-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, CTVbUwKpOSeTCXNXGQQ1W9C8Y6Gptji+4PVAj74/BOmXY0ZRadsMWzqXpHzav5zh BFsSZl4DxMS18ZXlEtd1jw== 0000862021-95-000088.txt : 19950531 0000862021-95-000088.hdr.sgml : 19950531 ACCESSION NUMBER: 0000862021-95-000088 CONFORMED SUBMISSION TYPE: N-30B-2 PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950228 FILED AS OF DATE: 19950516 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AUSTRIA FUND INC CENTRAL INDEX KEY: 0000843615 STANDARD INDUSTRIAL CLASSIFICATION: 0000 STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30B-2 SEC ACT: 1940 Act SEC FILE NUMBER: 811-05736 FILM NUMBER: 95540285 BUSINESS ADDRESS: STREET 1: 1345 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10105 BUSINESS PHONE: 2129691000 MAIL ADDRESS: STREET 1: ALLIANCE CAPITAL MANAGEMENT LP STREET 2: 1345 AVENUE OF THE AMERICAS 31ST FL CITY: NEW YORK STATE: NY ZIP: 10105 N-30B-2 1 LETTER TO SHAREHOLDERS THE AUSTRIA FUND April 17, 1995 Dear Shareholder: The outlook for the Austrian equity market continues to improve as the economic recovery gathers pace without any signs of an accompanying upswing in prices. The recovery is being led by a pick up in industrial investment, as enterprises continue to build capacity to accommodate the current export boom. This substantial increase in external demand has been generated in part by the recovery in Eastern Europe, to which Austria is a major exporter. Another contributing factor is increasing export penetration in the West -- a result of Austria's strength in machinery and capital goods production which has benefited from rising investment spending and the industry's ability to keep unit costs subdued relative to major competitors. REDUCTION IN TARIFF BARRIERS Clearly, Austria's entry into the European Union at the beginning of 1995 will bring further benefits. This is especially true in the field of exports as the reduction in tariff barriers will further enhance Austria's relative competitiveness. At the same time, the reduction on import duties, particularly on food items, should help inflation to stay low over this stage of the cycle. Overall we would anticipate Austria's gross domestic product (GDP) growth to be around 3% in 1995. Inflation is expected to be around 2.5% for the same period. These are among the highest growth and lowest inflation rates anticipated anywhere in Europe for the year. LONG-TERM STRENGTHS BECOME CLEARER Investors are clearly beginning to appreciate Austria's long-term strengths. The Austrian schilling maintained its parity with the Deutschemark (DM) over the first four months of 1995, which was a time of substantial upward pressure on the DM. This supports the belief that Austria should provide a high growth and low inflation environment for investors over the longer term, and it is crucial that this perception be maintained. Austria must also be able to maintain its relative competitiveness against other European markets. We shall be closely monitoring the 1995-96 wage bargaining round for signs of any revival of potentially inflationary settlements. With the employment situation tightening and corporations struggling to complete large order inflows, there is clearly a risk of some wage cost-driven inflationary uptick in 1996-97. Elsewhere, Austria's budget deficit, while significantly lower than that of many EU partners, is the country's most significant economic imbalance. Despite the burgeoning economic recovery it remains at a stubbornly high level of around 4.7% of GDP. TAX HIKES, SPENDING CUTS At the same time, the debt-to-GDP ratio stands at around 58%, and some progress towards reducing Austria's total debt outstanding will be a pre-requisite for achieving sustainable long-term growth. The government has already introduced a combination of tax hikes and spending cuts which are expected to amount to around $30 billion (in Austrian schilling terms) in 1995 and is to be commended on its quick reaction to the 1994 tax reductions. At the same time the government continues to reduce its involvement in the economy through its privatization program. Despite difficult market conditions, there was a partial privatization of Bohler-Uddeholm, the special steels group, and a sale of the government's stake in Creditanstalt, one of the country's leading banks, is scheduled. This 1 THE AUSTRIA FUND demonstrates that there remains a strong consensus as to the withdrawal of government from the productive sector and that Austria will continue to transform itself towards a modern, market-related economy. SOLID PERFORMANCE IN EQUITY MARKET The Austrian stock market has continued to perform well in U.S. dollar terms. The strength of the Austrian schilling, which has been particularly beneficial to foreign investors, culminated in a small reduction in domestic interest rates this month. Looking forward, it will be important to determine the true impact of this deflationary currency gain on corporate profitability. With so much of Austria's exports being to hard currency areas, it is likely that any significant declines in profitability will be incurred by this currency strength. We have continued to move the portfolio away from economically sensitive issues, however, and to concentrate more on companies with strong long-term earnings potential in the retail, technology and engineering sectors. Reflecting our optimism for the Austrian market, the Fund remains broadly fully invested and is well positioned to take advantage of strong growth prospects. We believe that current valuation levels (e.g., a prospective price-to-cash flow multiple of only 4.5x for 1995) inadequately reflect the superior long-term growth characteristics of the Austrian stock market. INVESTMENT RESULTS For the six months ended February 28, 1995, The Austria Fund returned -14.5% based on the net asset value. This compares with a return of 3.9% for the benchmark Credit Aktien Index over the same period. We appreciate your investment in The Austria Fund and look forward to reporting its progress to you in the coming months. Sincerely, Dave H. Williams Chairman and President Mark H. Breedon Vice President and Portfolio Manager 2 TEN LARGEST HOLDINGS FEBRUARY 28, 1995 (UNAUDITED) THE AUSTRIA FUND
COMPANY U.S. $ VALUE PERCENT OF NET ASSETS - - ---------------------------------------------------------------------------------------- OEMV AG $14,979,501 13.6% - - ---------------------------------------------------------------------------------------- VA Technologie AG 8,747,919 8.0 - - ---------------------------------------------------------------------------------------- BauMax Vertiebs pfd. 6,194,284 5.6 - - ---------------------------------------------------------------------------------------- Austria Mikro Systeme International AG 5,917,389 5.4 - - ---------------------------------------------------------------------------------------- Creditanstalt-Bankverein 5,567,274 5.1 - - ---------------------------------------------------------------------------------------- Verbund Cl.A 5,504,315 5.0 - - ---------------------------------------------------------------------------------------- Wienerberger Baustoff Industrie AG 4,655,251 4.2 - - ---------------------------------------------------------------------------------------- Waagner-Biro AG 4,456,056 4.1 - - ---------------------------------------------------------------------------------------- Wiene Stadtischer Allgemeine 4,126,791 3.8 - - ---------------------------------------------------------------------------------------- Bank Austria AG pfd. 3,777,902 3.4 - - ---------------------------------------------------------------------------------------- Total $63,926,682 58.2% - - ----------------------------------------------------------------------------------------
3 PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1995 (UNAUDITED) THE AUSTRIA FUND
COMPANY SHARES U.S.$ VALUE - - ------------------------------------------------------------ COMMON & PREFERRED STOCKS AND OTHER INVESTMENTS--97.4% CAPITAL GOODS--30.3% ENGINEERING & CONSTRUCTION--18.5% Allgemeine Baugesellschaft Porr. pfd.................... 18,104 $ 1,497,761 Bau Holdings AG............... 29,480 2,131,169 Maculan Holdings AG........... 20,725 1,425,462 Strabag Oesterreich AG........ 8,340 1,163,521 Universale Bau AG*............ 12,600 743,700 VA Technologie AG*............ 81,000 8,747,919 Wienerberger Baustoff Industrie AG................. 13,109 4,655,251 -------------- 20,364,783 -------------- MACHINERY--1.3% Steyr Daimler Puch Aktiengesells................ 100,000 1,473,157 -------------- MININGS & METAL--2.6% Heraklith Baustoffe new*...... 15,000 1,009,747 Radex Heraklith Industriebeteiligungs AG..... 50,000 1,809,739 -------------- 2,819,486 -------------- PAPER & FOREST PRODUCTS--1.8% Mayer-Melnhok Karton AG.................... 30,500 2,002,567 -------------- POLLUTION CONTROL--4.1% Waagner-Biro AG............... 75,000 4,456,056 -------------- OTHER--2.0% Jenbacher Transport Systeme AG*.......................... 110,000 1,159,014 Jenbacher Werke AG............ 6,500 1,001,308 -------------- 2,160,322 -------------- 33,276,371 -------------- COMPANY SHARES U.S.$ VALUE - - ------------------------------------------------------------ BASIC INDUSTRIES--19.0% ENERGY--13.6% OEMV AG*...................... 153,695 $ 14,979,501 -------------- TECHNOLOGY--5.4% Austria Mikro Systeme International AG............. 70,120 5,917,389 -------------- 20,896,890 -------------- FINANCIAL SERVICES--16.8% BANKING--10.0% Bank Austria AG pfd........... 78,230 3,777,902 Bank Fuer Oberoesterreich und Salzburg..................... 30,000 1,688,765 Creditanstalt-Bankverein...... 88,473 5,567,274 -------------- 11,033,941 -------------- INSURANCE--6.8% Erste Allegemeine Generali AG........................... 10,055 2,624,085 pfd.......................... 4,507 718,915 Wiene Stadtischer Allgemeine................... 47,000 4,126,791 -------------- 7,469,791 -------------- 18,503,732 -------------- CONSUMER PRODUCTS & SERVICES--16.2% AIRLINES--2.5% Austrian Airlines Oesterreichische Luftverkehrs AG*.......................... 7,000 1,188,282 Flughafen Wien AG............. 33,000 1,442,328 -------------- 2,630,610 -------------- BEVERAGES--1.7% Oesterreichische Brau- Beteillgungs AG.............. 25,382 1,453,570 Royal Tokaji Wine Co., Ltd.*(a)(e).................. 225,208 413,676 -------------- 1,867,246 --------------
4 THE AUSTRIA FUND
COMPANY SHARES U.S.$ VALUE - - ------------------------------------------------------------ HEALTH CARE--2.8% Immuno International AG(d).... 6,250 $ 3,092,177 -------------- RETAIL--7.4% BauMax Vertiebs pfd*.......... 144,300 6,194,284 Inku AG....................... 15,000 578,043 Wolford AG.................... 33,200 1,415,441 -------------- 8,187,768 -------------- TEXTILE PRODUCTS--1.8% Graboplast Textile & Artifical Leather Manufacturing, Ltd. Serial A*(c)................. 194,500 1,892,986 Styl-Ruhagyar................. 6,312 98,528 -------------- 1,991,514 -------------- 17,769,315 -------------- UTILITIES--11.2% Burgenland Holdings AG........ 93,450 3,373,284 EVN........................... 28,700 3,477,568 Verbund Cl.A.................. 88,850 5,504,315 -------------- 12,355,167 -------------- SHARES OR CURRENCY AMOUNT COMPANY (000) U.S.$ VALUE - - ------------------------------------------------------------ OTHER INVESTMENTS--3.9% East Europe Development Fund, Ltd.*(a)(d).................. 120,000 $ 2,666,400 First Hungary Fund, Ltd.(a)(d)................... 1,500 1,605,465 -------------- 4,271,865 -------------- Total Common & Preferred Stocks and Other Investments (cost $100,998,021).......... 107,073,340 -------------- CONVERTIBLE BONDS--0.4% Maculan Holdings AG 4.00%, 10/07/96 (cost $421,571).............. ATS 5,000 465,849 -------------- TOTAL INVESTMENTS--97.8% (cost $101,419,592)......... 107,539,189 Other assets less liabilities-- 2.2%........... 2,438,702 -------------- NET ASSETS--100%.............. $ 109,977,891 -------------- -------------- - - -------------------------------------------------------------------------------- * Non-income producing security. (a) Illiquid security, valued at fair value (see Notes A and E). (b) Swiss Franc denominated security. (c) Hungarian Forint denominated security. (d) U.S. Dollar denominated security. (e) British Pounds denominated security. Glossary: ATS -- Austrian Schillings. See notes to financial statements.
5 STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 1995 (UNAUDITED) THE AUSTRIA FUND ASSETS Investments in securities, at value (cost $101,419,592).................................. $107,539,189 Cash, at value (cost $2,517,950)......................................................... 2,569,222 Foreign taxes receivable................................................................. 19,313 Dividends and interest receivable........................................................ 9,404 Prepaid expense.......................................................................... 28,756 ------------ Total assets............................................................................. 110,165,884 ------------ LIABILITIES Advisory fee payable..................................................................... 73,376 Accrued expenses......................................................................... 114,617 ------------ Total liabilities........................................................................ 187,993 ------------ NET ASSETS (equivalent to $9.40 per share, based on 11,703,031 shares outstanding)......... $109,977,891 ------------ ------------ COMPOSITION OF NET ASSETS Capital stock, at par.................................................................... $ 117,030 Additional paid-in capital............................................................... 127,442,030 Distribution in excess of net investment income.......................................... (2,282,463) Accumulated net realized loss on investments and foreign currency transactions........... (21,471,556) Net unrealized appreciation of investments and foreign currency denominated assets and liabilities.............................................................................. 6,172,850 ------------ $109,977,891 ------------ ------------ NET ASSET VALUE PER SHARE................................................................ $9.40 ------------ ------------
- - -------------------------------------------------------------------------------- See notes to financial statements. 6 STATEMENT OF OPERATIONS SIX MONTHS ENDED FEBRUARY 28, 1995 (UNAUDITED) THE AUSTRIA FUND INVESTMENT INCOME Dividends (net of foreign taxes withheld of $16,267)........................ $ 131,630 Interest.................................................................... 111,594 $ 243,224 --------- EXPENSES Advisory fee................................................................ 486,409 Custodian................................................................... 92,794 Audit and legal............................................................. 44,880 Directors' fees and expenses................................................ 34,034 Transfer agency............................................................. 33,435 Printing.................................................................... 29,096 Registration................................................................ 7,322 Miscellaneous............................................................... 38,314 --------- Total expenses.............................................................. 766,284 ----------- Net investment loss......................................................... (523,060) ----------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY Net realized gain on investments............................................ 1,283,607 Net realized loss on foreign currency transactions.......................... (2,049,380) Net change in unrealized appreciation of investments........................ (4,293,260) Net change in unrealized appreciation of foreign currency denominated assets and liabilities............................................................. (602,456) ----------- Net loss on investments and foreign currency................................ (5,661,489) ----------- NET DECREASE IN NET ASSETS FROM OPERATIONS.................................... $(6,184,549) ----------- -----------
STATEMENT OF CHANGES IN NET ASSETS - - --------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED FEBRUARY 28, 1995 AUGUST 31, (UNAUDITED) 1994 ----------------- ------------ INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment loss.............................................................. $ (523,060) $ (439,293) Net realized gain (loss) on investments and foreign currency transactions........ (765,773) 6,465,830 Net change in unrealized appreciation (depreciation) of investments and foreign currency denominated assets and liabilities...................................... (4,895,716) 6,394,033 ----------------- ------------ Net increase (decrease) in net assets from operations............................ (6,184,549) 12,420,570 DIVIDENDS AND DISTRIBUTION TO SHAREHOLDERS: Dividends from net investment income............................................. (292,576) (59,519) Dividends in excess of net investment income..................................... -0- (550,279) Distributions from net realized gain on foreign currency transactions............ -0- (174,808) CAPITAL STOCK TRANSACTIONS Proceeds from sale of shares of common stock in rights offering.................. 25,874,456 -0- Offering costs charged to additional paid-in captial............................. (540,000) -0- Reinvestment of dividends resulting in issuance of common stock.................. -0- 20,615 ----------------- ------------ Total increase................................................................... 18,857,331 11,656,579 NET ASSETS Beginning of year................................................................ 91,120,560 79,463,981 ----------------- ------------ End of period.................................................................... $ 109,977,891 $ 91,120,560 ----------------- ------------ ----------------- ------------
- - -------------------------------------------------------------------------------- See notes to financial statements. 7 NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 1995 (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 $2,049,380 represents net foreign exchange gains or losses from holding of foreign currencies, currency gains or losses realized between the trade and settlement dates on security transactions, foreign currency forward contracts and the difference between the amounts of dividends, interest and foreign taxes recorded on the Fund's books and the U.S. dollar equivalent amounts actually received or paid. Net unrealized currency gains and losses from valuing foreign currency denominated assets and liabilities at period end exchange rates are reflected as a component of unrealized appreciation on 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 28, 1995 was ATS 10.25 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 U.S. income or excise taxes are 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 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 income tax regulations, which may differ from generally accepted accounting principles. 8 THE AUSTRIA FUND 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. The sub-advisory agreement in place in the prior fiscal year between the Fund and GiroCredit Research Analageberatungund Kapitalmarkforschung Ges, m.b.H., ("GiroCredit"), has subsequently been terminated and replaced with a new sub-advisory agreement effective March 8, 1995. Under the new sub-advisory agreement, the Fund will pay BAI Fondsberatung Ges m.b.H., the successor of GiroCredit, 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. For the six months ended February 28, 1995, the Fund earned $34,080 of interest income on cash balances maintained at GiroCredit. Brokerage commissions paid on securities transactions for the six months ended February 28, 1995 amounted to $63,478, of which none was paid to GiroCredit. - - -------------------------------------------------------------------------------- NOTE C: INVESTMENT TRANSACTIONS Purchases and sales of investment securities (excluding short-term investments) aggregated $29,526,226 and $9,233,301 respectively, for the six months ended February 28, 1995. The Fund enters into forward exchange currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign portfolio holdings. A forward exchange currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward rate. The gain or loss arising from the difference between the original contracts and the closing of such contracts is included in net realized 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. 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 28, 1995, 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 $8,717,145 and gross unrealized depreciation of investments was $2,597,548 resulting in net unrealized appreciation of $6,119,597 (excluding foreign currency). At August 31, 1994, the Fund had a capital loss carryforward of $17,786,041 of which $271,362 expires in the year 2000, $8,957,011 expires in the year 2001 and $8,557,668 expires in the year 2002. Capital losses incurred after October 31, 1993, 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 elected to defer a net foreign currency loss of $2,283,699 during such period in fiscal 1994. 9 NOTES TO FINANCIAL STATEMENTS (CONTINUED) THE AUSTRIA FUND 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 28, 1995, the Investment Manager owned 9,000 shares. - - -------------------------------------------------------------------------------- NOTE E: ILLIQUID SECURITIES
DATE ACQUIRED U.S. $ COST -------------- ----------- East Europe Development Fund, Ltd..................................................... 1/07/91 $ 1,200,000 First Hungary Fund, Ltd............................................................... 10/20/89 1,500,000 Royal Tokaj Wine Company, Ltd......................................................... 7/28/94 345,007
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 28, 1995 was $4,685,541, representing 4.3% of net assets. - - -------------------------------------------------------------------------------- NOTE F: RIGHTS OFFERING On October 7, 1994, the Fund issued 3,442,068 shares in connection with a rights offering of the Fund's shares. Shareholders of record on September 12, 1994 were issued one non-transferrable right for each share of common stock owned, entitling shareholders the opportunity to acquire one newly issued share of common stock for every three rights held at a subscription price of $7.81 per share. Offering costs of $540,000 were charged to additional paid-in capital. Dealer management and soliciting fees of $1,008,095 were netted against the proceeds of the subscription. - - -------------------------------------------------------------------------------- NOTE G: QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
NET REALIZED AND UNREALIZED GAIN NET INCREASE (LOSS) ON (DECREASE) INVESTMENTS AND IN NET ASSETS NET INVESTMENT FOREIGN CURRENCY RESULTING FROM INCOME (LOSS) TRANSACTIONS OPERATIONS MARKET PRICE ON --------------- ------------------- ------------------- NYSE TOTAL PER TOTAL PER TOTAL PER ------------------ QUARTER ENDED (000) SHARE (000) SHARE (000) SHARE HIGH LOW - - ----------------------- ----- ----- -------- ------ -------- ------ ------- ------- February 28, 1995...... $(244) $(.02) $ 2,144 $ .18 $ 1,900 $ .16 $ 8.250 $ 7.375 November 30, 1994...... (279) (.03) (7,805) (.83) (8,084) (.86) $11.000 $ 8.000 ----- ----- -------- ------ -------- ------ $(523) $(.05) $ (5,661) $(.65) $ (6,184) $(.70) ----- ----- -------- ------ -------- ------ ----- ----- -------- ------ -------- ------ August 31, 1994........ $ 347 $.04 $ 6,679 $ .81 $ 7,026 $ .85 $11.125 $ 9.000 May 31, 1994........... (172) (.02) (5,263) (.64) (5,435) (.66) $10.125 $ 8.750 February 28, 1994...... (297) (.03) 9,234 1.11 8,937 1.08 $12.375 $10.375 November 30, 1993...... (317) (.04) 2,210 .27 1,893 .23 $10.000 $ 9.000 ----- ----- -------- ------ -------- ------ $(439) $(.05) $ 12,860 $1.55 $ 12,421 $1.50 ----- ----- -------- ------ -------- ------ ----- ----- -------- ------ -------- ------
10 FINANCIAL HIGHLIGHTS THE AUSTRIA FUND SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
SEPTEMBER 28, SIX MONTHS ENDED YEAR ENDED AUGUST 31, 1989* FEBRUARY 28, 1995 ------------------------------------- TO (UNAUDITED) 1994 1993 1992 1991 AUGUST 31, 1990 ----------------- ------- ------- ------- ------- ---------------- Net asset value, beginning of period.... $11.03 $ 9.62 $ 8.89 $10.89 $14.54 $10.85** ------ ------- ------- ------- ------- ------ INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)............ (.05) (.05) .01 .01 (.04) .12 Net realized and unrealized gain (loss) on investments and foreign currency transactions........................... (.65) 1.55 .74 (1.87) (3.19) 3.56 ------ ------- ------- ------- ------- ------ Net increase (decrease) in net asset value from operations.................. (.70) 1.50 .75 (1.86) (3.23) 3.68 ------ ------- ------- ------- ------- ------ LESS: DISTRIBUTIONS - - ---------------------------------------- Dividends from net investment income.... (.02) (.01) (.01) -0- (.06) (.06) Dividends in excess of net investment income................................. -0- (.06) -0- -0- -0- -0- Distributions from net realized gains on investments and foreign currency transactions........................... -0- (.02) (.01) (.14) (.36) (.01) ------ ------- ------- ------- ------- ------ Total dividends and distributions....... (.02) (.09) (.02) (.14) (.42) (.07) ------ ------- ------- ------- ------- ------ Increase resulting from second public offering............................... -0- -0- -0- -0- -0- .08+ ------ ------- ------- ------- ------- ------ CAPITAL SHARE TRANSACTIONS - - ---------------------------------------- Dilutive effect of rights offering...... (.86) -0- -0- -0- -0- -0- Offering costs charged to additional paid-in capital........................ (.05) -0- -0- -0- -0- -0- ------ ------- ------- ------- ------- ------ Total capital share transactions........ (.91) -0- -0- -0- -0- -0- ------ ------- ------- ------- ------- ------ Net asset value, end of period.......... $ 9.40 $11.03 $ 9.62 $ 8.89 $10.89 $14.54 ------ ------- ------- ------- ------- ------ ------ ------- ------- ------- ------- ------ Market value, end of period............. $ 8.00 $10.88 $10.13 $ 7.75 $ 9.50 $11.25 ------ ------- ------- ------- ------- ------ ------ ------- ------- ------- ------- ------ TOTAL RETURN - - ---------------------------------------- Total investment return based on:(a) Market value.......................... (26.21)% 8.37% 30.96% (17.16)% (11.77)% 1.10% Net asset value....................... (14.52)% 15.69% 8.47% (17.11)% (21.75)% 30.67%
- - -------------------------------------------------------------------------------- See footnote on page 12. 11 FINANCIAL HIGHLIGHTS (CONTINUED) THE AUSTRIA FUND SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
SEPTEMBER 28, SIX MONTHS ENDED YEAR ENDED AUGUST 31, 1989* FEBRUARY 28, 1995 ------------------------------------------------- TO (UNAUDITED) 1994 1993 1992 1991 AUGUST 31, 1990 ----------------- ---------- ---------- ---------- ---------- ---------------- RATIOS/SUPPLEMENTAL DATA - - ---------------------------------------- Net assets, end of period (000's omitted)............................... $109,978 $91,121 $79,464 $73,418 $89,927 $120,088 Ratio of expenses to average net assets................................. 1.49%(b) 1.87% 2.13% 1.92% 1.78% 1.82%(b) Ratio of net investment income (loss) to average net assets..................... (1.02)%(b) (.51)% .09% .09% (.35)% .89%(b) Portfolio turnover rate................. 9% 36% 42% 56% 34% 24% - - -------------------------------------------------------------------------------- * Commencement of operation. ** Net of offering costs of $(.31). + Net of offering costs of $(.07). (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 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. 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 statements 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. 13 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, INC. 1345 Avenue of the Americas New York, NY 10105 [Alliance Capital Logo] - - -Registered Trademark-These registered service marks used under license from the owner, Alliance Capital Management L.P. AUSSR SEMI-ANNUAL REPORT FEBRUARY 28, 1995 AUSSR -----END PRIVACY-ENHANCED MESSAGE-----