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FIRST AUSTRALIA PRIME INCOME FUND ANNOUNCES DIVIDEND POLICY

 NEW YORK, Jan. 20 /PRNewswire/ -- The First Australia Prime Income Fund, Inc. (AMEX: FAX), a closed-end bond fund, today reiterated its announcement of Dec. 16, 1992, that it will continue to pay a regular monthly dividend of $0.09 per share. This dividend will apply at least until the end of March 1993, when the dividend will be subject to its routine quarterly review by the fund's board of directors, consistent with policy established in October 1988.
 It should also be noted that:
 -- The board's policy has been to provide a steady distribution level. The fund's December announcement included a statement that it may have to reduce the level of its monthly dividend in the future. This cautionary note to investors followed a period of considerable falls in interest rates in Australia and the United States, as well as significant currency movements.
 -- Obviously the fund cannot make precise market forecasts. However, Australian bonds continue to offer high relative yields and some potential for capital appreciation, especially with inflation at 0.8 percent pa -- its lowest level since the 1960s. In addition, the Australian dollar has consolidated at just above US$0.67 in recent trading after falling against a strengthening U.S. dollar over the past few months.
 -- Australian interest rates have historically been significantly higher than U.S. rates, and this is expected to continue. This is shown by the 13.4 percent average annual total return of the fund's net asset value from inception in 1986 to Oct. 31, 1992 (including reinvestment of dividends). For the 12-month period ended Dec. 31, 1992, total dividends and distributions declared by the fund amounted to $1.16 per share ($1.08 in income and $0.081 in capital gains). On the Dec. 31, 1992, share price of $10.00, this represented a yield of 11.6 percent. Qualifying U.S. taxpayers are entitled to a foreign withholding tax credit on a portion of the dividends. For the 1992 calendar year this amounted to $0.118.
 -- As of today, Australian 10-year government bonds are yielding 8.8 percent and inflation is running at an annual rate of 0.8 percent. The fund's average maturity is 5.8 years, with 65 percent of the fund invested in AAA-rated securities, 20 percent in AA, and the remainder in A.
 -- The fund retained some $4.6 million (approximately $0.046 per share) of distributable net income from 1992 earnings, to facilitate maintaining the dividend at $0.09 per share. Other than the running yield, the fund distributes realized capital gains and, due to the manager's active investment style, it would expect to continue to realize distributable gains from time to time.
 -- The manager is confident that Australian interest rates will continue to be significantly higher than rates in the United States.
 -0- 1/20/93
 /CONTACT: Brian Sherman of the First Australia Prime Income Fund, 011-612-258-8222, or Marissa Moretti or Doug Myers of Dewe Rogerson, 212-688-6840, for the First Australia Prime Income Fund/
 (FAX)


CO: First Australia Prime Income Fund, Inc. ST: New York IN: FIN SU: DIV

CK-PS -- NY040 -- 6889 01/20/93 12:34 EST
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Publication:PR Newswire
Date:Jan 20, 1993
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