0000936772-01-500289.txt : 20011112
0000936772-01-500289.hdr.sgml : 20011112
ACCESSION NUMBER: 0000936772-01-500289
CONFORMED SUBMISSION TYPE: N-30D
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20010731
FILED AS OF DATE: 20011105
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: AUSTRIA FUND INC
CENTRAL INDEX KEY: 0000843615
STANDARD INDUSTRIAL CLASSIFICATION: []
IRS NUMBER: 133529777
STATE OF INCORPORATION: MD
FISCAL YEAR END: 0831
FILING VALUES:
FORM TYPE: N-30D
SEC ACT: 1940 Act
SEC FILE NUMBER: 811-05736
FILM NUMBER: 1775073
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-30D
1
edg7029.txt
AUSTRIA FUND
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CLOSED END
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The Austria Fund
Annual Report
August 31, 2001
Alliance Capital [LOGO](R)
The Investment Professional's Choice
Investment Products Offered
---------------------------
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
---------------------------
----------------------
LETTER TO SHAREHOLDERS
----------------------
LETTER TO SHAREHOLDERS
October 24, 2001
Dear Shareholder:
This report contains investment results and market commentary for The Austria
Fund (the "Fund") for the annual reporting period ended August 31, 2001.
Investment Objective and Policies
This closed-end fund seeks long-term capital appreciation through investment
primarily in the equity securities of Austrian companies.
Investment Results
The following table provides performance for the Fund and its benchmark, the
Austrian Traded Index 50 (ATX 50), for the three-, six- and 12-month periods
ended August 31, 2001.
INVESTMENT RESULTS*
Periods Ended August 31, 2001
----------------------------
Total Returns
----------------------------
3 6 12
Months Months Months
--------------------------------------------------------------------------------
The Austria Fund (NAV) -1.48% -14.18% -33.91%
--------------------------------------------------------------------------------
Austrian Traded Index 50 (ATX 50) 7.50% -1.45% 3.68%
--------------------------------------------------------------------------------
* The Fund's investment results are total returns for the periods shown and
are based on the net asset value (NAV) as of August 31, 2001. All fees and
expenses related to the operation of the Fund have been deducted. Returns
for the Fund include the reinvestment of any distributions paid during
each period. Past performance is no guarantee of future results.
The unmanaged Austrian Traded Index 50 (ATX 50) is a
capitalization-weighted index of 50 Austrian stocks listed on the Vienna
Stock Exchange. The index reflects no fees or expenses. The index's
returns are expressed in U.S. dollars. An investor cannot invest directly
in an index, and its results are not indicative of the performance for any
specific investment, including The Austria Fund.
Additional investment results appear on pages 4-6.
The Fund underperformed its benchmark, the Austrian Traded Index 50, for the
three-, six- and 12-month periods ended August 31, 2001. The Fund's
underperformance is primarily a result of its emphasis on companies with
relatively high price-to-earnings (P/E) multiples and earnings growth, which
have underperformed in the face of the deteriorating macroeconomic fundamentals.
The economic slowdown has been further affected by the recent shift in the
political environment.
Economic Review
Following the tragic events of September 11 in the U.S., stock markets around
the world have become concerned over the possibility of a sustained global
recession based upon a collapse in consumer confidence. While there The Austria
Fund o is little likelihood of any good news on the macroeconomic front in the
short-term, we have become encouraged by the world's central banks' responses to
the crisis. The coordinated cuts in interest rates subsequent to September 11
suggest that the authorities take the risk of global recession very seriously.
We believe that recent
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THE AUSTRIA FUND o 1
----------------------
LETTER TO SHAREHOLDERS
----------------------
increases in global money supplies suggest that the reliquification process is
well under way and that the liquidity now being created will find its way into
the world's stock markets.
Economic Outlook
In this context, we now anticipate an improvement in economic conditions around
the middle of 2002 and that the Austrian stock market will begin to reflect
those recovery prospects well ahead of the announced figures. We have, however,
cut our anticipated gross domestic product (GDP) growth forecasts for both 2001
and 2002. However, the inflationary background remains benign, and despite the
relative outperformance of the Austrian market during 2001, we believe further
progress is more than probable.
However, our major concern is that over the long-term, the recent decline in the
cost of money could have inflationary implications. We do not expect to see any
signs of this problem over the near-term, or at least until asset prices begin
to rise again.
The relative performance of the Austrian stock market has been driven by the
markets bias towards "value" companies. Investors have moved significantly
towards companies with lower valuations as the prospects for long-term growth
have apparently declined. It has been clear that, subsequent to the U.S.
terrorist attacks, corporations displaying potential long-term relative growth
prospects have begun to lead the market in an upwards direction.
The Austrian equity market remains relatively moribund. New initial public
offerings (IPOs) are non-existent and recent merger and acquisition activity has
meant that the total market capitalization of the country has continued to
decline. It is unlikely that this downward spiral will be arrested until markets
begin to recover or the Austrian government embarks on a further round of
privatization. It is unfortunate at this time that the Austrian stock market is
being widely ignored by global investors who consider the lack of liquidity and
the degree of government interference a disincentive to invest.
Portfolio Strategy
The Fund's portfolio remains focused upon those companies in the technology,
telecommunications and media sectors which should benefit most from a recovery
in worldwide growth. Although it is too early to assess the depth or duration of
the current slowdown, we continue to believe that valuations in this area offer
the greatest opportunities for investors.
Liquidation of the Fund
As European economic integration proceeds, it will become increasingly difficult
for the Fund to deliver diversified, distinctively Austrian, equity exposure to
its shareholders. Therefore, on July 25, 2001, the Fund's Board of
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2 o THE AUSTRIA FUND
----------------------
LETTER TO SHAREHOLDERS
----------------------
Directors unanimously approved the liquidation and dissolution of the Fund
subject to shareholder approval. The Plan of Liquidation and Dissolution was
approved by the Fund's shareholders on October 24, 2001. Liquidation will occur
during the next several months, during which time shareholders can expect to
receive two or more liquidating distributions.
Thank you for your continued interest and investment in The Austria Fund.
Sincerely,
/s/ Dave H. Williams
Dave H. Williams
Chairman and President
/s/ Mark H. Breedon
Mark H. Breedon
Vice President
Dave H. Williams [PHOTO]
Mark H. Breedon [PHOTO]
Portfolio Manager, Mark H. Breedon, has over 24 years of investment experience.
--------------------------------------------------------------------------------
THE AUSTRIA FUND o 3
------------------
PERFORMANCE UPDATE
------------------
PERFORMANCE UPDATE
THE AUSTRIA FUND (NAV)
GROWTH OF A $10,000 INVESTMENT
8/31/91 TO 8/31/01
The Austria Fund (NAV): $11,197
Benchmarks: $7,762
[The following table was depicted as a mountain chart in the printed material.]
The Austria Fund Benchmarks
-----------------------------------------------------
8/31/91 $10,000 $10,000
8/31/92 $ 8,289 $ 8,088
8/31/93 $ 8,991 $ 8,944
8/31/94 $10,402 $10,090
8/31/95 $ 9,450 $ 9,727
8/31/96 $10,613 $ 9,339
8/31/97 $12,030 $ 9,558
8/31/98 $13,327 $ 9,491
8/31/99 $14,873 $ 9,031
8/31/00 $16,943 $ 7,487
8/31/01 $11,197 $ 7,762
This chart illustrates the total value of an assumed $10,000 investment in The
Austria Fund at net asset value (NAV) (from 8/31/91 to 8/31/01) as compared to
the performance of appropriate benchmarks. The chart assumes the reinvestment of
dividends and capital gains. Past performance is not indicative of future
results, and is not representative of future gain or loss in capital value or
dividend income.
The unmanaged ATX 50 is a capitalization-weighted index of 50 Austrian stocks
listed on the Vienna Stock Exchange. The index's returns are expressed in U.S.
dollars. The unmanaged Credit Aktien Index is a capitalization-weighted index
comprised of 30 domestic companies listed on the Vienna Stock Exchange.
When comparing The Austria Fund to the indices shown above, you should note that
no charges or expenses are reflected in the performance of the indices. An
investor cannot invest directly in an index, and its results are not indicative
of any specific investment, including The Austria Fund.
* For the period 8/31/91 through 8/31/98, the Fund's benchmark is
represented by the Credit Aktien Index. In 1998, the Fund's benchmark
changed to The Austrian Traded Index (ATX50). Subsequently, from 8/31/98
through 8/31/01, the Fund's benchmark is represented by the ATX 50.
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4 o THE AUSTRIA FUND
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PERFORMANCE UPDATE
------------------
PERFORMANCE UPDATE
THE AUSTRIA FUND (NAV)
HISTORY OF RETURNS
YEARLY PERIODS ENDED 8/31
[BAR CHART OMITTED]
The Austria Fund (NAV)--Yearly Periods Ended 8/31
--------------------------------------------------------------------------------
The Austria Fund (NAV) Benchmarks*
--------------------------------------------------------------------------------
8/31/92 -17.11% -19.12%
8/31/93 8.47% 10.58%
8/31/94 15.69% 12.82%
8/31/95 -9.15% -3.60%
8/31/96 12.31% -3.99%
8/31/97 13.35% 2.35%
8/31/98 10.78% -0.71%
8/31/99 11.60% -4.84%
8/31/00 13.91% -17.10%
8/31/01 -33.91% 3.68%
Past performance is no guarantee of future results. The Fund's investment
results represent total returns and are based on the net asset value (NAV). All
fees and expenses related to the operation of the Fund have been deducted.
Returns for the Fund include the reinvestment of any distributions paid during
the period.
The unmanaged ATX 50 is a capitalization-weighted index of 50 Austrian stocks
listed on the Vienna Stock Exchange. The unmanaged Credit Aktien Index is a
capitalization-weighted index comprised of 30 domestic companies listed on the
Vienna Stock Exchange. The indices reflect no fees or expenses. The indices
returns are expressed in U.S. dollars. An investor cannot invest directly in an
index, and its results are not indicative of any specific investment, including
The Austria Fund.
* For the period 8/31/92 through 8/31/98, the Fund's benchmark is
represented by the Credit Aktien Index. In 1998, the Fund's benchmark
changed to the Austrian Traded Index 50 (ATX 50). Subsequently, from
8/31/98 through 8/31/01, the Fund's benchmark is represented by the ATX
50.
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THE AUSTRIA FUND o 5
-----------------
PORTFOLIO SUMMARY
-----------------
PORTFOLIO SUMMARY
August 31, 2001
INCEPTION DATE PORTFOLIO STATISTICS
9/28/89 Net Assets ($mil): $46.9
SECTOR BREAKDOWN
21.2% Technology
17.6% Consumer Services [PIE CHART OMITTED]
14.6% Utilities
11.7% Financial Services
8.5% Capital Goods
6.9% Consumer Staples
6.7% Energy
5.4% Consumer Manufacturing
7.4% Short-Term
All data as of August 31, 2001. The Fund's sector breakdown is expressed as a
percentage of total investments and may vary over time.
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6 o THE AUSTRIA FUND
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TEN LARGEST HOLDINGS
--------------------
TEN LARGEST HOLDINGS
August 31, 2001
Percent of
Company U.S. $ Value Net Assets
--------------------------------------------------------------------------------
Erste Bank Der Oesterreichischen Sparkassen AG $ 5,212,484 11.1%
--------------------------------------------------------------------------------
Schoeller-Bleckmann Oilfield Equipment AG 3,798,366 8.1
--------------------------------------------------------------------------------
Telekom Austria AG 3,767,243 8.0
--------------------------------------------------------------------------------
Flughafen Wien AG 3,198,248 6.8
--------------------------------------------------------------------------------
Austria Tabakwerke AG 3,073,223 6.6
--------------------------------------------------------------------------------
OMV AG 2,995,684 6.4
--------------------------------------------------------------------------------
Do & Co Restaurants & Catering AG 2,553,447 5.4
--------------------------------------------------------------------------------
EVN AG 2,240,309 4.8
--------------------------------------------------------------------------------
Head NV 2,130,902 4.5
--------------------------------------------------------------------------------
Gericom AG 1,872,831 4.0
--------------------------------------------------------------------------------
$30,842,737 65.7%
--------------------------------------------------------------------------------
THE AUSTRIA FUND o 7
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
PORTFOLIO OF INVESTMENTS
August 31, 2001
Company Shares U.S. $ Value
--------------------------------------------------------------------------------
COMMON STOCKS-88.2%
Technology-20.2%
Communication Equipment-0.4%
Scotty Tele-Transport Corp. AG(a)(b) ............ 10,171 $ 198,051
-----------
Computer Services-4.0%
Gericom AG ...................................... 90,000 1,872,831
-----------
Computer Software-4.5%
Fabasoft AG(a) .................................. 263,468 407,003
Feratel Media Technologies(a) ................... 40,000 484,882
Jo Wood(a) ...................................... 95,476 1,214,627
-----------
2,106,512
-----------
Internet-1.5%
BETandWIN.com Interactive
Entertainment AG(a) .......................... 129,672 465,440
Update.com(a) ................................... 80,000 88,689
Webfreetv.Com Multimedia(a) ..................... 26,000 36,621
Yline Internet Business Services AG(a) .......... 73,600 117,040
Zy.Com(a)(b)(c) ................................. 39,000 0
-----------
707,790
-----------
Semi-conductor Components-3.7%
SEZ Holdings AG (Switzerland)(d) ................ 35,000 1,730,389
-----------
Miscellaneous-6.1%
Austria Technologie & Systemtechnik AG .......... 50,000 502,511
EMTS Technologie AG(a)(d) ....................... 35,000 1,656,979
Smart Fibres(a)(b)(c) ........................... 48,600 688,641
-----------
2,848,131
-----------
9,463,704
-----------
Consumer Services-16.8%
Restaurants & Lodging-5.4%
Do & Co Restaurants & Catering AG ............... 100,000 2,553,447
-----------
Miscellaneous-11.4%
Flughafen Wien AG ............................... 95,980 3,198,248
Head NV (Netherlands) ........................... 500,000 2,130,902
-----------
5,329,150
-----------
7,882,597
-----------
Utilities-13.9%
Electric & Gas-4.8%
EVN AG .......................................... 60,000 2,240,309
-----------
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8 o THE AUSTRIA FUND
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
Shares or
Principal
Amount
Company (000) U.S. $ Value
--------------------------------------------------------------------------------
Telephone-9.1%
Cybertron Telekom AG(a) ......................... 283,430 $ 517,681
Telekom Austria AG(a) ........................... 575,000 3,767,243
-----------
4,284,924
-----------
6,525,233
-----------
Financial Services-11.1%
Banking-11.1%
Erste Bank Der Oesterreichischen
Sparkassen AG ................................ 98,105 5,212,484
-----------
Capital Goods-8.1%
Machinery-8.1%
Schoeller-Bleckmann Oilfield Equipment AG ....... 400,000 3,798,366
-----------
Consumer Staples-6.6%
Tobacco-6.6%
Austria Tabakwerke AG ........................... 40,000 3,073,223
-----------
Energy-6.4%
Oil-6.4%
OMV AG .......................................... 30,810 2,995,684
-----------
Consumer Manufacturing-5.1%
Auto & Related-1.6%
Pankl Racing Systems AG(a) ...................... 19,082 759,484
-----------
Building & Related-3.5%
Weinerberger Baustoffindustrie AG ............... 100,000 1,647,473
-----------
2,406,957
-----------
Total Common Stocks
(cost $52,290,168) ........................... 41,358,248
-----------
SHORT-TERM INVESTMENT-7.0%
Time Deposit-7.0%
BNP Paribas
3.63%, 9/04/01
(cost $3,300,000) ............................ $ 3,300 3,300,000
-----------
Total Investments-95.2%
(cost $55,590,168) ........................... 44,658,248
Other assets less liabilities-4.8% .............. 2,266,095
-----------
Net Assets-100%.................................. $46,924,343
===========
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THE AUSTRIA FUND o 9
------------------------
PORTFOLIO OF INVESTMENTS
------------------------
(a) Non-income producing security.
(b) Illiquid security, valued at fair value (see Note A).
(c) British Pound denominated security.
(d) Swiss Franc denominated security.
See notes to financial statements.
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10 o THE AUSTRIA FUND
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STATEMENT OF ASSETS & LIABILITIES
---------------------------------
STATEMENT OF ASSETS & LIABILITIES
August 31, 2001
Assets
Investments in securities, at value (cost $55,590,168) ........ $ 44,658,248
Cash .......................................................... 89,773
Foreign cash, at value (cost $2,433,130) ...................... 2,529,842
Foreign taxes receivable ...................................... 103,748
Interest receivable ........................................... 332
------------
Total assets .................................................. 47,381,943
------------
Liabilities
Management fee payable ........................................ 45,702
Accrued expenses .............................................. 411,898
------------
Total liabilities ............................................. 457,600
------------
Net Assets .................................................... $ 46,924,343
============
Composition of Net Assets
Capital stock, at par ......................................... $ 64,069
Additional paid-in capital .................................... 59,412,470
Accumulated net realized loss on investments
and foreign currency transactions .......................... (1,720,545)
Net unrealized depreciation of investments
and foreign currency denominated assets and liabilities .... (10,831,651)
------------
$ 46,924,343
============
Net Asset Value Per Share
(based on 6,406,912 shares outstanding) .................... $7.32
=====
See notes to financial statements.
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THE AUSTRIA FUND o 11
-----------------------
STATEMENT OF OPERATIONS
-----------------------
STATEMENT OF OPERATIONS
Year Ended August 31, 2001
Investment Income
Dividends--unaffiliated issuers (net of
foreign taxes withheld of $134,970) ...... $ 764,830
Interest .................................... 153,711 $ 918,541
------------
Expenses
Management fee .............................. 547,352
Sub-advisory fee ............................ 81,399
Audit and legal ............................. 453,380
Custodian ................................... 161,122
Directors' fees and expenses ................ 156,826
Printing .................................... 59,965
Registration fee ............................ 31,279
Transfer agency ............................. 22,307
Miscellaneous ............................... 22,496
------------
Total expenses .............................. 1,536,126
------------
Net investment loss ......................... (617,585)
------------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Transactions
Net realized loss on investment
transactions--unaffiliated issuers ....... (2,738,074)
Net realized gain on investment
transactions--affiliated issuers ......... 1,168,401
Net realized gain on foreign
currency transactions .................... 32,001
Net change in unrealized
appreciation/depreciation of:
Investments .............................. (23,761,743)
Foreign currency denominated assets
and liabilities ........................ 108,456
------------
Net loss on investments and foreign
currency transactions .................... (25,190,959)
------------
Net Decrease in Net Assets from
Operations ............................... $(25,808,544)
============
See notes to financial statements.
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12 o THE AUSTRIA FUND
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STATEMENT OF CHANGES IN NET ASSETS
----------------------------------
STATEMENT OF CHANGES
IN NET ASSETS
Year Ended Year Ended
August 31, August 31,
2001 2000
============ ============
Increase (Decrease) in Net Assets
from Operations
Net investment loss ............................ $ (617,585) $ (1,944,453)
Net realized gain (loss) on investments
and foreign currency transactions ........... (1,537,672) 5,182,467
Net change in unrealized
appreciation / depreciation
of investments and foreign
currency denominated
assets and liabilities ...................... (23,653,287) 7,327,649
------------ ------------
Net increase (decrease) in net assets
from operations ............................. (25,808,544) 10,565,663
Distributions to Shareholders from:
Tax return of capital .......................... -0- (4,936,756)
Net realized gain on investments and
foreign currency transactions ............... -0- (5,701,178)
Distributions in excess of net realized gain
on investments and foreign currency
transactions ................................ (1,045,816) -0-
------------ ------------
Total decrease ................................. (26,854,360) (72,271)
Capital Stock Transactions
Net decrease ................................... (2,567,551) (13,606,471)
------------ ------------
Total decrease ................................. (29,421,911) (13,678,742)
Net Assets
Beginning of period ............................ 76,346,254 90,024,996
------------ ------------
End of period .................................. $ 46,924,343 $ 76,346,254
============ ============
See notes to financial statements.
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THE AUSTRIA FUND o 13
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
NOTES TO FINANCIAL STATEMENTS
August 31, 2001
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.
On October 24, 2001, the shareholders of the Fund approved the Plan of
Liquidation and Dissolution (the "Plan") of the Fund (see Note F). The financial
statements have been prepared in conformity with accounting principles generally
accepted in the United States of America and are substantially similar to those
prepared using the liquidation basis of accounting.
The preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
certain estimates and assumptions that affect the reported amounts of assets and
liabilities in the financial statements and amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund.
1. Security Valuation
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are The Austria Fund o similar to those of the United States over-the-counter
market) or on the Nasdaq Stock Market, Inc. are generally valued at the last
reported sales price, or if no sale occurred, at the mean of the closing bid and
asked prices on that day. Readily marketable securities traded in the
over-the-counter market, securities listed on a foreign securities exchange
whose operations are similar to the U.S. over-the-counter market, and securities
listed on a national securities exchange whose primary market is believed to be
over-the-counter, (but excluding securities traded on the Nasdaq Stock Market
Inc.), are valued at the mean of the current bid and asked prices. U.S.
government and fixed income securities which mature in 60 days or less are
valued at amortized cost, unless this method does not represent fair value.
Securities for which current market quotations are not readily available are
valued at their fair value as determined in good faith by, or in accordance with
procedures adopted by, the Board of Directors. Fixed income securities may be
valued on the basis of prices obtained from a pricing service when such prices
are believed to reflect the fair market value of such securities.
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 accrued.
Net realized gain or loss on foreign currency transactions 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, gains or losses arising
--------------------------------------------------------------------------------
14 o THE AUSTRIA FUND
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NOTES TO FINANCIAL STATEMENTS
-----------------------------
from the closing of forward exchange currency 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 unrealized currency gains and losses from valuing foreign
currency denominated assets and liabilities at period end exchange rates are
reflected as a component of net unrealized appreciation or depreciation 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 year.
The exchange rate for the Euro Dollar at August 31, 2001 was EUR 1.10 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 any, to
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 Investment Transactions
Dividend income is recorded on the ex-dividend date or as soon as the Fund is
informed on the dividend. Interest income is accrued daily. Investment
transactions are accounted for on the date securities are purchased or sold.
Realized and unrealized gains and losses from investment 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 and capital gains distributions are determined in accordance with
federal tax regulations which may differ from those determined in accordance
with accounting principles generally accepted in the United States of America.
To the extent these differences are permanent, such amounts are reclassified
within the capital accounts based on their federal tax basis treatment;
temporary differences do not require such reclassification.
During the current fiscal year, permanent differences, primarily due to foreign
currency transactions, distributions in excess of net realized gain on
investments and foreign currency transactions and a net operating loss, resulted
in a decrease in accumulated net investment loss and a corresponding decrease in
accumulated net realized loss on investment and foreign currency transactions
and additional paid-in capital. This reclassification had no effect on net
assets.
NOTE B
Management Fee and Other Transactions with Affiliates
Under the terms of an Investment Management and Administration Agree-
--------------------------------------------------------------------------------
THE AUSTRIA FUND o 15
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
ment, 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.
Under the terms of a Shareholder Inquiry Agency Agreement with Alliance Global
Investor Services, Inc. ("AGIS"),formerly Alliance Fund Services, Inc., an
affiliate of the Investment Manager, the Fund reimburses AGIS for costs relating
to servicing phone inquiries for the Fund. The Fund reimbursed AGIS $1,148
during the year ended August 31, 2001.
Under the Fund's former Sub-Advisory Agreement, which was terminated effective
May 11, 2001, the Fund paid BAI Fondsberatung Ges.m.b.H. (the "Sub-Adviser") a
fee, calculated weekly and paid monthly, at an annual rate of .20 of 1% of the
Fund's average weekly net assets.
Brokerage commissions paid on investment transactions for the year ended August
31, 2001 amounted to $96,701. Direct brokerage commission payments to Bank
Austria and Creditanstalt Investment Bank Vienna, affiliates of the former
Sub-Adviser, for the period September 1, 2000 through May 10, 2001, were $0 and
$5,130, respectively.
NOTE C
Investment Transactions
Purchases and sales of investment securities (excluding short-term and U.S.
government securities) aggregated $20,099,776 and $31,131,202 respectively, for
the year ended August 31, 2001. There were no purchases or sales of U.S.
government or government agency obligations for the year ended August 31, 2001.
At August 31, 2001, the cost of investments for federal income tax purposes was
$56,079,258. Accordingly, gross unrealized appreciation of investments was
$4,413,639 and gross unrealized depreciation of investments was $15,834,649
resulting in net unrealized depreciation of $11,421,010 (excluding foreign
currency transactions).
Currency and capital losses incurred after October 31, within the Fund's fiscal
year are deemed to arise on the first business day of the following fiscal year.
The Fund incurred and elected to defer post October capital losses of $1,130,911
for the year ended August 31, 2001. To the extent they are so used, future
capital gains will not be distributed to shareholders until they exceed
available capital loss carryovers.
At August 31, 2001, the Fund had a capital loss carryforward of $100,544, all of
which will expire in 2009.
Forward Exchange Currency Contracts
The Fund enters into forward exchange currency contracts in order to hedge its
exposure to changes in foreign currency exchange rates on its foreign portfolio
holdings 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 on a future date at a negotiated forward
rate. The gain or loss aris-
--------------------------------------------------------------------------------
16 o THE AUSTRIA FUND
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
ing from the difference between the original contracts and the closing of such
contracts is included in net realized gains or losses on foreign The Austria
Fund o 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.
The Fund's custodian will place and maintain liquid assets in a segregated
account of the Fund having a value at least equal to the aggregate amount of the
Fund's commitments under forward exchange currency contracts entered into.
At August 31, 2001, the Fund had no outstanding forward exchange currency
contracts.
NOTE D
Capital Stock
There are 100,000,000 shares of $.01 par value common stock authorized. At
August 31, 2001, 6,406,912 shares were outstanding. On December 15, 2000, the
Fund resumed its share repurchase program. For the year ended August 31, 2001,
336,200 shares were repurchased at a cost of $2,567,551 representing 4.99% of
the 6,743,112 shares outstanding at August 31, 2000. This cost includes $20,172
in commissions paid to Paine Webber Group, Inc. The average discount of market
price to net asset value of shares repurchased over the period December 15, 2000
to August 31, 2001 was 1.58%.
NOTE E
Concentration of Risk
Investing in securities of foreign companies involves special risks which
include the possibility of future political and economic developments which
could adversely affect the value of such securities. Moreover, securities of
many foreign companies and their markets may be less liquid and their prices
more volatile than those of comparable United States companies.
Investment in the Fund's shares requires consideration of certain factors that
are not typically associated with investments in U.S. equity securities such as
currency fluctuations, potential price volatility, lower liquidity and
concentration of the Austrian equities market and limitations on the
concentration of investment in the equity of securities of companies in certain
industry sectors. The possibility of political and economic instability of
government supervision and regulation of market may further affect the Fund's
investments.
NOTE F
Plan of Liquidation and Dissolution
At the meeting of the Fund's shareholders held on October 24, 2001 (the
"Effective Date"), the shareholders approved The Plan of Liquidation and
Dissolution (the "Plan") which provides for the complete liquidation of all of
the assets of the Fund, the payment of all known obligations including the
expenses of the liquidation and the re-
--------------------------------------------------------------------------------
THE AUSTRIA FUND o 17
-----------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
ceipt by the shareholders of two or more distributions equal to their pro rata
portion of the net assets of the Fund. The Plan also provides that on the
Effective Date, the Fund will cease its business as an investment company and
will not engage in any business activities except for the purpose of winding up
its business and affairs, and distributing its remaining assets to shareholders
in accordance with the Plan. Liquidation is expected to occur during the several
ensuing months.
--------------------------------------------------------------------------------
18 o THE AUSTRIA FUND
--------------------
FINANCIAL HIGHLIGHTS
--------------------
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
Year Ended August 31,
----------------------------------------------------------------
2001 2000 1999 1998 1997
----------------------------------------------------------------
Net asset value,
beginning of period ......... $ 11.32 $ 11.33 $ 12.29 $ 12.54 $ 11.22
----------------------------------------------------------------
Income From
Investment Operations
Net investment income
(loss) ...................... (.09)(a) (.26)(a) (.10)(a) -0- .01
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions ................ (3.76) 1.45 .73 1.13 1.44
----------------------------------------------------------------
Net increase (decrease) in
net asset value from
operations .................. (3.85) 1.19 .63 1.13 1.45
----------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net
investment income ........... -0- -0- -0- -0- (.01)
Distributions in excess of
net investment income ....... -0- -0- -0- (1.02) (.12)
Tax return of capital ......... -0- (.65) -0- -0- -0-
Distributions from net realized
gain on investments and
foreign currency
transactions ................ -0- (.75) (2.01) (.36) -0-
Distributions in excess of
net realized gain on
investments and foreign
currency transactions ....... (.16) -0- -0- -0- -0-
----------------------------------------------------------------
Total dividends and
distributions ............... (.16) (1.40) (2.01) (1.38) (.13)
----------------------------------------------------------------
Capital Share Transactions
Anti-dilutive effect of share
repurchase program .......... .01 .20 .42 -0- -0-
----------------------------------------------------------------
Net asset value, end of period $ 7.32 $ 11.32 $ 11.33 $ 12.29 $ 12.54
================================================================
Market value, end of period ... $ 6.90 $ 10.94 $ 9.00 $ 9.00 $ 9.56
================================================================
Total Return(b)
Total investment return
based on:
Market value .............. (35.53)% 38.57% 21.06% 6.38% 14.10%
Net asset value ........... (33.91)% 13.91% 11.60% 10.78% 13.35%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) ............. $46,924 $76,346 $90,025 $143,824 $146,743
Ratio of expenses to
average net assets .......... 2.77% 2.47% 2.20% 1.68% 1.71%
Ratio of net investment
income (loss) to average
net assets .................. (1.12)% (1.79)% (.87)% (.03)% .07%
Portfolio turnover rate ....... 39% 30% 24% 42% 19%
See footnote summary on page 20.
--------------------------------------------------------------------------------
THE AUSTRIA FUND o 19
--------------------
FINANCIAL HIGHLIGHTS
--------------------
(a) Based on average shares outstanding.
(b) 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 the 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 calculated for a period of less than one year is
not annualized.
--------------------------------------------------------------------------------
20 o THE AUSTRIA FUND
---------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of The Austria Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Austria Fund, Inc. (the "Fund")
at August 31, 2001, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for each of the five years in the period then ended, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with auditing standards generally accepted in the United States of
America which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 2001 by
correspondence with the custodian, provide a reasonable basis for our opinion.
As described in Note F, on October 24, 2001, the shareholders of the Fund
approved the Plan of Liquidation and Dissolution of the Fund.
PricewaterhouseCoopers LLP
New York, New York
October 5, 2001, except for Note F which is as of October 24, 2001.
TAX INFORMATION (UNAUDITED)
In order to meet certain requirements of the Internal Revenue Code we are
advising you that $1,045,816 of the capital gain distributions paid by the
Austria Fund during the fiscal year ended August 31, 2001, are subject to
maximum tax rates of 20%.
Shareholders should not use the above information to prepare their tax returns.
The information necessary to complete your tax returns will be included with
your Form 1099 DIV which will be sent to you separately in January 2002.
--------------------------------------------------------------------------------
THE AUSTRIA FUND o 21
----------------------
ADDITIONAL INFORMATION
----------------------
ADDITIONAL INFORMATION
(UNAUDITED)
Shareholders whose shares are registered in their own names may elect to be
participants in the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
pursuant to which dividends and capital gain distributions to shareholders will
be paid in or reinvested in additional shares of the Fund. State Street Bank and
Trust Company (the "Agent") will act as agent for participants under the Plan.
Shareholders whose shares are held in the name of a broker or nominee should
contact such broker or nominee to determine whether or how they may participate
in the Plan.
A shareholder who has elected to participate in the Plan may withdraw from the
plan at any time. There will be no penalty for withdrawal from the Plan and
shareholders who have previously withdrawn from the Plan may rejoin at any time.
Changes in elections must be in writing and should include the shareholder's
name and address as they appear on the share certificate. An election to
withdraw from the plan will, until such election is changed, be deemed to be an
election by a shareholder to take all subsequent distributions in cash. An
election will only be effective for a distribution declared and having a record
date of at least ten days after the date on which the election is received.
Commencing not more than five business days before the dividend payment date,
purchases of the Fund's shares may be made by the agent, on behalf of the
participants in the Plan, from time to time to satisfy dividend reinvestments
under the Plan. Such purchases by the Agent on or before the dividend payment
date may be made on the New York Stock Exchange (the "Exchange") or elsewhere at
any time when the price plus estimated commissions of the Fund's Common Stock on
the Exchange is lower than the Fund's most recently calculated net asset value
per share.
If the Agent determines on the dividend payment date that the shares purchased
as of such date are insufficient to satisfy the dividend reinvestment
requirements, the Agent, on behalf of the participants in the Plan, will obtain
the necessary additional shares as follows. To the extent that outstanding
shares are not available at cost of less than per share net asset value, the
Agent, on behalf of the participants in the Plan, will accept payment of the
dividend, or the remaining portion thereof, in authorized but unissued shares of
the Fund on the dividend payment date. Such shares will be issued at a per share
price equal to the higher of (1) the net asset value per share on payment date,
or (2) 95% of the closing market price per share on the payment date. If the
closing sale or offer price, plus estimated commissions, of the Common Stock on
the Exchange on the payment date is less than the Fund's net asset value per
share on such day, then the Agent will purchase additional outstanding shares on
the Exchange elsewhere. If before the Agent has completed such purchases, the
market price plus commissions exceeds the net asset value of the Fund's shares,
the average per share purchase price paid by the Agent may exceed the net asset
value of the Fund's shares, resulting in the acquisition of
--------------------------------------------------------------------------------
22 o THE AUSTRIA FUND
----------------------
ADDITIONAL INFORMATION
----------------------
fewer shares than if the shares had been issued by the Fund.
The Agent will maintain all shareholders' accounts in the Plan and furnish
written confirmation of all transactions in the account, including information
needed by shareholders for tax records. Shares in the account of each Plan
participant will be held by the Agent in non-certificate form in the name of the
participant, and each shareholder's proxy will include those shares purchased or
received pursuant to the Plan.
There will be no brokerage charges with respect to shares issued directly by the
Fund to satisfy the dividend reinvestment requirements. However, each
participant will pay a pro rata share of brokerage commissions incurred with
respect to the Agent's open market purchases of shares. In each case, the cost
per share of shares purchased for each shareholder's account will be the average
cost, including brokerage commissions, of any shares purchased in the open
market plus the cost of any shares issued by the Fund.
Shareholders participating in the plan may receive benefits not available to
shareholders not participating in the Plan. If the market price plus commissions
of the Fund's shares is above the net asset value, participants in the Plan will
receive shares of the Fund at a discount of up to 5% from the current market
value. However, if the market price plus the commissions is below the net asset
value, participants will receive distributions in shares with a net asset value
greater than the value of any cash distribution they would have received on
their shares. There may be insufficient shares available in the market to make
distributions in shares at prices below the net asset value. Also, since the
Fund does not redeem its shares, the price on resale may be more or less than
the net asset value.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income taxes that may be payable (or required to be
withheld) on dividends and distributions.
In the case of foreign participants whose dividends are subject to United States
income tax withThe Austria Fund o holding and in the case of any participants
subject to a 31% federal backup withholding, the Agent will reinvest dividends
after deduction of the amount required to be withheld.
Experience under the Plan may indicate that changes are desirable. Accordingly,
the Fund reserves the right to amend or terminate the Plan as applied to any
voluntary cash payments made and any dividend or distribution paid subsequent to
written notice of the change sent to participants in the Plan at least 90 days
before the record date for such dividend or distribution. The Plan may also be
amended or terminated by the Agent on at least 90 days' written notice to
participants in the Plan; however, the Fund reserves the right to amend the Plan
to include a service charge payable to the Agent by the participants. All
correspondence concerning the Plan should be directed to the Agent at State
Street Bank and Trust Company, PO Box 366, Boston, Massachusetts 02101.
--------------------------------------------------------------------------------
THE AUSTRIA FUND o 23
----------------------
ADDITIONAL INFORMATION
----------------------
Since the filing of the most recent amendment to the Fund's registration
statement with the Securities and Exchange Commission, there have been (i) no
material changes in the Fund's investment objectives or policies, (ii) no
changes to the Fund's charter or by-laws that would delay or prevent a change of
control of the Fund, (iii) no material changes in the principal risk factors
associated with investment in the Fund, and (iv) no change in the person
primarily responsible for the day-to-day management of the Fund's portfolio, who
is Mark H. Breedon, the Vice President of the Fund.
--------------------------------------------------------------------------------
24 o THE AUSTRIA FUND
----------------------
ADDITIONAL INFORMATION
----------------------
SUPPLEMENTAL PROXY INFORMATION
(unaudited)
The Annual Meeting of Shareholders of The Austria Fund, Inc. was held on April
26, 2001. A description of each proposal and number of shares voted at the
meeting are as follows:
Authority
Voted For Withheld
================================================================================
1. Election of Directors:
Class One (term expires in 2003)
Dave H. Williams 2,977,151 2,757,908
William H.M. deGelsey 2,970,468 2,764,591
Peter Nowak 5,495,924 239,135
Hellmut Longin 2,975,206 2,759,852
Reinhard Ortner 5,491,206 243,852
Broker
Voted For Voted Against Abstain Non-Vote
=======================================================================================
2. To ratify the selection of
PricewaterhouseCoopers LLP
as the Fund's independent
auditors for the Fund's
fiscal year ending
August 31, 2001 5,273,815 345,112 116,113
3. Approval of the new sub-advisory
agreement between the Fund
and BAI Fondsberatung 5,493,069 89,991 151,998
4. Approval of repeal of a
provision of the Fund's Bylaws
prescribing qualifications for
nominees as directors 980,841 3,464,967 141,881 1,147,370
--------------------------------------------------------------------------------
THE AUSTRIA FUND o 25
----------------------------
GLOSSARY OF INVESTMENT TERMS
----------------------------
GLOSSARY OF INVESTMENT TERMS
benchmark
A standard by which a fund's performance can be measured. A benchmark is usually
an unmanaged index, such as the Standard & Poor's 500 Stock Index or the Lehman
Brothers Aggregate Bond Index.
Consumer Price Index (CPI)
An index that measures the cost of living. The CPI is published by the U.S.
Bureau of Labor Statistics.
index
A compilation of securities of similar types of companies that is used to
measure the investment performance of securities within that specific market. An
index is often used as a benchmark for a mutual fund. An investor cannot invest
directly in an index.
net asset value (NAV)
The value of a mutual fund's total assets, minus its liabilities, divided by the
number of shares outstanding.
portfolio
The collection of securities that make up a fund's or an investor's investments.
price-to-earnings (P/E)
What an investor pays for a company's earnings per share of outstanding stock.
--------------------------------------------------------------------------------
26 o THE AUSTRIA FUND
----------------
ALLIANCE CAPITAL
----------------
ALLIANCE CAPITAL
The Investment Professional's Choice
Alliance Capital is a leading global investment management firm with
approximately $465 billion in assets under management. In recognition of our
far-reaching investment capabilities, Alliance Capital has been selected by
employee benefit plans for 36 of the FORTUNE 100 companies and public retirement
funds in 41 states as well as by hundreds of foundations, endowments and foreign
institutions. By sharing this institutional money management experience with
millions of mutual fund investors as well, Alliance stands out as a "manager of
choice" for thousands of investment professionals around the world.
At Alliance Capital, we place a premium on investment research. We carefully
select securities based on our proprietary research, conducted by 642 investment
professionals in 36 cities and 19 countries. Our commitment to this process
means that our mutual fund shareholders have their portfolios managed by the
same experienced analysts and portfolio managers who manage the pension funds of
some of America's largest institutional investors.
All information on Alliance Capital is as of 6/30/01.
--------------------------------------------------------------------------------
THE AUSTRIA FUND o 27
------------------
BOARD OF DIRECTORS
------------------
BOARD OF DIRECTORS
Dave H. Williams, Chairman and President
Gary A. Bentz
Ralph W. Bradshaw
John D. Carifa
William A. Clark
William H. M. de Gelsey
Thomas G. Lachs(1)
Dipl. Ing. Hellmut Longin(1)
Dipl. Ing. Peter Mitterbauer(1)
Peter Nowak(1)
Ronald G. Olin
Mag. Reinhard Ortner(1)
Andras Simor(1)
Dr. Reba W. Williams
Dr. Stefan K. Zapotocky
OFFICERS
Norman S. Bergel, Vice President
Mark H. Breedon, Vice President
Russell Brody, Vice President
Edmund P. Bergan, Jr., Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Vincent S. Noto, Controller
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
Independent Accountants
PricewaterhouseCoopers LLP
1177 Avenue of Americas
New York, NY 10036
Dividend Paying Agent, Transfer Agent and Registrar
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
(1) Member of the Audit Committee
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 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.
--------------------------------------------------------------------------------
28 o THE AUSTRIA FUND
--------------------------------
ALLIANCE CAPITAL FAMILY OF FUNDS
--------------------------------
ALLIANCE CAPITAL FAMILY OF FUNDS
Domestic Equity Funds
Growth & Income Fund
Growth Fund
Health Care Fund
Premier Growth Fund
Quasar Fund
Technology Fund
The Alliance Fund
Global & International Equity Funds
All-Asia Investment Fund
Global Small Cap Fund
Greater China '97 Fund
International Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privatization Fund
AllianceBernstein Value Funds
Disciplined Value Fund
Global Value Fund
International Value Fund
Real Estate Investment Fund
Small Cap Value Fund
Utility Income Fund
Value Fund
Select Investor Series
Biotechnology Portfolio
Premier Portfolio
Small Cap Growth Portfolio
Technology Portfolio
Asset Allocation Funds
Balanced Shares
Conservative Investors Fund
Growth Investors Fund
Fixed Income Funds
Corporate Bond Portfolio
Global Dollar Government Fund
Global Strategic Income Trust
High Yield Fund
Multi-Market Strategy Trust
North American Government Income Trust
Quality Bond Portfolio
U.S. Government Portfolio
Municipal Income Funds
National
Insured National
Arizona
California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Ohio
Pennsylvania
Virginia
Closed-End Funds
All-Market Advantage Fund
The Austria Fund
ACM Income Fund
ACM Government Opportunity Fund
The Korean Investment Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
The Southern Africa Fund
The Spain Fund
World Dollar Government Fund
World Dollar Government Fund II
Alliance also offers AFD Exchange Reserves, which serves as the money market
fund exchange vehicle for the Alliance mutual funds.
To obtain a prospectus for any Alliance Capital fund, call your investment
professional, or call Alliance at (800) 227-4618.
--------------------------------------------------------------------------------
THE AUSTRIA FUND o 29
------------------------------
SUMMARY OF GENERAL INFORMATION
------------------------------
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 daily net asset value of the Fund's shares are available from the
Fund's Transfer Agent by calling (800) 219-4218. The Fund also distributes its
daily net asset value to various financial publications or independent
organizations such as Lipper Analytical Services and Morningstar, Inc. 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, each Sunday in The New York Times and each Saturday in Barron's
and other newspapers in a table called "Closed-End Funds".
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. 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.
For questions concerning shareholder account information, or if you would like a
brochure describing the Dividend Reinvestment Plan, please call State Street
Bank and Trust Company at (800) 219-4218.
--------------------------------------------------------------------------------
30 o THE AUSTRIA FUND
NOTES
--------------------------------------------------------------------------------
THE AUSTRIA FUND o 31
NOTES
--------------------------------------------------------------------------------
32 o THE AUSTRIA FUND
The Austria Fund
1345 Avenue of the Americas
New York, NY 10105
Alliance Capital [LOGO](R)
The Investment Professional's Choice
(R) These registered service marks used under license from the owner, Alliance
Capital Management L.P.
AUSAR801