investment Manager, the Fund
reimburses AFS for costs relating to servicing phone inquiries for the Fund.
The Fund reimbursed AFS $1,125 during the six months ended May 31, 1997.
Banco Bilbao Vizcaya, an affiliate of the Sub-Adviser, serves as subcustodian
of the Fund. Fees paid to the sub-custodian are payable by the custodian from
its fee. For the six months ended May 31, 1997, the Fund earned $22,821 of
interest income on cash balances maintained at the subcustodian.
Brokerage commissions paid on investment transactions for the six months ended
May 31, 1997 amounted to $137,147 of which $3,195 was paid to Banco Bilbao
Vizcaya.
NOTE C: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments
and U.S. government securities) aggregated $36,055,128 and $35,041,131,
respectively, for the six months ended May 31, 1997. There were no purchases or
sales of U.S. government or government agency obligations for the six months
ended May 31, 1997.
At May 31, 1997, the cost of securities for federal income tax purposes was
$113,876,832. Accordingly, gross unrealized appreciation of investments was
$53,291,476 and gross unrealized depreciation of investments was $3,896,723
resulting in net unrealized appreciation of $49,394,753 (excluding foreign
currency). At November 30, 1996, the Fund had a total capital loss carryforward
of $3,414,457 of which $2,121,153 expires in the year 2001 and $1,293,304
expires in the year 2003. No capital gain distribution is expected to be paid
to shareholders until future net gains have been realized in excess of such
carryforward.
FORWARD EXCHANGE CURRENCY CONTRACTS
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 open 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 a contract and from
unanticipated movements in the value of a foreign currency relative to the U.S.
dollar.
At May 31, 1997, the Fund had outstanding forward exchange currency contracts
as follows:
CONTRACT VALUE ON U.S. $
AMOUNT ORIGINATION CURRENT UNREALIZED
(000) DATE VALUE APPRECIATION
-------------- ------------ ------------ ------------
FOREIGN CURRENCY
SALE CONTRACT
Spanish Pesetas
expiring 6/30/97 3,169,000,000 $22,052,888 $21,906,707 $146,181
10
THE SPAIN FUND
_______________________________________________________________________________
NOTE D: CAPITAL STOCK
There are 100,000,000 shares of $.01 par value common stock authorized. At May
31, 1997, 10,026,746 shares were outstanding.
NOTE E: RESTRICTED SECURITIES
DATE ACQUIRED COST
------------- -----------
Asesores Bursatiles Capital Fund, N.V. 10/29/90 $1,394,015
Asesores Bursatiles Capital Fund II, N.V. 5/24/94 1,067,792
Unidad Editorial S.A. Series A 12/12/89 513,710
Unidad Editorial S.A. Series A 9/30/92 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, 1997 was $3,366,279, representing 2.0%
of net assets.
NOTE F: CONCENTRATION OF RISK
Investment in the Fund's shares requires consideration of certain factors that
are not typically associated with investments in U.S. equity securities such as
currency fluctuations, potential price volatility, lower liquidity and
concentration of the Spanish equities market and limitations on the
concentration of investment in the equity of securities of companies in certain
industry sectors. The possibility of political and economic instability of
government supervision and regulation of the market may further affect the
Fund's investments.
11
FINANCIAL HIGHLIGHTS THE SPAIN FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
MAY 31, YEAR ENDED NOVEMBER 30,
1997 ---------------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year $13.41 $10.47 $9.96 $9.49 $8.28 $11.65
INCOME FROM INVESTMENT OPERATIONS
Net investment income .03 .11 .09 .05 .10 .16
Net realized and unrealized gain (loss)
on investment and foreign currency
transactions 3.15 2.86 .42 .88 1.29 (3.16)
Net increase (decrease) in net asset
value from operations 3.18 2.97 .51 .93 1.39 (3.00)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income (.15) (.03) -0- (.10) (.17) (.15)
Distributions in excess of net
investment income -0- -0- -0- (.05) -0- -0-
Distributions from net realized gain on
investments and foreign currency
transactions -0- -0- -0- (.31) (.01) (.22)
Total dividends and distributions (.15) (.03) -0- (.46) (.18) (.37)
Net asset value, end of period $16.44 $13.41 $10.47 $9.96 $9.49 $8.28
Market value, end of period $13.375 $10.75 $8.625 $9.125 $9.625 $8.375
TOTAL RETURN
Total investment return based on (a):
Market value 26.04% 25.03% (5.48)% (1.29)% 17.31% (34.82)%
Net asset value 24.19% 28.48% 5.12% 9.28% 16.99% (26.71)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $164,853 $134,508 $105,011 $99,886 $95,058 $82,920
Ratio of expenses to average net assets 1.52%(b) 1.73% 2.07% 2.09% 2.24% 2.34%
Ratio of net investment income to
average net assets .44%(b) .93% .89% .53% 1.10% 1.50%
Portfolio turnover rate 48% 44% 38% 22% 65% 43%
Average commission rate paid(c) $.0731 $.0618 -- -- -- --
</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 business
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 and Cash Purchase Plan. Generally, total
investment return based on net asset value will be higher than total investment
return based on market value in periods 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 years. Conversely, total investment
return based on net asset value will be lower than total investment return
based on market value in periods 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 years.
(b) Annualized.
(c) For fiscal years beginning on or after September 1, 1995, a fund is
required to disclose its average commission rate per share for trades on which
commissions are charged. This amount includes commissions paid to foreign
brokers, which may materially affect the rate shown. Amounts paid in foreign
currencies have been converted into U.S. dollars using the prevailing exchange
rate on the date of the transaction.
12
THE SPAIN FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
DAVE H. WILLIAMS, CHAIRMAN AND PRESIDENT
ANGEL CORCOSTEGUI (1)
H.R.H. PILAR DE BORBON Y BORBON (1)
INMACULADA DE HABSBURGO-LORENA (1)
ENRIQUE L. FEVRE
IGNACIO GOMEZ-ACEBO (1)
DR. JAMES M. HESTER (1)
DR. MARILYN PERRY (1)
FRANCISCO GOMEZ ROLDAN (1)
JUAN MANUEL SAINZ DE VICUNA (1)
DR. REBA W. WILLIAMS
CARLOS DELCLAUX ZULUETA
OFFICERS
NORMAN S. BERGEL, VICE PRESIDENT
MARK H. BREEDON, VICE PRESIDENT
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
EDMUND P. BERGAN, JR., SECRETARY
VINCENT S. NOTO, 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
(1) Member of the Audit Committee
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 on the open market.
This report, including the financial statements therein is transmitted to
the shareholders of The Spain Fund 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.
13
THE SPAIN FUND
Summary of General Information
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to seek long-term capital appreciation
through investment primarily in the equity securities of Spanish companies.
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 NYSE trading 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, each Sunday in THE NEW YORK TIMES and each
Saturday in 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
1345 Avenue of the Americas
New York, New York 10105
ALLIANCE CAPITAL
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER, ALLIANCE
CAPITAL MANAGEMENT L.P.
SPNSR
