<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ X / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
The Austria Fund, Inc.
- ----------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X / No fee required
/ / Fee computed on table below per Exchange Act Rule 14a-
6(i)(1) and 0-11.
(1) Title of each class of securities to which
transaction applies:
- ----------------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
- ----------------------------------------------------------------
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is
calculated and state how it was determined):
- ----------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- ----------------------------------------------------------------
(5) Total fee paid:
- ----------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
<PAGE>
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
THE AUSTRIA FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
Toll Free (800) 221-5672
November __, 1999
To the Stockholders of The Austria Fund, Inc. (the "Fund"):
The accompanying Notice of Meeting and Proxy Statement present proposals to
be considered at the Fund's Annual Meeting of Stockholders on December 15, 1999.
The Board of Directors recommends that you elect to the Board the current
Directors who are standing for election (Proposal 1) and ratify the Board's
selection of PricewaterhouseCoopers LLP as the Fund's independent accountants
for its 2000 fiscal year (Proposal 2).
The Notice of Meeting and Proxy Statement also include a proposal (Proposal
3) which the Fund understands a stockholder intends to present at the Annual
Meeting and which seeks to remove Alliance Capital Management L.P. ("Alliance")
as the Fund's Investment Manager. The proposal would sever the Fund's
relationship with Alliance, thus disrupting the Fund's investment program and
creating a period of uncertainty which could substantially harm your investment.
[For the reasons indicated in the Proxy Statement, a majority of your Board of
Directors urges you to vote against Proposal Three.]
We welcome your attendance at the Annual Meeting. If you are unable to
attend, we encourage you to vote your proxy promptly, in order to spare the Fund
additional proxy solicitation expenses. Shareholder Communications Corporation
("SCC"), a professional proxy solicitation firm, has been selected to assist
stockholders in the voting process. As the date of the Annual Meeting
approaches, if we have not yet received your proxy, you may receive a telephone
call from SCC reminding you to exercise your right to vote. If you have any
questions regarding the Annual Meeting agenda or how to give your proxy, please
call SCC at [(800) [ ] ext.
[ ]].
Sincerely,
Dave H. Williams
Chairman and President
<PAGE>
LOGO
The Austria Fund, Inc.
- -------------------------------------------------------------------------------
1345 Avenue of the Americas, New York, New York 10105
Toll Free (800) 221-5672
- -------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
December 15, 1999
To the Stockholders of The Austria Fund, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of The Austria Fund, Inc., a Maryland corporation (the "Fund"), will
be held at the offices of the Fund, 1345 Avenue of the Americas, 33rd Floor, New
York, New York 10105, on Wednesday, December 15, 1999 at 11:00 a.m., for the
following purposes, all of which are more fully described in the accompanying
Proxy Statement dated November ___, 1999.
1. To elect seven Directors of the Fund, each to hold office for a term of
one, two or three years, as the case may be, and until his or her successor is
duly elected and qualifies;
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants for the Fund for its fiscal year ending August 31, 2000;
3. To act upon, if presented, a stockholder proposal to terminate the
Fund's advisory contract; and
4. To transact such other business as may properly come before the Meeting.
The Board of Directors has fixed the close of business on October 1, 1999
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Meeting or any postponement or adjournment thereof. The
enclosed proxy is being solicited on behalf of the Board of Directors.
By Order of the Board of Directors,
Edmund P. Bergan, Jr.
Secretary
New York, New York
November ___, 1999
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
Please indicate your voting directions on the enclosed proxy card, sign and
date it, and return it in the envelope provided, which needs no postage if
mailed in the United States. Your vote is very important no matter how many
shares you own. Please mark and mail your proxy promptly in order to save the
Fund any additional cost of further proxy solicitation and in order for the
Meeting to be held as scheduled.
- --------------------------------------------------------------------------------
(R) This registered service mark used under license from the owner, Alliance
Capital Management L.P.
<PAGE>
PROXY STATEMENT
THE AUSTRIA FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
----------
ANNUAL MEETING OF STOCKHOLDERS
December 15, 1999
----------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of The Austria Fund, Inc., a
Maryland corporation (the "Fund"), to be voted at the Annual Meeting of
Stockholders of the Fund (the "Meeting"), to be held at the offices of the Fund,
1345 Avenue of the Americas, 33rd Floor, New York, New York 10105, on Wednesday,
December 15, 1999 at 11:00 a.m. The Notice of Meeting, this Proxy Statement and
the accompanying Proxy Card are being mailed to stockholders on or about
November ___, 1999.
The Board of Directors has fixed the close of business on October 1, l999
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Meeting and at any postponement or adjournment thereof (the
"Record Date"). The outstanding voting shares of the Fund as of the Record Date
consisted of 7,947,357 shares of common stock, each share being entitled to one
vote. All properly executed and timely received proxies will be voted at the
Meeting in accordance with the instructions marked thereon or otherwise provided
therein. Accordingly, unless instructions to the contrary are marked, proxies
solicited on behalf of the Board of Directors will be voted for the election of
seven Directors (Proposal One), for the ratification of the selection of
PricewaterhouseCoopers LLP as the Fund's independent accountants for its fiscal
year ending August 31, 2000 (Proposal Two), and, if presented, [against] [for]
the stockholder proposal (Proposal Three) to terminate the Fund's advisory
contract. Any stockholder may revoke that stockholder's proxy at any time prior
to the exercise thereof by giving written notice to the Secretary of the Fund at
1345 Avenue of the Americas, New York, New York 10105, by signing another proxy
of a later date or by personally voting at the Meeting.
Properly executed proxies may be returned with instructions to abstain
from voting or withhold authority to vote (an "abstention") or represent a
broker "non-vote" (which is a proxy from a broker or nominee indicating that the
broker or nominee has not received instructions from the beneficial owner or
other person entitled to vote shares on a particular matter with respect to
which the broker or nominee does not have discretionary power to vote). The
shares represented by such a proxy, with respect to Proposals One and Two, which
are matters to be determined by a plurality or specified majority of the votes
cast on such matters, will be considered present for purposes of determining the
existence of a quorum for the transaction of business. Those shares, not being
cast, will not affect the outcome of such matters. With respect to Proposal
Three, the adoption of which requires the affirmative vote of a specified
proportion of Fund shares, an abstention or broker non-vote will be considered
present for purposes of determining the existence of a quorum but will have the
effect of a vote against Proposal Three. If any proposal, other than Proposals
One, Two and Three, properly comes before the Meeting, shares represented by
proxies will be voted on all such proposals in the discretion of the person or
persons voting the proxies.
<PAGE>
A quorum for the Meeting will consist of the presence in person or by proxy
of the holders of a majority of the shares entitled to vote at the Meeting.
Whether or not a quorum is present at the Meeting, if sufficient votes in favor
of the position recommended by the Board of Directors on any proposal described
in the Proxy Statement are not timely received, the persons named as proxies
may, but are under no obligation to, with no other notice than announcement at
the Meeting, propose and vote for one or more adjournments of the Meeting for up
to 120 days after the Record Date to permit further solicitation of proxies. The
Meeting may be adjourned with respect to fewer than all the proposals in the
Proxy Statement, and a stockholder vote may be taken on less than all of the
proposals prior to adjournment if sufficient votes have been received for
approval thereof. Shares represented by proxies indicating a vote contrary to
the position recommended by a majority of the Board of Directors on a proposal
will be voted against adjournment as to that proposal.
The solicitation of proxies on behalf of the Board will be by mail, and the
cost will be borne by the Fund. The Fund has engaged Shareholder Communications
Corporation, 17 State Street, New York, New York 10004, to assist the Fund in
soliciting proxies for the Meeting. Shareholder Communications Corporation will
receive a fee of $[ ] for its services plus reimbursement of out-of-pocket
expenses.
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
At the Meeting, five Directors will be elected to serve for terms of three
years, one Director will be elected to serve a term of two years and one
Director will be elected to serve a term of one year and, in each case, until
their successors are elected and qualify. The affirmative vote of a plurality of
the votes cast at the Meeting is required to elect a Director. It is the
intention of the persons named in the enclosed proxy to nominate and vote in
favor of election of the persons listed below.
Pursuant to the charter and Bylaws of the Fund, the Board of Directors has
been divided into three classes. The terms of the members of Class Three will
expire as of the Meeting, the terms of the members of Class One will expire as
of the annual meeting of stockholders for the year 2000, and the terms of the
members of Class Two will expire as of the annual meeting of stockholders for
the year 2001. Upon expiration of the terms of the members of a class as set
forth above, the term of their successors in that class will continue until the
third annual meeting of stockholders following their election and until their
successors are duly elected and qualify. Messrs. John D. Carifa, Thomas G. Lachs
and Andras Simor and Drs. Reba W. Williams and Stefan Zapatocky are currently
the members constituting Class Three; Messrs. Dave H. Williams, William H.M. de
Gelsey and Peter Nowak, Dipl. Ing. Dr. Hellmut Longin and Mag. Reinhard Ortner
are currently the members constituting Class One; and Messrs. Gary A. Bentz,
Ralph W. Bradshaw, William A. Clark, Ronald G. Olin and Dipl. Ing. Peter
Mitterbauer are currently the members constituting Class Two.
Under this classified Board structure, only those Directors in a single
class may be replaced in any one year, and it would require two years to replace
a majority of the Board of Directors (although Maryland law provides that
stockholders may remove Directors under certain circumstances even if they are
not then standing for reelection and, under regulations of the Securities and
Exchange Commission (the "Commission"), procedures are available for including
appropriate stockholder proposals in the Fund's annual proxy statement). This
classified Board structure, which may be regarded as an "anti-takeover"
provision, may make it more difficult for the Fund's stockholders to change the
majority of Directors and, thus, has the effect of maintaining the continuity of
management.
The Board of Directors has nominated Mr. Dave H. Williams for election as a
Director in Class One, Dipl. Ing. Peter Mitterbauer for election as a Director
in Class Two, and Messrs. John D. Carifa, Thomas G. Lachs and Andras Simor and
Drs. Reba W. Williams and Stefan K. Zapatocky each for election as a Director in
Class Three. Each nominee has consented to serve as a Director. The Board of
Directors knows of no reason why any of these nominees would be unable to serve,
but in the event any nominee is unable to serve or for good cause will not
serve, the proxies received indicating a vote in favor of such nominee will be
voted for a substitute nominee as the Board of Directors may recommend.
Earlier this year, the Board of Directors amended the Fund's Bylaws to
require, among other requirements, that to be eligible thereafter for nomination
or election as a Director, an individual must have, or have previously had, a
substantial Austrian connection of a type specified in the amended Bylaws, or
be, or previously have been, connected in a prescribed manner with the
investment adviser or subadviser or an affiliate of either of them. The
Nominating Committee of the Board of Directors, all of the members of which are
not "interested persons" of the Fund under the Investment Company Act of 1940,
as amended (the "Act"), determines whether an individual is so qualified and has
determined that each of the seven nominees named below satisfies the Bylaw
requirements. These Bylaw requirements and other actions taken by certain of the
Directors, including certain of these nominees, are the subject of the lawsuit
referred to below under "Litigation".
Although the Fund is a Maryland corporation, certain of the Fund's
Directors and officers are residents of Austria, Hungary or the United Kingdom,
and substantially all of the assets of such persons may be located outside of
the United States. As a result, it may be difficult for United States investors
to effect service upon such Directors or officers within the United States, or
to realize judgments of courts of the United States predicated upon civil
liabilities of such Directors or officers under the federal securities laws of
the United States. The Fund has been advised that there is substantial doubt as
to the enforceability in Austria, Hungary or the United Kingdom of the civil
remedies and criminal penalties afforded by the federal securities laws of the
United States. Also, it is unclear if extradition treaties now in effect between
the United States and any of Austria, Hungary or the United Kingdom would
subject Directors and officers residing in these countries to effective
enforcement of the criminal penalties of the federal securities laws.
Certain information concerning the Fund's Directors, including the nominees
for election as Directors, is set forth below. Messrs. Dave H. Williams and John
D. Carifa and Dr. Reba W. Williams are each a director or trustee of one or more
other investment companies sponsored by Alliance Capital Management L.P., the
Fund's investment adviser and administrator ("Alliance").
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Year Beneficially owned
Name, age, positions and offices with the first Year term Directly or
Fund, principal occupations during became a as a Director Indirectly as of
the past five years and other Directorships Director will expire October 1, 1999
------------------------------------------- -------- ------------- -------------------
<S> <C> <C> <C>
* Dave H. Williams, Chairman and President, 67. Chairman of the 1989 2000+ 18,000
Board, and until 1998 President, of Alliance Capital Management (Class One)
Corporation ( "ACMC "),** and Director of The
Equitable Companies Incorporated and The Equitable
Life Assurance Society of the United States.
Gary A. Bentz, Director, 43. Vice President and 1999 2001 2,800
Chief Financial Officer of Deep Discount (Class Two)
Advisors, Inc. ("DDA"); Director of Clemente Strategic Value
Fund, Inc.
Ralph W. Bradshaw, Director, 48. Vice President and 1999 2001 354
Secretary of DDA; Director of Clemente Strategic Value Fund, (Class Two)
Inc.
* John D. Carifa, Director, 54. President, Chief Operating 1991 2002+ 1,118
Officer and Director of ACMC. (Class Three)
William A. Clark, Director, 54. Director of Research for 1999 2001 300
DDA; Director of Clemente Strategic Value Fund, Inc. (Class Two)
<FN>
* "Interested person", as defined in the Act, of the Fund because of an
affiliation with Alliance.
** ACMC is the sole general partner of Alliance.
+ If elected at the Meeting.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Year Beneficially owned
Name, age, positions and offices with the first Year term Directly or
Fund, principal occupations during became a as a Director Indirectly as of
the past five years and other Directorships Director will expire October 1, 1999
------------------------------------------- -------- ------------- -------------------
<S> <C> <C> <C>
*** William H.M. de Gelsey, Director, 77. Senior Advisor to the 1991 2000 1,005
Managing Board of CA IB Investmentbank AG since 1997; Senior (Class One)
Advisor to the Managing Board of Creditanstalt AG, Vienna
from 1988 to 1997; prior thereto, Deputy Chairman of Orion
Royal Bank Ltd., London; and currently Director of Okura Ltd.,
Grand Cayman, Provence Europe, Paris, Gedeon Richter
Chemical Works Ltd., Budapest, Royal Tokaji
Boraszari Kft, Mad and CA Management Company Ltd.
++ Thomas G. Lachs, Director, 61. Independent consultant; 1999 2002+ -0-
Executive Director of Oesterreichische Nationalbank (Class One)
from 1982 until 1997.
++ Dipl. Ing. Dr. Hellmut Longin, Director, 65. Honorary Chairman 1989 2000 1,000
of the Board of Radox-Heraklith Industriebeteiligungs A.G.; (Class One)
Chairman, Federation of Mining and Steel Producing Industry
of Austria; Chairman of the Board of Directors of Mining
University of Loeben; Vice-Chairman of the Boards of
Umdasch AG, Zumtobel Holding AG and Zumtobel AG; Vice
President of Federation of Austrian Industry; and
member of the Boards of Federation of Austrian
Industry Eisenhutte Osterreich, Auricon Beteiligungs AG
and Bank Gutmann AG.
++ Dipl. Ing. Peter Mitterbauer, Director, 56. Chairman of the 1989 2001+ 1,080
Executive Board of Miba A.G.; Chairman of the Supervisory (Class Two)
Boards of Miba Gleitlager A.G. and Miba Sintermetall A.G.;
and Member of the Supervisory Boards of Strabag Osterreich
A.G., Teufelberger Holding A.G., Bank fur Oberosterreich
and Salzburg, SCA Laakitchen AG and EA-Generali AG.
++ Peter Nowak, Director, 54. Managing Director of 1990 2000 1,000
CDI-Beteiligungsberatung GmbH; member of the Boards of Roth (Class One)
Beteilingungs AG, Adolf Darbo AG and The Romanian Investment
Fund; formerly Director of Erste Bank AG, Investment Bank
Austria AG and GiroCredit Bank AG.
Ronald G. Olin, Director, 54. Chairman and Chief Executive 1999 2001 8,054
Officer of DDA and General Partner of Ron Olin Investment (Class Two)
Management Co.; Chairman of the Board of Clemente Strategic
Value Fund, Inc.
</FN>
*** "Interested person", as defined in the Act, of the Fund because of an
affiliation with the Fund's sub-adviser, BAI Fondsberatung Ges.m.b.H
("BAI").
+ If elected at the Meeting.
++ Member of the Audit Committee and the Nominating Committee.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
Year Beneficially owned
Name, age, positions and offices with the first Year term Directly or
Fund, principal occupations during became a as a Director Indirectly as of
the past five years and other Directorships Director will expire October 1, 1999
------------------------------------------- --------- ------------- ------------------
<S> <C> <C> <C>
++ Mag. Reinhard Ortner, Director, 50. Member of the Management 1992 2000 2,500
Board of Erste Bank AG; Chairman of the Supervisory Boards of (Class One)
Amanda Industriebeteiligungen GesmbH, Bjelovarska Banka and
Vereinigte Pensionskasse AG; and member of the Supervisory
Boards of Generali Holding AG, Leasfinanz AG,
Oesterreichische Kontrollbank AG and Oesterreichische
Lotterlen GesmbH.
++ Andras Simor, Director, 45. Chairman of the Budapest Stock 1998 2002+ -0-
Exchange; and Director of The Romanian Investment Fund and (Class Three )
Central European Telecom Investments; previously,
Chairman of the Managing Board of CA-IB Investment
Bank AG (Vienna) during 1997 and 1998; and prior
thereto, Chief Executive Officer of Creditanstalt
Securities Ltd. (Budapest) since 1989.
* Dr. Reba W. Williams, Director, 63. Director of ACMC; Director 1991 2002+ 18,000
of Special Projects of ACMC; art historian and writer; (Class Three)
formerly Vice President and security analyst for Mitchell
Hutchins, Inc. and an analyst for McKinsey & Company, Inc.
*** Dr. Stefan K. Zapatocky, Director, 46. Senior General Manager 1999 2002+ -0-
of Bank Austria Aktiengesellschaft. (Class Three)
<FN>
* "Interested person", as defined in the Act, of the Fund because of an affiliation with Alliance.
*** "Interested person", as defined in the Act, of the Fund because of an affiliation with BAI.
+ If elected at the Meeting.
++ Member of the Audit Committee and the Nominating Committee.
</FN>
</TABLE>
<PAGE>
Alliance has instituted a policy applicable to all the investment companies
to which Alliance provides advisory services (collectively, the "Alliance Fund
Complex") contemplating, in the case of the Fund, that the Directors of the Fund
will each invest at least $10,000 in shares of the Fund.
During the fiscal year ended August 31, 1999, the Board of Directors met
eight times, the Audit Committee met twice for the purposes described below in
Proposal Two, and the Nominating Committee met twice. Both the Audit Committee
and the Nominating Committee are standing committees of the Board. John D.
Carifa and Dr. Reba W. Williams attended fewer than 75% of the meetings of the
Fund's Board of Directors. The Nominating Committee was constituted for the
purpose of selecting and nominating persons to fill any vacancies on the Board
of Directors and is responsible for determining whether all candidates for
election as Directors satisfy the qualifications prescribed by the Fund's Bylaws
which all candidates must meet. The Nominating Committee does not consider
candidates recommended by stockholders except for purposes of making this
determination.
The aggregate compensation paid by the Fund to each of the Directors during
its fiscal year ended August 31, 1999, the aggregate compensation paid to each
of the Directors during the calendar year 1998 by the Alliance Fund Complex and
the total number of funds in the Alliance Fund Complex with respect to which
each of the Directors serves as a director or trustee are set forth below.
Neither the Fund nor any other fund in the Alliance Fund Complex provides
compensation in the form of pension or retirement benefits to any of its
directors or trustees.
<TABLE>
<CAPTION>
Number of
Investment
Portfolios
Total Total Number of within the
Compensation Funds in the Alliance Fund
from the Alliance Fund Complex,
Aggregate Alliance Fund Complex, Including the
Compensation Complex, Including the Fund, as to
from the Fund Including the Fund, as to which which the
Name of Director of During the Fiscal Fund, During the Director is a Director is a
the Fund Year Ended the 1998 Director or Director or
August 31, 1999 Calendar Year Trustee Trustee
----------------- --------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C>
Dave H. Williams................................ $ 0 $ 0 6 15
Gary A. Bentz................................... $ 5,250 $ 0 1 1
Ralph W. Bradshaw............................... $ 5,250 $ 0 1 1
John D. Carifa.................................. $ 0 $ 0 50 116
William A. Clark................................ $ 5,250 $ 0 1 1
William H.M. de Gelsey.......................... $ 10,250 $12,000 1 1
Thomas G. Lachs................................. $ 0 $ 0 1 1
Dipl. Ing. Dr. Hellmut Longin................... $ 10,250 $12,000 1 1
Dipl. Ing. Peter Mitterbauer.................... $ 9,250 $11,000 1 1
Peter Nowak..................................... $ 10,750 $12,000 1 1
Ronald G. Olin.................................. $ 5,250 $ 0 1 1
Mag. Reinhard Ortner............................ $ 9,750 $12,000 1 1
Andras Simor.................................... $ 5,750 $ 0 1 1
Dr. Reba W. Williams............................ $ 0 $ 0 3 3
</TABLE>
As of the Record Date, the Directors and officers of the Fund as a group
owned less than 1% of the shares of the Fund.
All of the members of the Board of Directors, other than Messrs. Bentz,
Bradshaw, Clark and Olin, recommend that the stockholders vote FOR the election
of each of the foregoing nominees to serve as a Director of the Fund.
<PAGE>
PROPOSAL TWO
RATIFICATION OF SELECTION
OF INDEPENDENT ACCOUNTANTS
The Board of Directors, including a majority of the Directors who are not
"interested persons" of the Fund as defined in the Act, at a meeting held on
August 5, 1999, selected PricewaterhouseCoopers LLP, independent accountants
("Pricewaterhouse"), to audit the accounts of the Fund for the fiscal year
ending August 31, 2000. Pricewaterhouse (or its predecessor) has audited the
accounts of the Fund since the Fund's commencement of operations and does not
have any direct financial interest or any material indirect financial interest
in the Fund. The affirmative vote of a majority of the votes cast at the Meeting
is required to ratify such selection.
A representative of Pricewaterhouse is expected to attend the Meeting and
will have the opportunity to make a statement and respond to appropriate
questions from the stockholders. The Audit Committee of the Board of Directors
generally meets twice during each fiscal year with representatives of the
independent accountants to discuss the scope of the independent accountants'
engagement and review the financial statements of the Fund and the results of
their examination thereof.
Your Board of Directors unanimously recommends that the stockholders vote
FOR the ratification of the selection of PricewaterhouseCoopers LLP as
independent accountants of the Fund.
<PAGE>
PROPOSAL THREE
STOCKHOLDER PROPOSAL TO TERMINATE THE FUND'S
ADVISORY CONTRACT
Ronald G. Olin, a Director of the Fund (the "proponent"), has informed the
Fund that he intends to present the following recommendation for action at the
Meeting. Adoption of this proposal requires the affirmative vote of the holders
of a majority of the outstanding shares of the Fund which, as defined by the
Act, means the vote of (i) 67% or more of the shares present at the Meeting, if
the holders of more than 50% of the outstanding shares are present or
represented by proxy, or (ii) more than 50% of the outstanding shares of the
Fund, whichever is less.
RESOLVED: That the advisory contract between the Fund and Alliance Capital
Management L.P. be terminated within sixty (60) days as provided for in the
Investment Company Act of 1940.
[A majority of your Board of Directors opposes this proposal.]
[Alliance is responsible for your Fund's fine relative performance.
Approval of Proposal Three would sever the Fund's relationship with Alliance,
thus disrupting the Fund's investment program, necessitating extraordinary
expenditures and creating a period of uncertainty that could substantially harm
your investment.
Alliance is one of the world's largest global investment managers. Unlike
almost all of its competitors, Alliance has a presence in Austria and has
investment resources specifically dedicated to the Austrian markets. In
addition, at Alliance's recommendation, the Fund retains as its sub-advisor BAI,
an investment management arm of Austria's largest bank. The combined resources
of Alliance and BAI have conferred fine performance on the Fund:
-- During the four years from January 1, 1995 through December 31,
1998, the Fund's net asset value total return was 60.94%, compared
to -4.12% for the Credit Aktien Index, the Fund's benchmark index
during this period.
-- Through October 31, 1999, the Fund's 1999 net asset value total
return was 2.64%, again well ahead of the -7.61% decline of the
ATX 50 Index, the Fund's current benchmark, for the same period.
Alliance and the Fund's Board of Directors regularly assess the market
discount issue and actions which may be taken for the purposes of enhancing
stockholder value and reducing the discount at which the Fund's share trade from
their net asset values. On the basis of those assessments, Alliance makes
appropriate recommendations to the Fund's Board regarding measures that may, in
addition to tender offers already mandated under the Fund's charter in
prescribed circumstances, be advisable to provide significant and sustained
discount relief in a manner consistent with the best interests of the Fund and
its stockholders. Alliance has demonstrated its commitment to stockholder values
by initiating both (a) the Fund's stock repurchase program under which 32.1% of
the Fund's outstanding shares when the program commenced were repurchased in
late 1998 and earlier 1999 and (b) the Fund's innovative managed distribution
policy under which the Fund distributes to its stockholders quarterly an amount
equal to at least 2.5% of the Fund's total net assets - a total of at least 10%
annualized. To the Fund's knowledge, the shares acquired by the Fund under its
stock repurchase program represent the largest buy back in percentage terms ever
under a stock repurchase program by a closed-end investment company. Alliance is
at present considering what other action may be taken. Measures taken to date
and any future measures would have in common the objective of achieving
effective discount reduction without sacrificing the investment advantages that
the Fund and its stockholders now derive from the Fund's closed-end structure.
If approved, Proposal Three would directly terminate the Fund's investment
management agreement with Alliance. The Fund would soon thereafter lose
Alliance's services and the Fund's investment program would be completely
disrupted. This would not eliminate the Fund's market discount and might very
well increase it. The proponent's Proposal does not suggest any successor
adviser, and your Board of Directors doubts that any other investment manager
would duplicate the expertise and resources that the combination of Alliance and
BAI brings to the Fund. Approval of the proposal would override your Board's
determination, reached after careful deliberations, that continuance of the
Fund's current advisory relationship with Alliance is in the best interests of
the Fund. A new agreement with any adviser would require stockholder approval,
which could only occur months later, after considerable stockholder expense.
During this time, your investment in the Fund could be substantially harmed.]
[All of the members of the Board of Directors, other than Messrs. Bentz,
Bradshaw, Clark and Olin, recommend that the stockholders vote AGAINST Proposal
Three.]
INFORMATION AS TO THE FUND'S PRINCIPAL OFFICERS, INVESTMENT
ADVISER AND ADMINISTRATOR, AND THE FUND'S SUB-ADVISER
The principal officers of the Fund and their principal occupations during
the past five years are set forth below. Each of the officers listed below also
serves as an officer of one or more of the other registered investment companies
sponsored by Alliance.
Dave H. Williams, Chairman (see page 4 for biographical information).
Norman S. Bergel, Vice President, 49, a Senior Vice President of ACMC since
prior to 1994; Director and a Senior Vice President of Alliance Capital Limited
("ACL") since prior to 1994.
Mark H. Breedon, Vice President, 46, a Vice President of ACMC since prior
to 1994; Director and a Senior Vice President of ACL since prior to 1994.
Russell Brody, Vice President, 46, a Vice President and Head Trader of the
London Desk of ACL, with which he has been associated since July 1997; prior
thereto, he was Head of European Equity Dealing with Lombard Odier Cie, London
office, since prior to 1994.
Mark D. Gersten, Treasurer and Chief Financial Officer, 49, a Senior Vice
President of Alliance Fund Services, Inc. ("AFS"), with which he has been
associated since prior to 1994.
Edmund P. Bergan, Jr., Secretary, 49, a Senior Vice President and the
General Counsel of Alliance Fund Distributors, Inc. and AFS, with which he has
been associated since prior to 1994.
Vincent S. Noto, Controller, 34, an Assistant Vice President of AFS, with
which he has been associated prior to 1994.
The address of Messrs. Williams and Bergan is c/o Alliance Capital
Management L.P., 1345 Avenue of the Americas, New York, New York 10105. The
address of Messrs. Bergel, Breedon and Brody is c/o Alliance Capital Management
International, 53 Stratton Street, London, W1X 6JJ. The address of Messrs.
Gersten and Noto is c/o Alliance Fund Distributors, Inc., 500 Plaza Drive,
Secaucus, New Jersey 07094.
The investment adviser and administrator for the Fund is Alliance Capital
Management L.P., with principal offices at 1345 Avenue of the Americas, New
York, New York 10105, which on October 29, 1999 succeeded in a structural
reorganization to the business of the Fund's then adviser and administrator of
the same name. The Fund's sub-adviser is BAI Fondsberatung Ges.m.b.H., with
principal offices at Burgring 3, A1010, Vienna, Austria.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 30(h) of the Act and the rules under Section 16 of the Securities
Exchange Act of 1934 require that the Directors and officers of the Fund and the
Directors of ACMC, among others, file with the Securities and Exchange
Commission (the "Commission") and the New York Stock Exchange initial reports of
ownership and reports of changes in ownership of shares of the Fund. For the
fiscal year ended August 31, 1999, all such reports were timely filed.
LITIGATION
On October 1, 1999, a complaint in a purported class action on behalf of
stockholders of the Fund, entitled Steiner v. Williams et al., 99 Civ. 10186
(JSM), was filed in the U.S. District Court for the Southern District of New
York by an individual claiming to be a Fund stockholder against the Fund and
certain of its Directors alleging that the defendants have breached fiduciary
duties to stockholders under the Act and Maryland law by, among other things,
(a) adopting certain amendments to the Fund's Bylaws, including provisions (i)
increasing the percentage of the Fund's outstanding shares which stockholders
must own to convene a special meeting of stockholders, (ii) requiring nominees
for election as Directors to possess substantial contacts with Austria in order
to qualify as an independent Director of the Fund, and (iii) vesting exclusive
authority to amend the Bylaws with the Fund's Directors, (b) expanding the size
of the Board to allow appointment to the vacancies of individuals who were
defeated for reelection as Directors at the prior annual meeting of
stockholders, and (c) failing to take action to open-end the Fund. The principal
relief sought by the plaintiff is that the Bylaw amendments complained of be
declared null and void, that the defendants be ordered to take all appropriate
steps to eliminate the Fund's market value discount and obstacles to stockholder
exercise of voting rights, and that plaintiff be awarded his costs and
attorneys' fees. The defendants believe that the allegations in the complaint
are entirely without merit.
OTHER MATTERS
The proponent of Proposal Three has also given notice of his intention to
take the following other actions at the Meeting and, together with certain of
his affiliates (who he has represented beneficially own, together with him, a
total of 11,507 shares of the Fund) to solicit proxies in support thereof: (i)
to nominate four individuals for election as Directors, (ii) to introduce five
proposals to amend the Fund's Bylaws, and (iii) to introduce a proposal to amend
the Fund's charter to convert the Fund from a closed-end investment company to
an open-end investment company.
The Nominating Committee of the Board of Directors has determined, and
advised the proponent, that none of the four individuals whom the proponent has
advised the Fund he intends to nominate at the Meeting satisfies the
qualification requirements of the Fund's Bylaws to be nominated or elected as a
Director. Accordingly, none of these individuals can properly be nominated at
the Meeting.
The proposals to amend the Fund's Bylaws would (i) limit the authority of
the Board of Directors to amend the Bylaws in certain respects, (ii) limit the
Board in its selection of future Directors and in fixing Directors'
qualifications, (iii) require that certain expenses of Directors be reimbursed,
and (iv) mandate the submission of proposals to open-end the Fund in certain
situations. Pursuant to a provision of the Fund's charter which has been in
effect since the Fund was first established in 1988, as well as pursuant to a
Bylaw provision, which provisions are specifically authorized by Maryland law,
the Bylaws can only be amended by the Directors. Even if the amendment of the
Bylaws by the stockholders was proper, Bylaw limitations on the authority of the
Directors of the type which several of the proposed Bylaw amendments would also
impose would not be valid under Maryland law. Moreover, under Maryland law, the
stockholders of the Fund may not unilaterally, without Board action in
furtherance of such action, amend the Fund's charter to convert the Fund to an
open-end investment company. Pursuant to his authority under the Bylaws, the
Chairman is to rule at a meeting of stockholders as to whether proposals
submitted at the meeting are proper for consideration. Because they are
improper, the Chairman has, accordingly, determined and advised the proponent
that if the proponent endeavors to introduce the above-referenced Bylaw
amendment proposals and/or the open-ending proposal at the Meeting, the
proponent's action will be ruled out of order.
Provisions of the Bylaws to which certain of the above-referenced proposals
of the proponent relate are the subject of the litigation referred to above
under "Litigation".
Management of the Fund does not know of any matters properly to be
presented at the Meeting other than those mentioned in this Proxy Statement.
Therefore, the only other matters that may properly come before the Meeting in
accordance with the Bylaws are those presented by or at the direction of the
Board of Directors. If any such matter were properly to come before the Meeting,
the shares represented by proxies will be voted with respect thereto in the
discretion of the person or persons voting the proxies.
According to information filed with the Commission, as of November ____, 1999,
the following person was the beneficial owner of more than 5% of the Fund's
common stock.
Percent of
Common Stock
Based on
Shares
Outstanding
Name and Address Amount of Beneficial as of the
of Beneficial Owner Ownership Record Date
------------------- -------------------- ------------
Bank Austria Aktiengesellschaft 2,518,500 shares [31.69]
Vordere Zollamtsstrasse 13
A-1030 Vienna, Austria
SUBMISSION OF PROPOSALS FOR THE NEXT
ANNUAL MEETING OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the next annual
meeting of stockholders of the Fund must be received by the Fund by [ ] for
inclusion in the Fund's proxy statement and form of proxy relating to that
meeting. The submission by a stockholder of a proposal for inclusion in the
proxy statement does not guarantee that it will be included. Stockholder
proposals are subject to certain requirements under the federal securities laws
and the Maryland General Corporation Law and must be submitted in accordance
with the Fund's Bylaws. If not received by the Fund by [ ] and includable in the
Fund's proxy statement and form of proxy relating to the next annual meeting of
stockholders of the Fund, for a Stockholder proposal to be presented at that
meeting, in accordance with the Fund's Bylaws the proposal must be delivered by
a stockholder of record to the Secretary after the close of business on August
16, 2000 and before the close of business on September 15, 2000.
The persons named as proxies for the Annual Meeting of Stockholders for
2000 will have discretionary authority to vote on any matter presented by a
stockholder for action at that meeting unless the Fund receives notice of the
matter by September 15, 2000 (the date specified in the advance notice provision
in the Fund's Bylaws). If the Fund receives such timely notice, these persons
will not have this authority except as provided in the applicable rules of the
Commission.
<PAGE>
REPORTS TO STOCKHOLDERS
The Fund will furnish each person to whom this Proxy Statement is delivered
with a copy of the Fund's latest annual report to stockholders upon request and
without charge. To request a copy, please call Alliance Fund Services, Inc. at
(800) 227-4618 or contact Christina Santiago at Alliance Capital Management
L.P., 1345 Avenue of the Americas, New York, New York 10105.
By Order of the Board of Directors,
Edmund P. Bergan, Jr.
Secretary
November __, 1999
New York, New York
<PAGE>
TABLE OF CONTENTS Page
- ---------------------------------------------------------
Introduction.................................. 1
Proposal One: Election of Directors........... 3
Proposal Two: Ratification of Selection of
Independent Accountants...................... 8
Proposal Three: Stockholder Proposal to
Terminate the Fund's Advisory Contract....... 9
Information as to the Fund's Principal
Officers, Investment Adviser and
Administrator, and the Fund's Sub-
Adviser...................................... 10
Litigation.................................... 11
Other Matters................................. 11
Submissions of Proposals for the Next Annual
Meeting of Stockholders
12
Reports to Stockholders....................... 12
<PAGE>
The Austria Fund, Inc.
- -------------------------------------------------------------------------------
LOGO
Alliance Capital Management L.P.
- -------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS AND
PROXY STATEMENT
November ___, 1999
<PAGE>
PROXY THE AUSTRIA FUND, INC. PROXY
PROXY IN CONNECTION WITH THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON DECEMBER 15, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE CORPORATION.
The undersigned stockholder of The Austria Fund, Inc., a Maryland corporation
(the "Corporation"), hereby instructs each of Carol H. Rappa and Anthony
Tammaro, or either of them, as proxies for the undersigned, each with full power
of substitution, to attend the Annual Meeting of Stockholders of the Corporation
to be held at 11:00 a.m., Eastern Time, on December 15, 1999 at the offices of
the Corporation, 1345 Avenue of the Americas, 33rd Floor, New York, New York
10105, and any postponement or adjournment thereof, and to cast on behalf of the
undersigned all votes that the undersigned is entitled to cast at the meeting
and otherwise to represent the undersigned with all powers possessed by the
undersigned if personally present at such meeting. The undersigned hereby
acknowledges receipt of the Notice of Meeting and accompanying Proxy Statement.
IF THIS PROXY IS PROPERLY EXECUTED, THE VOTES ENTITLED TO BE CAST BY THE
UNDERSIGNED WILL BE CAST IN THE MANNER DIRECTED ON THE REVERSE SIDE HEREOF. IF
NO DIRECTION IS MADE AS REGARDS A PARTICULAR PROPOSAL OR OTHER MATTERS, SUCH
VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST FOR THE ELECTION OF
THE NOMINEES REFERRED TO IN PROPOSAL ONE AS DIRECTORS, "FOR" THE RATIFICATION OF
THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT ACCOUNTANTS FOR
THE CORPORATION (PROPOSAL TWO), IF PRESENTED ["AGAINST"] ["FOR"] THE STOCKHOLDER
PROPOSAL TO TERMINATE THE FUND'S ADVISORY CONTRACT, "FOR" ANY POSTPONEMENT OR
ADJOURNMENT OF THE MEETING WITH RESPECT TO ANY PROPOSAL DESCRIBED IN THE
ABOVE-REFERENCED PROXY STATEMENT IN THE EVENT THAT SUFFICIENT VOTES IN FAVOR OF
THE POSITION ON SUCH PROPOSAL RECOMMENDED BY THE BOARD OF DIRECTORS ARE NOT
TIMELY RECEIVED, AND IN THE DISCRETION OF THE PROXY HOLDER(S) ON ANY OTHER
MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENT OR
POSTPONEMENT THEREOF.
Please refer to the Proxy Statement for a discussion of each
of the Proposals.
NOTE: Please sign this proxy exactly as your name(s) appear(s) on the books
of the Corporation. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where more than
one name appears, a majority must sign. If a corporation, the signature should
be that of an authorized officer who should state his or her title.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE HEREOF AND RETURN THE SIGNED
PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
THE AUSTRIA FUND, INC.
CONTROL NUMBER:
Please mark votes as in this example: /x/
FOR ALL WITH- FOR ALL
1. Election of Directors. NOMINEES HOLD EXCEPT
Class One Director (term / / / / / /
expires 2000):
Dave H. Williams
Class Two Director (term expires 2001):
Dipl. Ing. Peter Mitterbauer
Class Three Directors (term expires 2002):
John D. Carifa Dr. Reba W. Williams
Thomas G. Lachs Dr. Stefan K. Zapatocky
Andras Simor
A majority of your Board of Directors urges you to vote "FOR" the election
of all Nominees.
NOTE:If you do not wish your shares voted "FOR" a particular Nominee, mark
the "For All Except" box and strike a line through the name(s) of such
Nominee(s). Your shares will be voted for the remaining Nominee(s).
2. Ratification of the selection of FOR AGAINST ABSTAIN
Pricewaterhouse-Coopers LLP as / / / / / /
independent accountants for the
Corporation for the fiscal
year ending August 31, 2000
(Proposal Two).
Your Board of Directors urges you to vote "FOR" Proposal Two.
3. To approve, if presented, a FOR AGAINST ABSTAIN
stockholder proposal to terminate / / / / / /
the Fund's advisory contract
(Proposal Three).
[A majority of your Board of Directors urges you to vote "AGAINST"
Proposal Three.]
4. In the discretion of the Proxy holder(s), to vote and otherwise
represent the undersigned upon any other matters that may properly come
before the Annual Meeting or any postponement or adjournment thereof.
RECORD DATE SHARES:
Please be sure to sign and date this Proxy.
Dated:
_________________, 1999
_______________________ ________________________
Stockholder sign here Co-owner sign here
00250.000
