THE AUSTRIA FUND
SEMI-ANNUAL REPORT
FEBRUARY 29,1996
ALLIANCECAPITAL
MUTUAL FUNDS WITHOUT THE MYSTERY.
LETTER TO SHAREHOLDERS THE AUSTRIA FUND
_______________________________________________________________________________
April 16, 1996
Dear Shareholder:
The formalization of the federal budget for 1996 between the SPO (Social
Democrats) and the OVP (Conservatives) following the December election opened
the way for the resuscitation of the coalition between the two parties.
The overall budget package is designed to raise around 100 billion Austrian
schillings over the next two years and consequently reduce the budget deficit
to below 3% of gross domestic product (GDP) by 1997 within the constraints of
the Maastricht criteria for European monetary union.
GOVERNMENT SPENDING REDUCTIONS
Encouragingly, approximately two thirds of the amount to be saved will be
derived from government spending cuts and only one third from higher taxation.
The willingness of the government to attack Austria's generous social welfare
provisions is an encouraging aspect for the future competitiveness of the
Austrian economy. Additionally it has helped alleviate many investors' fears as
to the socialists' propensity to tax and spend following their improved showing
in the December election. Moreover, with this new budget it appears that
Austria will be one of the very few European nations likely to comply fully
with the Maastricht criteria for convergence in 1997.
However, this contraction in spending is taking place in the face of a slowing
economy. A weak fourth quarter of 1995 brought GDP growth for the year to only
1.8% and consensus expectations for 1996, currently at around 1.5%, are likely
to be reduced further as all indications are that economic activity slowed
again in the first quarter of the year.
MONETARY EASING LIKELY
While growth estimates have been cut so have inflationary expectations. It is
now probable that consumer prices will rise by only around 2% in 1996 and that
consequently there is further scope for monetary easing over the course of the
year.
Clearly the extent of any relaxation will depend on events in Germany given the
Austrian schilling's link to the Deutschemark, but in our view a meaningful
reduction in rates is probable.
It is the prospect of falling interest rates that makes the outlook for stock
prices so promising. Certainly corporate profits growth is likely only to be in
the low single figures for 1996, but the potential for some expansion of
multiples in the face of lower interest rates is considerable.
With the stock market standing at a prospective cash flow multiple of around
only 4.5 times, Austria remains among the lowest valued markets in Europe.
Given the progress made in recent years on privatization, accounting standards,
earnings growth and shareholder focus, the low valuation level appears
unjustifiably pessimistic.
We continue to attribute this phenomenon largely to the reluctance of Austrian
residents to consider equities as a form of long-term savings. It is
anticipated that this situation will improve in the future, particularly given
the recent equalization of tax treatment between alternative savings vehicles,
including equities.
PRIVATIZATION TRANSACTIONS SCHEDULED
Austria's aggressive privatization program is likely to proceed apace in 1996,
which should also continue to attract further interest in the stock market. The
government-owned OIAG is currently preparing for the sale of a further stake of
OMV, the energy group with interests in the chemicals and plastics businesses.
The excellent reception given to the recent placing of a further tranche of the
specialist steel group Bohler Uddeholm should ensure a strong interest in the
OMV transaction.
In light of further evidence of an economic slowdown within Austria we have
re-directed your Fund's portfolio towards more defensive stocks where we
anticipate the rewards to be a maximum participation in multiple expansion and
minimal sensitivity to the economic cycle.
INVESTMENT RESULTS
For the six months ended February 29, 1996, The Austria Fund returned +8.5% on
a net asset value basis, which compares with the Credit Aktien Index return of
+2.1% over the same period with net dividends reinvested. For the twelve months
ended February 29, The Austria Fund achieved a total return of +15.3%, which
compares favorably with the +2.1% return for the benchmark
1
THE AUSTRIA FUND
Index. (The Index returns were the same for both periods.) The Fund's
outperformance in recent periods is due to our continued focus on growth
stocks, which are relatively underweighted in the Index.
Thank you for your continued interest in The Austria Fund. We look forward to
reporting to you again on market activity and the Fund's investment results in
coming periods.
Sincerely,
Dave H. Williams
Chairman and President
Mark H. Breedon
Vice President and Portfolio Manager
2
TEN LARGEST HOLDINGS
FEBRUARY 29, 1996 (UNAUDITED) THE AUSTRIA FUND
_______________________________________________________________________________
COMPANY U.S. $VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
VA Technologie AG $12,778,153 10.1%
OEMV AG 12,665,727 10.0
Oest El Wirtsch A Verbundgslschft 8,145,990 6.4
EVN 7,882,341 6.2
Burgenland Holdings 6,467,978 5.1
BauMax Vertiebs pfd 6,110,497 4.8
Weinerberger Baustoff Industrie AG 5,646,325 4.4
Creditanstalt-Bankverein 5,502,508 4.3
Flughafen Wien AG 5,470,769 4.3
Austria Mikro Systeme International AG 5,329,833 4.2
$76,000,121 59.8%
3
PORTFOLIO OF INVESTMENTS
FEBRUARY 29, 1996 (UNAUDITED) THE AUSTRIA FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- ------------------------------------------------------------------------
COMMON AND PREFERRED STOCKS AND
OTHER INVESTMENTS-97.5%
CAPITAL GOODS-24.3%
ENGINEERING & CONSTRUCTION-18.8%
Bau Holdings AG 74,480 $ 4,704,265
Strabag Oesterreich AG 11,040 747,491
VA Technologie AG (b) 101,000 12,778,153
Weinerberger Baustoff Industrie AG 25,000 5,646,325
-----------
23,876,234
MACHINERY-1.8%
Steyr Daimler Puch Aktiengesells* 150,000 2,306,892
PAPER & FOREST PRODUCTS-2.4%
Mayer-Melnhof Karton AG 60,000 3,000,411
STEEL-1.3%
Voest-Alpine Stahl Ag 49,500 1,670,973
-----------
30,854,510
CONSUMER PRODUCTS & SERVICES-21.1%
AIRLINES-5.3%
Austrian Airlines Oesterreichische
Luftverkehrs AG* 7,000 1,289,829
Flughafen Wien AG 80,000 5,470,769
-----------
6,760,598
FOOD & BEVERAGES-3.5%
Agrana Beteiligungs AG pfd 13,900 324,019
Brau-Union Goess-Reininghaus
Osterreichische Brau AG 40,000 2,298,187
Oesterreichische Brau-Beteillgungs AG (b) 25,382 1,301,190
Royal Tokaj Wine Co., Ltd.*(a)(f) 275,254 489,303
-----------
4,412,699
HEALTH CARE-2.9%
Immuno International AG (c) 6,250 3,675,244
RETAIL-8.0%
BauMax Vertiebs pfd (b) 159,530 6,110,497
Inku AG 15,000 459,928
Wolford AG* 20,000 3,617,517
-----------
10,187,942
TEXTILE PRODUCTS-1.4%
Graboplast Textile & Artificial Leather
Manufacturing, Ltd. Serial A*(d) 100,000 1,799,486
26,835,969
UTILITIES-17.7%
Burgenland Holdings AG 143,190 6,467,978
EVN (b) 59,440 7,882,341
Oest El Wirtsch A Verbundgslschft (b) 123,850 8,145,990
-----------
22,496,309
BASIC INDUSTRIES-17.1%
ENERGY-10.0%
OEMV AG (b) 135,695 12,665,727
TECHNOLOGY-7.1%
Austria Mikro Systeme International AG 36,492 5,329,833
Scala /Overseas/ Ece Bearer Sh (a) 43,500 3,681,597
-----------
9,011,430
-----------
21,677,157
FINANCIAL SERVICES-15.3%
BANKING-8.4%
Bank Austria AG pfd 78,230 3,503,429
Bank Fuer Oberoesterreich und Salzburg 30,000 1,680,114
Creditanstalt-Bankverein 88,473 5,502,508
-----------
10,686,051
4
THE AUSTRIA FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- ------------------------------------------------------------------------
INSURANCE-6.9%
Erste Allegemeine Generali
AG (b) 10,055 $ 3,480,829
pfd. 4,507 784,256
Wiene Staedtische Allgemeine Ver 47,000 4,496,070
-----------
8,761,155
-----------
19,447,206
OTHER INVESTMENTS-2.0%
East Europe Development Fund, Ltd.* (a)(e) 40,000 945,000
First Hungary Fund, Ltd.(a)(e) 1,500 1,538,100
-----------
2,483,100
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $VALUE
- ------------------------------------------------------------------------
Total Common & Preferred Stocks and
Other Investments
(cost $107,471,214) $123,794,251
TIME DEPOSIT-0.5%
Canadian Imperial Bank of Commerce
5.44%, due 3/01/1996
(cost $600,000) 600 600,000
TOTAL INVESTMENTS-98.0%
(cost $108,071,214) 124,394,251
Other assets less liabilities-2.0% 2,506,021
NET ASSETS-100% $126,900,272
* Non-income producing security.
(a) Illiquid security, valued at fair value (see Note A and E).
(b) Securities (with an aggregate market value of $35,990,988) partially or
fully segregated to collateralize a forward exchange currency contract.
(c) Swiss Franc denominated security.
(d) Hungarian Forint denominated security.
(e) U.S. Dollar denominated security.
(f) British pounds denominated security.
See notes to financial statements.
5
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 29, 1996 (UNAUDITED) THE AUSTRIA FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $108,071,214) $124,394,251
Cash, at value (cost $2,185,834) 2,151,679
Receivable for investment securities sold 1,507,864
Unrealized appreciation of forward exchange currency contract 319,339
Foreign taxes receivable 7,023
Prepaid expenses and other assets 30,212
Total assets 128,410,368
LIABILITIES
Payable for investment securities purchased 1,193,923
Advisory fee payable 95,782
Sub-advisory fee payable 20,402
Accrued expenses 199,989
Total liabilities 1,510,096
NET ASSETS $126,900,272
COMPOSITION OF NET ASSETS
Capital stock, at par $ 117,030
Additional paid-in capital 125,342,532
Accumulated net investment loss (3,851,072)
Accumulated net realized loss on investments and
foreign currency transactions (11,311,385)
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 16,603,167
$126,900,272
NET ASSET VALUE PER SHARE (based on 11,703,031 shares outstanding) $10.84
See notes to financial statements.
6
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 29, 1996 (UNAUDITED) THE AUSTRIA FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld of $19,950) $161,413
Interest 20,813 $ 182,226
EXPENSES
Advisory fee 566,071
Sub-advisory fee 120,253
Audit and legal 165,024
Custodian 130,228
Directors' fees and expenses 128,579
Printing 33,656
Transfer agency 27,115
Registration 10,321
Miscellaneous 5,015
Total expenses 1,186,262
Net investment loss (1,004,036)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized gain on investments 4,851,661
Net realized loss on foreign currency transactions (423,815)
Net change in unrealized appreciation of investments 6,026,677
Net change in unrealized depreciation of foreign
currency denominated assets and liabilities 513,575
Net gain on investments and foreign currency 10,968,098
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 9,964,062
See notes to financial statements.
7
STATEMENT OF CHANGES IN NET ASSETS THE AUSTRIA FUND
_______________________________________________________________________________
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 29,1996 AUGUST 31,
(UNAUDITED) 1995
-------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income (loss) $ (1,004,036) $ 27,204
Net realized gain on investments and foreign
currency transactions 4,427,846 1,666,950
Net change in unrealized appreciation of
investments and foreign currency denominated
assets and liabilities 6,540,252 (1,005,651)
Net increase in net assets from operations 9,964,062 688,503
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income -0- (243,171)
Dividends in excess of net investment income -0- (49,405)
CAPITAL STOCK TRANSACTIONS
Proceeeds from sale of shares of common stock
in rights offering -0- 25,874,456
Offering costs charged to additional paid-in
capital -0- (512,347)
Reimbursement of expenses -0- 57,614
Total increase 9,964,062 25,815,650
NET ASSETS
Beginning of year 116,936,210 91,120,560
End of period $126,900,272 $116,936,210
See notes to financial statements.
8
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 1996 (UNAUDITED) THE AUSTRIA FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
The Austria Fund, Inc. (the 'Fund'), was incorporated in the State of Maryland
on December 5, 1988 as a non-diversified, closed-end management investment
company. The following is a summary of significant accounting policies followed
by the Fund.
1. SECURITY VALUATION
Investments are stated at value. All investments for which market quotations
are readily available are valued at the closing price on the primary exchange
on which they are traded on the day of valuation or, if no such closing price
is available at the last bid price quoted on such day. Securities for which
current market quotations are not readily available and restricted securities
are valued in good faith at fair value using methods determined by the Board of
Directors. In determining fair value, consideration is given to cost, operating
and other financial data. Short-term debt securities that 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 foreign currencies are translated into
U.S. dollars at the mean of the quoted bid and asked price of the respective
currency 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 loss on foreign currency transactions of $423,815 represents net
foreign exchange gains and losses from the 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 receivable
recorded on the Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net 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 Fund does not isolate
that portion of the results of operations arising as a result of changes in the
foreign exchange rates from the fluctuations arising from changes in the market
prices of securities during the period.
The exchange rate for the Austrian Schilling at February 29, 1996 was ATS 10.34
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
shareholders. Therefore, no provision for U.S. income or excise taxes is
required. Withholding taxes on foreign interest and dividends have been
provided for in accordance with the applicable tax requirements.
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 security and
currency transactions are calculated on the identified cost basis. The Fund
accretes discounts on short-term securities as adjustments to interest income.
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 principals.
NOTE B: MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of 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 annual rate of 1% of the Fund's
average weekly net assets up to $50 million and .90 of 1% of the Fund's average
weekly net assets in excess of $50 million.
9
NOTES TO FINANCIAL STATEMENTS (CONTINUED) THE AUSTRIA FUND
_______________________________________________________________________________
Under the sub-advisory agreement, the Fund will pay BAI Fondaberatung
Ges.m.b.H. a fee, calculated weekly and paid monthly, at an annual rate of .20
of 1% of the Fund's average weekly net assets.
GiroCredit serves as the sub-custodian of the Fund. Brokerage commissions paid
on securities transactions for the six months ended February 29, 1996 amounted
to $64,307, of which none was paid to GiroCredit.
NOTE C: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
aggregated $30,245,334 and $25,842,777 respectively, for the six months ended
February 29, 1996.
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 and to hedge certain firm purchase and sale commitments denominated in
foreign currencies. 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 contract is included in net realized gain or
loss from 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.
The Fund's custodian will place and maintain cash not available for investment
or securities in a separate account of the Fund having a value equal to the
aggregate amount of the Fund's commitments under forward exchange currency
contracts entered into with respect to position hedges.
Risks may arise from the potential inability of a 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 February 29, 1996, the Fund had an outstanding forward exchange currency
contract, to sell 253,050,000 Austrian Schillings expiring on March 29, 1996,
with a cost of $24,833,170. The market value of the forward exchange currency
contract at February 29, 1996 was $24,513,831, resulting in unrealized
appreciation of $319,339.
At February 29, 1996, the cost of securities for federal income tax purposes
was the same as the cost for financial purposes. Accordingly, gross unrealized
appreciation of investments was $21,406,524 and gross unrealized depreciation
of investments was $5,083,487 resulting in net unrealized appreciation of
$16,323,037 (excluding foreign currency).
At August 31, 1995, the Fund had a capital loss carryforward of $15,103,188 of
which $6,545,520 expires in the year 2001 and $8,557,668 expires in the year
2002. The Fund utilized a capital loss carryover of $2,682,853 to offset gains
realized during the year ended August 31, 1995. No capital gain distribution is
expected to be paid to shareholders until future net gains have been realized
in excess of the carry forward. Currency losses incurred after October 31,
1994, within the taxable year are deemed to arise on the first business day of
the Fund's next taxable year. In accordance with the Internal Revenue Code, the
Fund incurred and will elect to defer a net foreign currency loss of $1,137,036
during such period in fiscal 1995.
NOTE D: CAPITAL STOCK
There are 100,000,000 shares of $.01 par value common stock authorized. Of the
11,703,031 shares outstanding at February 29, 1996, the Investment Manager
owned 9,000 shares.
10
THE AUSTRIA FUND
_______________________________________________________________________________
NOTEE: ILLIQUID SECURITIES
DATE ACQUIRED U.S. $COST
---------------- ----------
East Europe Development Fund, Ltd. 1/07/91 $ 400,000
First Hungary Fund, Ltd. 10/20/89 1,500,000
Royal Tokaj Wine Company, Ltd. 7/28/94 437,655
Scala/Overseas Ece. Ltd. 6/29/95-10/31/95 965,721
The securities shown above are illiquid and have been valued at fair value in
accordance with the procedures described in Note A.
The value of these securities at February 29, 1996 was $6,654,000, representing
5.2% of total assets.
11
FINANCIAL HIGHLIGHTS THE AUSTRIA FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FEBRUARY 29, YEAR ENDED AUGUST 31,
1996 ---------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
------------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.99 $11.03 $ 9.62 $ 8.89 $10.89 $14.54
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (.09) -0- (.05) .01 .01 (.04)
Net realized and unrealized gain (loss)
on investments and foreign
currency transactions .94 (.11) 1.55 .74 (1.87) (3.19)
Net increase (decrease) in net asset
value from operations .85 (.11) 1.50 .75 (1.86) (3.23)
LESS: DIVIDENDS AND DISTRIBUTIONS
Dividends from net investment income -0- (.02) (.01) (.01) -0- (.06)
Dividends in excess of net investment
income -0- -0- (.06) -0- -0- -0-
Distributions from net realized gains
on investments and foreign
currency transactions... -0- -0- (.02) (.01) (.14) (.36)
Total dividends and distributions -0- (.02) (.09) (.02) (.14) (.42)
CAPITAL SHARE TRANSACTIONS
Dilutive effect of rights offering -0- (.86) -0- -0- -0- -0-
Offering costs charged to additional
paid-in capital -0- (.05) -0- -0- -0- -0-
Total capital share transactions -0- (.91) -0- -0- -0- -0-
Net asset value, end of period $10.84 $9.99 $11.03 $9.62 $8.89 $10.89
Market value, end of period $8.88 $8.25 $10.88 $10.13 $7.75 $9.50
TOTAL RETURN(A)
Total investment return based on:
Market value 7.73% (21.51)% 8.37% 30.96% (17.16)% (11.77)%
Net asset value 8.51% (9.15)% 15.69% 8.47% (17.11)% (21.75)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $126,900 $116,936 $91,121 $79,464 $73,418 $89,927
Ratio of expenses to average net assets 1.97%(b) 1.71% 1.87% 2.13% 1.92% 1.78%
Ratio of net investment income (loss)
to average net assets (1.67)%(b) .02% (.51)% .09% .09% (.35)%
Portfolio turnover rate 43% 27% 36% 42% 56% 34%
</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 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 periods. 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 periods. Total investment return for a period of less than one year is not
annualized.
(b) Annualized.
12
THE AUSTRIA FUND
_______________________________________________________________________________
SUPPLEMENTAL PROXY INFORMATION
The Annual Meeting of Shareholders of the Austria Fund, Inc. was held on
Tuesday, December 19, 1995. The description of each proposal and number of
shares are as follows:
SHARES VOTED
SHARES WITHOUT
VOTED FOR AUTHORITY
- -------------------------------------------------------------------------------
1.To elect directors: Class Two Directors
(term expires 1998)
Dave H. Williams 6,929,552 237,377
Inmaculada de Habsburgo-Lorena 6,907,467 259,462
Dipl. Ing. Peter Mitterbauer 6,911,673 255,256
Mag. Reinhard Ortner 6,911,573 255,356
Dr. Maria Schaumayer 6,911,815 255,114
Dr. Walter Wolfsberger 6,910,973 255,956
SHARES SHARES VOTED SHARES VOTED
VOTED FOR AGAINST ABSTAIN
- -------------------------------------------------------------------------------
2. To ratify the selection of Price
Waterhouse LLP as the Fund's independent
auditors for the Fund's fiscal year
ending August 31, 1996: 7,035,127 98,246 33,556
13
THE AUSTRIA FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
DAVE H. WILLIAMS, CHAIRMAN AND PRESIDENT
JOHN D. CARIFA
H.R.H. PILAR DE BORBON Y BORBON
WILLIAM H. M. DE GELSEY
INMACULADA DE HABSBURGO-LORENA
DR. HANS HAUMER
DIPL. ING. HELLMUT LONGIN
DIPL. ING. PETER MITTERBAUER
PETER NOWAK
MAG. REINHARD ORTNER
DR. MARIA SCHAUMAYER
DR. JOSEF VLCEK
REBA W. WILLIAMS
DR. WALTER WOLFSBERGER
OFFICERS
NORMAN S. BERGEL, VICE PRESIDENT
MARK H. BREEDON, VICE PRESIDENT
NICHOLAS CROSSLAND, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER &CHIEF FINANCIAL OFFICER
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 Americas
New York, NY 10036-2798
DIVIDEND PAYING AGENT, TRANSFER AGENT AND REGISTRAR
STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
Boston, MA 02110
The financial information included 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 statement herein, is transmitted to the
shareholders of The Austria Fund, Inc. for their information. This is not a
prospectus, circular or representation intended for use in the purchases of
shares of the Fund or any securities mentioned in this report.
14
THE AUSTRIA 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
AustriaFd. The Fund's NYSE trading symbol is 'OST'. 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 AUSTRIA FUND
1345 Avenue of the Americas
New York, New York 10105
ALLIANCECAPITAL
MUTUAL FUNDS WITHOUT THE MYSTERY.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER, ALLIANCE
CAPITAL MANAGEMENT L.P.
AUSSR
