<PAGE>
ALLIANCE GROWTH AND INCOME FUND, INC
1345 Avenue of the Americas
New York, New York 10105
Toll Free (800) 221-5672
September 22, 2000
To the Stockholders of Alliance Growth and Income Fund, Inc. (the "Fund"):
The accompanying Notice of Meeting and Proxy Statement present five
proposals to be considered at the Fund's Special Meeting of Stockholders to be
held on November 2, 2000. The proposals are discussed more fully in the
accompanying Proxy Statement.
The first two proposals are for, respectively, the reelection of the Fund's
Directors and the ratification of the selection of PricewaterhouseCoopers LLP as
independent accountants to the Fund for its fiscal year ending October 31, 2000.
The third proposal is for an amendment to the Fund's investment advisory
agreement with Alliance Capital Management L.P. to increase the advisory fee
payable by the Fund to Alliance and to revise the investment advisory fee
breakpoint schedule. The last two proposals relax or remove, in each case
consistent with the Investment Company Act of 1940 (the "1940 Act"), certain
outdated investment restrictions which were required by state "blue sky" laws
that were preempted and thus nullified by Congress in 1996. These restrictions
are not required by the 1940 Act and could impair the ability of the Fund to
respond competitively to future market developments. The Board believes that it
is in the best interests of the Fund and its stockholders to change these
restrictions to provide the Fund with the investment flexibility allowed by the
1940 Act.
We welcome your attendance at the Meeting. If you are unable to attend, we
encourage you to vote your proxy promptly, in order to spare the Fund additional
proxy solicitation expenses. Shareholder Communications Corporation ("SCC"), a
professional proxy solicitation firm, has been selected to assist stockholders
in the voting process. As the date of the Meeting approaches, if we have not
yet received your proxy, you may receive a telephone call from SCC reminding you
to exercise your right to vote. If you have any questions regarding the Meeting
agenda or how to submit your proxy, please call SCC at (800) 733-8481 ext.454.
Sincerely,
John D. Carifa
Chairman and President
<PAGE>
[Alliance Capital Logo]
Alliance Growth and Income Fund, Inc.
-----------------------------------------------------------
1345 Avenue of the Americas, New York, New York 10105
Toll Free (800) 221-5672
-----------------------------------------------------------
--------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
November 2, 2000
To the Stockholders of Alliance Growth and Income Fund, Inc.:
Notice is hereby given that a Special Meeting of Stockholders (the
"Meeting") of Alliance Growth and Income Fund, Inc., a Maryland corporation (the
"Fund"), will be held at the offices of the Fund, 1345 Avenue of the Americas,
33rd Floor, New York, New York 10105, on Thursday, November 2, 2000 at 11:00
a.m., for the following purposes, all of which are more fully described in the
accompanying Proxy Statement dated September 22, 2000:
1. To elect eight Directors of the Fund, each to hold office until his or her
successor is duly elected and qualified;
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the Fund for its fiscal year ending October 31, 2000;
3. To consider and vote on the approval of an amendment to the Fund's
Investment Advisory Agreement with Alliance Capital Management L.P. (the
"Adviser") to increase the advisory fee payable by the Fund to the Adviser
and revise the investment advisory fee breakpoint schedule;
4. To approve an amendment of a fundamental policy to permit the Fund to
engage in securities lending to the extent permitted by the Investment
Company Act of 1940, as amended (the "1940 Act");
5. To approve the reclassification of the Fund's fundamental policy relating
to portfolio diversification as a non-fundamental policy and the revision
of that policy to permit the Fund to fully utilize the investment latitude
for diversified funds established by the 1940 Act; and
6. To transact such other business as may properly come before the Meeting.
The Board of Directors has fixed the close of business on September 8, 2000
as the record date for the determination of stockholders entitled to notice of,
and to vote at, the Meeting and any postponement or adjournment thereof.
The enclosed proxy is being solicited on behalf of the Board of Directors
of the Fund. Each stockholder who does not expect to attend the Meeting in
person is requested to complete, date, sign and promptly return
<PAGE>
the enclosed proxy card, or to vote by telephone or via the Internet as
described on the enclosed proxy card.
The Board of Directors recommends approval of all the proposals.
By Order of the Board of Directors,
Edmund P. Bergan, Jr.
Secretary
New York, New York
September 22, 2000
-----------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
Please indicate your voting instructions on the enclosed proxy card,
sign and date it, and return it in the envelope provided, which needs no postage
if mailed in the United States. You may also vote via the Internet or by
telephone. To do so, please follow the instructions on the enclosed proxy card.
Your vote is very important no matter how many shares you own. Please mark and
mail your proxy promptly or vote by telephone or through the Internet in order
to save the Fund any additional cost of further proxy solicitation and in order
for the Meeting to be held as scheduled.
-----------------------------------------------------------------------------
(R) This registered service mark used under license from the owner, Alliance
Capital Management L.P.
2
<PAGE>
PROXY STATEMENT
ALLIANCE GROWTH AND INCOME FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
----------------
SPECIAL MEETING OF STOCKHOLDERS
November 2, 2000
----------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Alliance Growth and Income
Fund, Inc., a Maryland corporation (the "Fund"), to be voted at the Special
Meeting of Stockholders of the Fund (the "Meeting"), to be held at the offices
of the Fund, 1345 Avenue of the Americas, 33rd Floor, New York, New York 10105,
on Thursday, November 2, 2000 at 11:00 a.m. Proxies will be solicited primarily
by mail and solicitation may also be made by telephone. Solicitation costs will
be borne by Alliance Capital Management L.P., the Fund's investment adviser (the
"Adviser").
The Board of Directors has fixed the close of business on September 8,
2000 as the record date for the determination of stockholders entitled to notice
of, and to vote at, the Meeting and at any postponement or adjournment thereof
(the "Record Date"). The outstanding voting shares of the Fund as of the Record
Date consisted of [_________] shares of common stock, representing four classes
of shares, each share being entitled to one vote. All properly executed and
timely received proxies will be voted in accordance with the instructions marked
thereon or otherwise provided therein. Accordingly, unless instructions to the
contrary are marked, proxies will be voted for the election of eight directors
(Proposal One), for the ratification of the selection of PricewaterhouseCoopers
LLP as the Fund's independent accountants for its fiscal year ending October 31,
2000 (Proposal Two), for the approval of an amendment to the Fund's Investment
Advisory Agreement (the "Advisory Agreement") with the Adviser to provide for an
increase in the advisory fee payable by the Fund to the Adviser and to revise
the investment advisory fee breakpoint schedule (Proposal Three), for the
approval of an amendment to a fundamental policy to permit the Fund to engage in
securities lending to the extent permitted by the Investment Company Act of
1940, as amended (the "1940 Act")(Proposal Four), and for the approval of the
reclassification of the Fund's fundamental policy relating to portfolio
diversification as a non-fundamental policy and the revision of that policy to
permit the Fund to fully utilize the investment latitude for diversified funds
established by the 1940 Act (Proposal Five). (These proposals are referred to
individually as a "Proposal" and collectively as the "Proposals".) Any
stockholder may revoke that stockholder's proxy at any time prior to exercise
thereof by giving written notice to the Secretary of the Fund at 1345 Avenue of
the Americas, New York, New York 10105, by signing another proxy of a later date
or by personally voting at the Meeting.
1
<PAGE>
Properly executed proxies may be returned with instructions to abstain
from voting or to withhold authority to vote (an "abstention") or represent a
broker "non-vote" (which is a proxy from a broker or nominee indicating that the
broker or nominee has not received instructions from the beneficial owner or
other person entitled to vote shares on a particular matter with respect to
which the broker or nominee does not have discretionary power to vote). The
shares represented by such a proxy will be considered present for purposes of
determining the existence of a quorum for the transaction of business. Those
shares not being cast will have no effect, however, on the outcome of the
Proposals. If any proposal, other than the Proposals, properly comes before the
Meeting, the shares represented by proxies will be voted on all such other
proposals in the discretion of the person or persons voting the proxies. The
Fund has not received notice of, and is not otherwise aware of, any other matter
to be presented at the Meeting.
A quorum for the Meeting will consist of the presence in person or by
proxy of the holders of a majority of the shares entitled to vote at the
Meeting. Whether or not a quorum is present at the Meeting, if sufficient votes
in favor of the position recommended by the Board of Directors on any Proposal
described in the Proxy Statement are not timely received, the persons named as
proxies may, but are under no obligation to, with no other notice than
announcement at the Meeting, propose and vote for one or more adjournments of
the Meeting to permit further solicitation of proxies. The Meeting may be
adjourned with respect to fewer than all the Proposals in the Proxy Statement,
and a stockholder vote may be taken on any one or more of the Proposals prior to
any adjournment if sufficient votes have been received for approval thereof.
Shares represented by proxies indicating a vote contrary to the position
recommended by the Board of Directors on a Proposal will be voted against
adjournment as to that Proposal.
The Fund has engaged Shareholder Communications Corporation ("SCC"), 17
State Street, New York, New York 10004, to assist the Fund in soliciting proxies
for the Meeting. SCC will receive a fee of $17,500 for its services plus
reimbursement of out-of-pocket expenses.
PROPOSAL ONE
ELECTION OF DIRECTORS
At the Meeting, eight Directors are to be elected, each to serve until
his or her successor is duly elected and qualifies. The affirmative vote of a
majority of the votes cast at the Meeting is required to elect a Director. It is
the intention of the persons named as proxies in the accompanying proxy to
nominate and vote in favor of the election of each nominee referred to below.
Messrs. John D. Carifa, David H. Dievler, John H. Dobkin, William H.
Foulk, Jr., Clifford L. Michel and Donald J. Robinson, Ms. Ruth Block and Dr.
James M. Hester were previously elected as Directors of the Fund by its
stockholders. The foregoing individuals are standing for reelection at the
Meeting. Each of the eight nominees has consented to serve as a Director of the
Fund. The Board of Directors knows of no reason why any of the nominees will be
unable to serve, but in the event any nominee is unable to serve or for good
cause will not serve, the proxies received indicating a vote in favor of such
nominee will be voted for a substitute nominee as the Board of Directors may
recommend.
2
<PAGE>
Certain information concerning the Fund's Directors is set forth below.
Each is a director or trustee of other investment companies sponsored by the
Adviser.
<TABLE>
<CAPTION>
Number of shares of the Fund's
common stock beneficially
Year first owned directly or indirectly
Name, age, positions and offices with the Fund, principal became a as of
occupations during the past five years and other Directorships Director September 8, 2000
--------------------------------------------------------------- -------- -----------------
<S> <C> <C>
* John D. Carifa, Chairman of the Board, 54. President, Chief
Operating Officer and a Director of Alliance Capital Management
Corporation, the general partner of the Adviser ("ACMC"), which
he has been associated with since prior to 1995. 1987 [ ]
**+ Ruth Block, Director, 69. Formerly an Executive Vice President
and Chief Insurance Officer of The Equitable Life Assurance
Society of the United States. She is a Director of Ecolab
Incorporated (specialty chemicals) and BP Amoco Corporation (oil
and gas). 1986 [ ]
**+ David H. Dievler, Director, 70. Independent Consultant. Formerly
a Senior Vice President of ACMC until December 1994. 1987 [ ]
**+ John H. Dobkin, Director, 58. President of Historic Hudson Valley
(historic preservation) since prior to 1995. Previously, he was
Director of the National Academy of Design. 1992 [ ]
**+ William H. Foulk, Jr., Director, 67. Investment Adviser and
Independent Consultant. He was formerly Senior Manager of Barrett
Associates, Inc., a registered investment adviser, with which he
had been associated since prior to 1995. 1992 [ ]
</TABLE>
--------------------------
* "Interested person," as defined in the 1940 Act, of the Fund because of an
affiliation with the Adviser.
** Member of the Audit Committee.
+ Member of the Nominating Committee.
3
<PAGE>
<TABLE>
<CAPTION>
Number of shares of the Fund's
common stock beneficially
Year first owned directly or indirectly
Name, age, positions and offices with the Fund, principal became a as of
occupations during the past five years and other Directorships Director September 8, 2000
---------------------------------------------------------------- ---------- ------------------
<S> <C> <C>
**+ Dr. James M. Hester, Director, 75. President of The Harry Frank
Guggenheim Foundation, with which he has been associated since
prior to 1995. He was formerly President of New York University
and The New York Botanical Garden and Rector of The United
Nations University. 1989 [ ]
**+ Clifford L. Michel, Director, 60. Member of the law firm of
Cahill Gordon & Reindel, with which he has been associated since
prior to 1995. He is President and Chief Executive Officer of
Wenonah Development Company (investments) and a Director of
Placer Dome, Inc. (mining). 1989 [ ]
**+ Donald J. Robinson, Director, 65. Senior Counsel of the law firm
of Orrick, Herrington & Sutcliffe since January 1995. He was
formerly a senior partner and a member of the Executive Committee
of that firm. He was also a Trustee of the Museum of the City of
New York from 1977-1995. 1996 [ ]
</TABLE>
--------------------------
** Member of the Audit Committee.
+ Member of the Nominating Committee.
The Adviser has instituted a policy applicable to all registered
investment companies to which the Adviser provides investment advisory services
including the Fund (collectively, the "Alliance Fund Complex") contemplating
that each Director will invest specified minimum amounts and (in most cases) an
overall total of at least $150,000 in shares of investment companies within the
Alliance Fund Complex. As of the Record Date, the Directors and officers of the
Fund as a group owned less than 1% of the shares of the Fund.
During the Fund's fiscal year ended October 31, 1999 (the "1999 fiscal
year"), the Board of Directors met [nine] times, the Audit Committee met [twice]
for the purposes described below in Proposal Two and the Nominating Committee of
the Fund did not meet. Both the Audit Committee and the Nominating Committee are
standing committees of the Board. The Nominating Committee considers individuals
for nomination to fill vacancies on the Board of Directors. It does not
currently consider for nomination candidates proposed by stockholders.
4
<PAGE>
The Fund does not pay any fees to, or reimburse expenses of, any
Director during a time in which such Director is considered an "interested
person" of the Fund. The aggregate compensation paid by the Fund to each of the
Directors during the 1999 fiscal year, the aggregate compensation paid to each
of the Directors during calendar year 1999 by all of the investment companies in
the Alliance Fund Complex and the total number of investment companies and
investment portfolios within the Alliance Fund Complex with respect to which
each of the Directors serves as a director or trustee are set forth below.
Neither the Fund nor any other investment company in the Alliance Fund Complex
provides compensation in the form of pension or retirement benefits to any of
its directors or trustees.
<TABLE>
<CAPTION>
Total Number of Total Number of
Investment Investment
Total Compensation Companies in the Portfolios within
Aggregate from the Alliance Alliance Fund the Alliance Fund
Compensation from Fund Complex, Complex, including Complex, including
the Fund during the including the Fund, the Fund, as to the Fund, as to
Fiscal Year Ended during the 1999 which the Director which the Director
Name of Director of the October 31, Calendar is a Director or a is a Director or a
Fund 1999 Year Trustee Trustee
-------------------------- ------------------- ------------------- -------------------- ---------------------
<S> <C> <C> <C> <C>
John D. Carifa $0 $0 [50] [103]
Ruth Block $3,617 $154,263 [38] [80]
David H. Dievler $3,735 $210,188 [45] [87]
John H. Dobkin $3,737 $206,488 [42] [84]
William H. Foulk, Jr. $3,738 $246,413 [45] [98]
Dr. James M. Hester $3,740 $164,138 [39] [81]
Clifford L. Michel $3,740 $183,388 [39] [83]
Donald J. Robinson $2,984 $140,813 [41] [92]
</TABLE>
Your Board of Directors recommends that the stockholders vote "FOR" the
election of each of the foregoing nominees to serve as a Director of the Fund.
PROPOSAL TWO
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, including a majority of the Directors who are
not "interested persons" of the Fund, as defined in the 1940 Act, at a meeting
held on [_______, 2000], selected PricewaterhouseCoopers LLP, independent
accountants to audit the accounts of the Fund for the fiscal year ending October
31, 2000. PricewaterhouseCoopers LLP (or its predecessor) has audited the
accounts of the Fund since [__________] and does not have any direct financial
interest or any material indirect financial interest in the
5
<PAGE>
Fund. The affirmative vote of a majority of the votes cast at the
Meeting is required to ratify the selection of PricewaterhouseCoopers
LLP as independent accountants of the Fund.
A representative of PricewaterhouseCoopers LLP is expected to attend
the Meeting and to have the opportunity to make a statement and to respond to
appropriate questions from stockholders. The Audit Committee of the Board of
Directors meets with representatives of PricewaterhouseCoopers LLP to discuss
the scope of their engagement and to review the financial statements of the Fund
and the results of their examination thereof.
Your Board of Directors recommends that the stockholders vote "FOR" the
ratification of the selection of PricewaterhouseCoopers LLP as independent
accountants of the Fund.
PROPOSAL THREE
APPROVAL OF A PROPOSAL
TO AMEND THE INVESTMENT ADVISORY AGREEMENT TO
INCREASE THE INVESTMENT ADVISORY FEE
AND REVISE THE ADVISORY FEE BREAKPOINT SCHEDULE
At a meeting of the Board of Directors held on July 19-20, 2000, the
Directors considered and approved the Adviser's proposal that the Fund's
Advisory Agreement be amended as described below to increase the advisory fee
payable by the Fund to the Adviser and revise the current advisory fee
breakpoint schedule and resolved to recommend the amendment to the stockholders
for their approval. Approval of Proposal Three requires the affirmative vote of
"a majority of the outstanding voting securities" as defined by the 1940 Act,
which means the lesser of (i) 67% or more of the voting securities of the Fund
present or represented at the Meeting, if the holders of more than 50% of the
outstanding voting securities of the Fund are present or represented by proxy,
or (ii) more than 50% of the outstanding voting securities of the Fund.
If the stockholders of the Fund do not approve the amendment to
increase the advisory fee and revise the advisory fee breakpoint schedule, the
Board of Directors will consider other appropriate action.
Your Board of Directors recommends that the stockholders vote "FOR" the
approval of Proposal Three.
Summary of the Proposal
At the Boards July 19-20, 200 Meeting, the Adviser presented data to
the Directors indicating that the Fund's current advisory fee is significantly
below both the average fee for funds with similar investment objectives and the
average fees paid by those funds that the Adviser has identified as the Fund's
main competitors. The Adviser noted that the Fund's lower than average advisory
fee is the result of its inherited fee breakpoint schedule, which had been in
place for many years when the Adviser assumed management of the Fund in 1986 and
which, because it contains breakpoints at asset levels which are low in light
of the Fund's growth in recent years, does not take into account the Fund's
growth in recent years. The proposed increase in the advisory fee and the new
proposed breakpoint schedule are designed to bring the fee closer to, but yet
still below the industry averages, although somewhat above the average of fees
paid by some of the Adivser's main competitors.
6
<PAGE>
Proposed Fee. As approved by the Directors, the Fund's proposed
------------
advisory fee would be .625 of 1% of the first $5 billion, .60 of 1% of the
excess over $5 billion up to $7.5 billion, .575 of 1% of the excess over $7.5
billion up to $10 billion and .55 of 1% of the excess over $10 billion of the
average daily value of the Fund's net assets. At the Fund's current asset level
of $4.7 billion, the effective fee rate under the Proposal would be .625%. If
the Proposal is approved by the stockholders the new advisory fee would become
effective promptly following such approval. This proposed fee differs slightly
from the fee initially proposed to the Board of Directors by the Adviser. See
"Board Considerations" below.
Current Fee. The Fund's current advisory fee is .625 of 1% of the first
-----------
$200 million, .50 of 1% of the excess over $200 up to $400 million and .45 of 1%
of any excess over $400 million of the average daily value of the Fund's net
assets. At the Fund's net asset level as of June 30, 2000, its effective fee
rate was .46%.
Board Considerations
In its deliberations concerning the Adviser's proposal that they
approve the proposed increase in the advisory fee and revisions to the advisory
fee breakpoint schedule, the Directors considered that the Fund has been
experiencing superior investment performance and that the Fund's current
advisory fee is significantly below industry norms. The Directors reviewed a
comparison of the Fund's investment performance, advisory fee and expense ratio
against both the larger universe of the multi-cap value funds tracked by Lipper
Analytical Services, Inc. ("Lipper") and smaller universe, prepared by the
Adviser and based upon recent data supplied by Lipper of the seven best selling
salesforce-distributed funds, including the Fund (the "Key Competitor Universe")
and the largest salesforce-distributed multicap value funds, including the Fund
(the "Adviser's Competitor Universe"). The Adviser's Competitor Universe
included only one competitive fund per complex. The comparison reflects that, as
of June 30, 2000, measured against the broader universe of Lipper multi-cap
funds, the Fund has achieved top decile performance for the 3-year and 5-year
periods and near top quartile performance (124 of 482, or top 26%) for the
1-year period. Measured against the more narrow Key Competitor Universe, the
Fund's performance was second out of seven funds for the 3-year and 5-year
periods and fourth and third for the 1-year and 6-month periods, respectively,
ending on June 30, 2000. In addition, the Adviser provided the Directors with
information that indicated that the Fund significantly outperformed the
Adviser's Competitor Universe by approximately 403, 738 and 562 basis points for
the one, three and five year periods, respectively, ended May 31, 2000.
The Adviser further noted to the Directors that while the Fund's
performance has been exceptional, the current effective advisory fee rate of
.46% is well below the Lipper multi-cap value fund average and median fees of
.76% and .77%, respectively, and significantly below the .628% and .614% average
fees of the Adviser's Competitor Universe at the $3 billion and $5 billion asset
levels, respectively. The Adviser also noted that the Fund's current effective
fee is slightly below the average .48% fee of funds of similar size and
distribution.
In addition, the Adviser informed the Directors that under its proposed
fee schedule, the Fund's effective fee rate of .638% at its asset level as of
June 30, 2000 would remain well below the average and median of the larger
7
<PAGE>
Lipper peer group, but would be slightly above the average of the Adviser's
Competitor Universe and somewhat above the average of the Key Competitor
Universe. The Adviser stated that it believed that this fee is appropriate given
the research intensive nature of the Adviser's disciplined investment process
and the Fund's consistently superior long-term performance against these smaller
groups.
The Adviser also noted that the Fund's current expense ratio of .910%
is in line with the .872% average of a group of five salesforce-distributed
multi-cap value funds of similar size and distribution and well below the 1.38%
Lipper average. The Adviser informed the Directors that, if the Proposal is
approved, it expected that the Fund's current expense ratio would remain well
below the Lipper average, although it would be somewhat higher than the average
of funds of similar size and distribution.
As proposed by the Adviser, the advisory fee would have been increased
to .650 of 1% of the first $2.5 billion, .625 of 1% of the next $2.5 billion,
.600 of 1% of the next $2.5 billion, .575 of 1% of the next $2.5 billion and
.550 of 1% of the excess over $10 billion, of the average daily value of the
Fund's net assets.
In its deliberations on the proposed increase in the advisory fee, the
Board of Directors reviewed the materials provided by the Adviser and
considered, among other things, the following: (1) the performance of the Fund,
noting the Fund had outperformed both the Larger Lipper Universe and the smaller
Key Competitor and Adviser's Competitor Universes, (2) the level of the proposed
fee as compared to the fees paid by other funds in the Lipper Universe, the
Adviser's Competitor Universe and the universe of the funds of similar size and
distribution, (3) the nature and quality of the services rendered by the
Adviser, (4) actual expense ratios of the Fund as of June 30, 2000 and pro-forma
expense ratios assuming adoption of the proposed fee increase, and (5) the
profitability of the Fund to the Adviser for calendar year 1999 and pro-forma
data regarding the profitability of the Fund to the Adviser assuming adoption of
the proposed fee increase .
Following the Adviser's presentation, the independent Directors
consulted separately with their independent counsel. Thereafter, the Directors
met with representatives of the Adviser and indicated their general agreement
with the proposal presented by the Adviser but stated their belief that it would
be more suitable to reduce the fee at the initial breakpoint from .650% on the
first $2.5 billion to .625% on the first $5 billion and to thereafter continue
with the breakpoint schedule as proposed. In response, the Adviser indicated its
willingness to accept this recommendation of the disinterested Directors, after
which the Directors and the disinterested Directors as a whole, approved the
proposal and determined to recommend the proposal to shareholders for their
approval.
Fees and Expenses
The following tables describe, for each of the Fund's four classes of
shares, the Fund's operating expenses for the 1999 fiscal year, including the
advisory fee, and the Fund's corresponding pro forma fees and expenses for the
1999 fiscal year, including the advisory fee, if the Proposal is approved.
8
<PAGE>
Current Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>
------------------------------------- -------------------- --------------------- ---------------------- ----------------------
Class A Class B Class C Advisor Class
------------------------------------- -------------------- --------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Advisory fees .47% .47% .47% .47%
------------------------------------- -------------------- --------------------- ---------------------- ----------------------
Distribution (12b-1) fees .24% 1.00% 1.00$ None
------------------------------------- -------------------- --------------------- ---------------------- ----------------------
Other expenses .22% .23% .22% .21%
------------------------------------- -------------------- --------------------- ---------------------- ----------------------
Total fund operating expenses .93% 1.70% 1.69% .68%
------------------------------------- -------------------- --------------------- ---------------------- ----------------------
</TABLE>
Pro Forma Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
<TABLE>
------------------------------------- -------------------- --------------------- ---------------------- ----------------------
Class A Class B Class C Advisor Class
------------------------------------- -------------------- --------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Advisory fees .63% .63% .63% .63%
------------------------------------- -------------------- --------------------- ---------------------- ----------------------
Distribution (12b-1) fees .24% 1.00% 1.00% None
------------------------------------- -------------------- --------------------- ---------------------- ----------------------
Other expenses .22% .23% .22% .21%
------------------------------------- -------------------- --------------------- ---------------------- ----------------------
Total fund operating expenses 1.09% 1.86% 1.85% .84%
------------------------------------- -------------------- --------------------- ---------------------- ----------------------
</TABLE>
Examples
The Examples are to help you compare the cost of investing in the Fund
with the cost of investing in other funds. They assume that you invest $10,000
in the Fund for the time periods indicated and then redeem all of your shares at
the end of those periods. They also assume that your investment has a 5% return
each year, that the Fund's operating expenses stay the same and that all
dividends and distributions are reinvested. Your actual costs may be higher or
lower. Although Proposal Three involves no change in such charges, for the sake
of comparison these examples also include the 4.25% maximum sales charge imposed
on purchases of Class A shares and the 4.0% and 1.0% maximum deferred sales
charges imposed as a percentage of the original purchase price or redemption
proceeds, whichever is lower, of Class B shares and Class C shares,
respectively.
Current Examples
<TABLE>
<CAPTION>
------------------------- --------------------- ------------------------ ----------------------- -----------------------------
Class A Class B Class C Advisor Class
------------------------- --------------------- ------------------------ ----------------------- -----------------------------
<S> <C> <C> <C> <C> <C>
After 1 year $516 $573 $272 $69
------------------------- --------------------- ------------------------ ----------------------- -----------------------------
After 3 years $709 $736 $533 $218
------------------------- --------------------- ------------------------ ----------------------- -----------------------------
After 5 years $918 $923 $918 $379
------------------------- --------------------- ------------------------ ----------------------- -----------------------------
After 10 Years $1,519 $1,804+ $1,998 $847
------------------------- --------------------- ------------------------ ----------------------- -----------------------------
</TABLE>
+ Assumes Class B shares convert to Class A shares after eight years.
Pro Forma Examples
<TABLE>
<CAPTION>
------------------------- --------------------- ------------------------ ----------------------- -----------------------------
Class A Class B Class C Advisor Class
------------------------- --------------------- ------------------------ ----------------------- -----------------------------
<S> <C> <C> <C> <C>
After 1 year $531 $589 $288 $86
------------------------- --------------------- ------------------------ ----------------------- -----------------------------
After 3 years $757 $785 $582 $268
------------------------- --------------------- ------------------------ ----------------------- -----------------------------
After 5 years $1,000 $1,006 $1,001 $466
------------------------- --------------------- ------------------------ ----------------------- -----------------------------
After 10 Years $1,697 $1,979+ $2,169 $1037
------------------------- --------------------- ------------------------ ----------------------- -----------------------------
</TABLE>
+ Assumes Class B shares convert to Class A shares after eight years.
9
<PAGE>
The Adviser received aggregate advisory fees from the Fund in the
amount of $13,402,371 for the 1999 fiscal year. If the proposed fee had been in
effect during the 1999 fiscal year, the Adviser would have received an aggregate
amount of $17,989,404, representing an increase of 34.2%
Investment Advisory Agreement
The current Advisory Agreement, dated July 22, 1992, was approved by a
majority of the outstanding voting securities of the Fund at a meeting held on
June 11, 1992.
Under the Advisory Agreement, the Adviser furnishes advice and
recommendations with respect to the Fund's portfolio of securities and
investments and provides persons satisfactory to the Board of Directors to act
as officers and employees of the Fund. These officers and employees, as well as
certain Directors of the Fund, may be employees of the Adviser or its
affiliates.
The Advisory Agreement is to remain in effect for successive
twelve-month periods, provided that such continuance is specifically approved at
least annually by the Fund's Directors or by majority vote of the holders of the
outstanding voting securities of the Fund and in either case by a majority of
the Directors who are not parties to the Advisory Agreement, or interested
persons, as defined in the 1940 Act, of any such party, at a meeting in person
called for the purpose of voting on such matter. Continuance of the Advisory
Agreement for another annual term was approved by the Directors, including a
majority of the Directors who are not "interested persons" as defined in the
1940 Act, at a meeting of the Board of Directors held on July 19-20, 2000.
The Advisory Agreement may be terminated without penalty on 60 days'
written notice by a vote of a majority of the Fund's outstanding voting
securities or by a vote of a majority of the Fund's Directors, or by the Adviser
on 60 days' written notice, and will automatically terminate in the event of its
assignment. The Advisory Agreement provides that the Adviser shall not be liable
thereunder for any mistake of judgment or in any event whatsoever, except for
lack of good faith, provided that the Adviser shall be liable to the Fund and
stockholders by reason of willful misfeasance, bad faith or gross negligence, or
of reckless disregard of its obligations and duties under the Advisory
Agreement.
As to the obtaining of services other than those specifically provided
to the Fund by the Adviser, the Fund may employ its own personnel. For such
services, it also may utilize personnel employed by the Adviser or other
subsidiaries of The Equitable Life Assurance Society of the United States
("Equitable") and, in that event, the services are to be provided to the Fund at
cost and the payments therefore must be specifically approved by the Fund's
Directors. The Fund paid to the Adviser a total of $130,000 for the cost of
certain administrative, accounting, bookkeeping, legal and compliance services
to the Fund during the 1999 fiscal year.
Investment Adviser
Alliance Capital Management L.P. (the "Adviser"), a Delaware limited
partnership with principal offices at 1345 Avenue of the Americas, New York,
10
<PAGE>
New York 10105, has been retained under the Advisory Agreement to provide
investment advice and, in general, to conduct the management and investment
program of the Fund under the supervision of the Fund's Board of Directors. The
Adviser is a leading international investment adviser supervising client
accounts with assets as of June 30, 2000 totaling more than $388 billion (of
which more than $185 billion represented assets of investment companies). As of
June 30, 2000, the Adviser managed retirement assets for many of the largest
public and private employee benefit plans (including 29 of the nation's FORTUNE
100 companies), for public employee retirement funds in 33 states, for
investment companies, and for foundations, endowments, banks and insurance
companies worldwide. As of June 30, 2000 the 52 registered investment companies
managed by the Adviser, comprising 122 separate investment portfolios, had more
than 6.1 million shareholder accounts.
Alliance Capital Management Corporation, with principal offices at 1345
Avenue of the Americas, New York, New York 10105, is the general partner of the
Adviser and a wholly owned subsidiary of Equitable. Equitable, with principal
offices at 1290 Avenue of the Americas, New York, New York 10104, one of the
largest life insurance companies in the United States, is the beneficial owner
of an approximately 55.4% partnership interest in the Adviser. Alliance Capital
Management Holding L.P. ("Alliance Holding") owns an approximately 41.9%
partnership interest in the Adviser.1 Equity interests in Alliance Holding are
traded on the New York Stock Exchange in the form of units. Approximately 98% of
such interests are owned by the public and management or employees of the
Adviser and approximately 2% are owned by Equitable. Equitable is a wholly owned
subsidiary of AXA Financial, Inc. ("AXA Financial"), a Delaware corporation with
principal offices at 1290 Avenue of the Americas, New York, New York 10104,
whose shares are traded on the New York Stock Exchange. AXA Financial serves as
the holding company for the Adviser, Equitable and Donaldson, Lufkin & Jenrette,
Inc. ("DLJ"), an integrated investment and merchant bank. As of June 30, 1999,
AXA, a French insurance holding company, with principal offices at 25, Avenue
Matignon, 75008 Paris, France, owned approximately 58.2% of the issued and
outstanding shares of common stock of AXA Financial.
Distribution and Transfer Agency Fees and Payments to Affiliated Brokers
The Fund has entered into a Distribution Services Agreement (the
Distribution Agreement") with Alliance Fund Distributors, Inc., the Fund's
principal underwriter, to permit it to distribute the Fund's shares and to
permit the Fund to pay distribution services fees to defray expenses associated
with the distribution of its Class A shares, Class B shares and Class C shares
in accordance with a plan of distribution which is included in the Distribution
Agreement and has been duly adopted and approved in accordance with Rule 12b-1
under the 1940 Act. During the Fund's 1999 fiscal year, the Fund paid
distribution services fees for expenditures under the Distribution Agreement of
$3,081,790 with respect to Class A shares,
------------------------
1 Until October 29, 1999, Alliance Holding served as the investment adviser
to the Fund. On that date, Alliance Holding reorganized by transferring its
business to the Adviser. Prior thereto, the Adviser had no material
business operations. One result of the organization was that the Advisory
Agreement, then between the Fund and Alliance Holding, was transferred to
the Adviser by means of a technical assignment, and ownership of Alliance
Fund Distributors, Inc. and Alliance Fund Services, Inc., the Fund's
principal underwriter and transfer agent, respectively, also was
transferred to the Adviser.
11
<PAGE>
$12,625,937 with respect to Class B shares, and $3,197,078 with respect to Class
C shares.
Alliance Fund Services, Inc., an indirect wholly-owned subsidiary of
the Adviser located at 500 Plaza Drive, Secaucus, New Jersey 07094, receives a
transfer agency fee per account holder of each of the Class A shares, Class B
shares, Class C shares and Advisor Class shares of the Fund, plus reimbursement
for out-of-pocket expenses. For the Fund's 1999 fiscal year, the Fund paid AFS
$3,157,091 for transfer agency services.
Distribution and transfer agency services will continue following the
approval of the Proposal.
During the Fund's fiscal year ended October 31, 1999, brokerage
commissions amounting in the aggregate to $288,596 were paid to DLJ and
brokerage commissions amounting in the aggregate to $0 were paid to brokers
utilizing the Pershing Division of DLJ. During such fiscal year, the brokerage
commissions paid to DLJ constituted 5.04%% of the Fund's aggregate brokerage
commissions and the brokerage commissions paid to brokers utilizing the Pershing
Division of DLJ constituted 0% of the Fund's aggregate brokerage commissions. As
discussed above, DLJ is an affiliate of the Adviser.
Other Fund Advised by the Adviser with
Similar Investment Objectives
The Growth and Income Portfolio of Alliance Variable Products Series
Fund, Inc. (the "Variable Portfolio") has an investment objective that is
similar to that of the Fund. The fees paid to the Adviser pursuant to an
advisory agreement in effect for the Variable Portfolio are .625% (as a
percentage of average daily net assets). For the Variable Portfolio's fiscal
year ending December 31, 2000, the Adviser has agreed to waive its fee and bear
certain expenses so that its total expenses do not exceed on an accrued basis
.95% for Class A shares and 1.20% for class B shares. Because the Variable
Portfolio's total expenses are presently below these limits, the Adviser is not
currently waiving its fee or reimbursing expenses. The average net assets of the
Variable Portfolio for the year ended December 31, 1999 were $454,233,904.
PROPOSAL FOUR
APPROVAL OF A PROPOSAL
TO AMEND A FUNDAMENTAL POLICY
TO PERMIT SECURITIES LENDING TO THE EXTENT
PERMITTED BY THE 1940 ACT
The fundamental policies of the Fund currently do not permit the
lending of securities. Under the Fund's current policy, the Fund may not make
loans except certain call loans upon collateral security. At its September 7,
2000 Special Meeting, the Adviser informed the Directors that it was developing,
for the Directors consideration, proposed securities lending arrangements for
many Alliance Mutual Funds, including the Fund. The Adviser noted that the
proposed arrangements would enable each participating fund to earn incremental
investment income through the lending of a portion of the Fund's portfolio
securities on terms designed to avoid any impingement of the Fund's ongoing
investment process. The Adviser stated that in anticipation of these
recommendations, it was recommending the revision of the Fund's fundamental
investment restriction generally prohibiting the Fund from engaging in
securities lending. At the September 7, 2000 Meeting, the Board of Directors
approved the Adviser's recommendation that this fundamental policy be revised to
permit the Fund to engage in securities lending to the extent permitted by the
1940 Act. The Board further resolved to recommend this change to the Fund's
stockholders for their approval.
12
<PAGE>
In recommending this change, the Adviser informed the Board that this
absolute prohibition was not required by the 1940 Act. The Adviser noted that
this restriction was required by state "blue sky" laws that were nullified by
the federal preemption of state regulation of mutual fund prospectuses passed by
Congress in 1996. The Adviser noted that in order to ensure that the Fund can
continue to compete with newer funds created after federal preemption that are
not so constrained as well as older funds that changed their lending policies to
permit securities lending, it was recommending that this fundamental policy be
revised so as to provide the Fund with essentially the same investment
flexibilty to engage in securities lending as is possessed by the majority of
the Alliance Mutual Funds, which are permitted to engage in securities lending
to the extent permitted by the 1940 Act.
Based on the information provided by the Adviser, the Directors
approved the Adviser's proposal and recommended its approval by the Fund's
stockholders. The proposed revised fundamental policy would provide as follows:
The Fund may not make loans to other persons, except that the
Fund may lend its portfolio securities in accordance with
applicable law. The acquisition of investment securities or
other investment instruments shall not be deemed to be the
making of a loan.
If the proposed revised policy is adopted by the stockholders, under
current law the Fund would be able to lend portfolio securities up to a maximum
in value of 33 1/3% of its total assets (including collateral for any stock
loaned). It is currently expected that the Fund would lend securities only on a
fully collateralized basis and only to borrowers deemed by the Adviser to be of
sound financial standing. While any such loan is outstanding, it would generally
be secured by collateral in the form of cash or securities issued or guaranteed
by the U.S. Government, equal at all times to at least 100% of the current
market value of the loaned securities plus, if applicable, accrued interest. All
such loans could be terminated at any time by either the Fund (entitling the
Fund to the return of the loaned securities at the end of the customary
settlement period for the type of securities loaned) or the borrower. It is
currently expected that the transactions would be structured so that the Fund
would retain rights of ownership of the loaned securities, including rights to
dividends, interest or other distributions on the loaned securities. Voting
rights would pass with the lending, although the Fund would be able to call
loans to vote proxies if desired.
Approval of this proposal requires the affirmative vote of "a majority
of the outstanding voting securities" defined herein. If the stockholders of the
Fund do not approve the amendment to the Fund's fundamental policy to permit
lending to the extent permitted by the 1940 Act, the policy will remain
unchanged.
Your Board of Directors recommends that the stockholders vote "FOR" the
approval of Proposal Four.
13
<PAGE>
PROPOSAL FIVE
APPROVAL OF A PROPOSAL TO RECLASSIFY THE FUND'S FUNDAMENTAL POLICY RELATING
TO PORTFOLIO DIVERSIFICATION AS A NON-FUNDAMENTAL POLICY AND THE REVISION OF
THAT POLICY TO PERMIT THE FUND TO FULLY UTILIZE THE INVESTMENT LATITUDE
FOR DIVERSIFIED FUNDS ESTABLISHED BY THE 1940 ACT
Although the Fund is a "diversified" investment company under the 1940
Act, it has a fundamental policy that is more restrictive than that required of
a diversified investment company under the 1940 Act. To be "diversified" under
the 1940 Act, an investment company must not, with respect to 75% of its total
assets, invest more than 5% of its total assets in the securities of any one
issuer (the "5% limit") or acquire more than 10% of the outstanding voting
securities of any one issuer (the "10% limit"). Up to 25% of its total assets
(the "25% basket") may be invested without regard to these restrictions (i.e. up
to 25% in one or more issuers).
Under the Fund's current fundamental policy, the 5% and 10% limits
apply to 100% of its total assets, not to 75% of its total assets as is
permissible under the 1940 Act. This restriction was required by state "blue
sky" laws that were nullified by the federal preemption of state regulation of
mutual fund prospectuses passed by Congress in 1996. At its September 7, 2000
Special Meeting, the Board of Directors approved the Adviser's recommendation
that this fundamental policy be reclassified as non-fundamental and be revised
to permit the Fund to invest in accordance with the limits contained in the 1940
Act for diversified investment companies. In making its recommendation, the
Adviser noted that these changes would enable the Fund to remain competitive
with newer funds that are not subject to these restrictions, as well as older
funds that changed their diversification policies to remove similar
restricitons, and would allow the Fund the flexibility to take larger positions
within its non-diversified 25% basket when the Adviser deems appropriate. The
Adviser further noted that reclassifying this policy as non-fundamental would
allow the Fund to respond more quickly to any changes in the 1940 Act
diversification standard without the delay or expense of a stockholder vote. The
Adviser stated that it believed that the adoption of this change would not
materially affect the operation of the Fund, although it was expected that the
Fund would avail itself of the occasional opportunities presented by the
non-diversified 25% basket. The returns of a fund that may invest 25% of its
total assets in a single issuer may be more dependent on a single stock and may
be more volatile than those of a fund that is subject to a lower limit on such
investments.
Approval of Proposal Five requires the affirmative vote of "a majority
of the outstanding voting securities" defined herein. If the stockholders of the
Fund do not approve the Fund's fundamental policy with respect to the
diversification of the Fund's investments, the policy will remain unchanged.
Your Board of Directors recommends that the stockholders vote "FOR" the
approval of Proposal Five.
HOW TO VOTE
You may vote your shares by mail by signing and returning the enclosed
proxy card, by telephone, or over the Internet.
14
<PAGE>
Voting by Mail or in Person. If you wish to participate at the Meeting,
---------------------------
but do not wish to give a proxy by telephone or via the Internet, you can
complete, sign and mail the enclosed proxy card or attend the Meeting in person.
Internet and Telephone Voting. You may give your voting instructions
-----------------------------
via the Internet or by touch-tone telephone by following the instructions
provided on your proxy card.
INFORMATION AS TO THE FUND'S PRINCIPAL OFFICERS
The principal officers of the Fund and their principal occupations
during the past five years are as follows:
JOHN D. CARIFA, Chairman and President (see page [__] for biographical
information).
KATHLEEN A. CORBET, Senior Vice President, [39], is an Executive Vice
President of Alliance Capital Management Corporation ("ACMC"), with which she
has been associated since prior to 1995.
PAUL C. RISSMAN, Senior Vice President, [43], is a Senior Vice
President of ACMC, with which he has been associated since prior to 1995.
THOMAS J. BARDONG, Vice President, [54], is a Senior Vice President of
ACMC, with which he has been associated since prior to 1995.
FRANK V. CARUSO, Vice President, [43], is a Senior Vice President of
[Shields/ACMC], with which he has been associated since prior to 1995.
EDMUND P. BERGAN, JR., Secretary, [50], is a Senior Vice President and
the General Counsel of Alliance Fund Distributors, Inc. ("AFD") and Alliance
Fund Services, Inc. ("AFS"), with which he has been associated since prior to
1995.
ANDREW L. GANGOLF, Assistant Secretary, [45], is a Vice President and
Assistant General Counsel of AFD, with which he has been associated since prior
to 1995.
DOMENICK PUGLIESE, Assistant Secretary, [38], is a Vice President and
Assistant General Counsel of AFD, with which he has been associated since May
1995. Prior thereto, he was a Vice President and Counsel of Concord Holding
Corporation since prior to 1995.
MARK D. GERSTEN, Treasurer and Chief Financial Officer, [49], is a
Senior Vice President of AFS and a Vice President of AFD, with which he has been
associated since prior to 1995.
VINCENT S. NOTO, Controller, [35], is a Vice President of AFS, with
which he has been associated since prior to 1995.
The address of Messrs. Carifa, Rissman, Bardong, Caruso, Bergan,
Gangolf and Pugliese and Ms. Corbet is c/o Alliance Capital Management, L.P.,
1345 Avenue of the Americas, New York, New York 10105. The address of Messrs.
Gersten and Noto is c/o Alliance Fund Distributors, Inc., 500 Plaza Drive,
Secaucus, New Jersey 07094.
15
<PAGE>
All of the officers of the Fund are employees of the Adviser and
officers of ACMC, the general partner of the Adviser, or a wholly-owned
subsidiary of the Adviser. The only officer or Director of the Fund who
beneficially owns more than 1% of the outstanding equity securities of the
Adviser is John D. Carifa, Chairman of the Board of Directors, who is the
President, Chief Operating Officer and a Director of ACMC. Mr. Carifa
beneficially owns approximately [__]% of such securities.
STOCK OWNERSHIP
According to information filed with the Commission, the following
persons were the beneficial owners of more than 5% of any class of the Fund's
outstanding common stock as of the Record Date.
<TABLE>
<CAPTION>
Percent of Common
Stock Based on Shares
Amount of Beneficial Ownership Outstanding as of
Name and Address of Beneficial Owner and Class the Record Date
------------------------------------ --------- ---------------
<S> <C> <C>
[Bank of New York
AFM and EPW Fund 9
1 Wall Street
New York, NY 10005-2500] [______________
(Advisor Class)] [__%]
[Amalgamated Bank of New York
C/F TWU PVT BUS LINES
Pension Trust-Amivest
Discretionary Investment Manager
P.O. Box 370 Cooper Station
New York, NY 10276-0370] [______________
(Advisor Class)] [___%]
[Trust for Profit Sharing
For Alliance Capital Employees
1345 Avenue of the Americas
New York, NY 10105] [______________
(Advisor Class)] [___%]
</TABLE>
REPORTS TO STOCKHOLDERS
The Fund will furnish each person to whom this Proxy Statement is
delivered with a copy of the Fund's latest annual report to stockholders upon
request and without charge. To request a copy, please call Alliance Fund
Services, Inc. at (800) 227-4618 or contact [Edmund P. Bergan, Jr.] at Alliance
Capital Management L.P., 1345 Avenue of the Americas, New York, New York 10105.
By Order of the Board of Directors,
Edmund P. Bergan, Jr.
Secretary
New York, New York
September 22, 2000
16
<PAGE>
Alliance Growth and
Income Fund, Inc.
----------------------------------
(LOGO)
Alliance Capital Management L.P.
----------------------------------
NOTICE OF SPECIAL MEETING
OF STOCKHOLDERS AND
PROXY STATEMENT
November 2, 2000
<PAGE>
PROXY IN CONNECTION WITH THE SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 2, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Alliance Growth and Income Fund, Inc., a Maryland
corporation (the "Corporation"), hereby appoints each of Reid Conway and Carol
H. Rappa, or either of them, as proxies for the undersigned, each with full
power of substitution, to attend the Special Meeting of Stockholders of the
Corporation to be held at 11:00 a.m., Eastern Time, on November 2, 2000 at the
offices of the Corporation, 1345 Avenue of the Americas, 33rd Floor, New York,
New York 10105, and any postponement or adjournment thereof, to cast on behalf
of the undersigned all votes that the undersigned is entitled to cast at the
Special Meeting and otherwise to represent the undersigned with all powers
possessed by the undersigned if personally present at the Special Meeting. The
undersigned hereby acknowledges receipt of the Notice of Meeting and
accompanying Proxy Statement.
VOTE BY RETURNING THE SIGNED PROXY CARD
OR
VOTE VIA THE INTERNET: https://vote.proxy-direct.com
OR
VOTE BY TELEPHONE BY CALLING TOLL-FREE: 1-800-597-7836
CONTROL NUMBER:
Please sign exactly as your name appears on the books
of the Corporation. Joint owners should each sign
personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where
more than one name appears, a majority must sign. If a
corporation, this signature should be that of an
authorized officer who should state his or her title.
_____________________________________________________
Signature of Stockholder
_____________________________________________________
Signature of joint owner, if any
_______________________________________________, 2000
Dated
<PAGE>
If this proxy is properly executed, the votes entitled to be cast by the
undersigned will be cast in the manner directed below. If no direction is made
as regards a particular proposal or other matter, the votes entitled to be cast
by the undersigned will be cast "FOR" proposals one through five listed below,
"FOR" any postponement or adjournment of the Special Meeting with respect to any
proposal described in the proxy statement in the event that sufficient votes in
favor of the position on such proposal recommended by the Board of Directors are
not timely received, and in the discretion of the Proxy holder(s) on any other
matters that may properly come before the Special Meeting or any adjournment or
postponement thereof.
Please refer to the Proxy Statement for a discussion of each of the proposals.
PLEASE MARK VOTES AS IN THIS EXAMPLE: [X]
1. Election of Directors.
01 John D. Carifa 05 William H. Foulk, Jr. For All With- For All
02 Ruth Block 06 Dr. James M. Hester Nominees hold Except
03 David H. Dievler 07 Clifford L. Michel [ ] [ ] [ ]
04 John H. Dobkin 08 Donald J. Robinson
If you do not wish your shares voted "For" any particular Nominee, mark the
"For All Except" box and write the number(s) for the Nominee(s) on the line
provided below.
________________________________________
Your Board of Directors urges you to vote "FOR" the election of all Nominees.
2. Ratification of the selection For Against Abstain
of PricewaterhouseCoopers LLP [ ] [ ] [ ]
as the Corporation's independent
accountants for its fiscal year
ending October 31, 2000.
Your Board of Directors urges you to vote "FOR" Proposal Two.
3. Approval of an amendment For Against Abstain
to the Corporation's Investment Advisory [ ] [ ] [ ]
Agreement with the Adviser to
provide for an increase in the
advisory fee payable by the Corporation
to the Adviser and revise the investment
advisory fee breakpoint schedule.
Your Board of Directors urges you to vote "FOR" Proposal Three.
4. Approve of an amendment of a For Against Abstain
fundamental policy to permit [ ] [ ] [ ]
the Corporation to engage in securities
lending to the extent permitted by
the Investment Company Act of 1940,
as amended (the "1940 Act").
Your Board of Directors urges you to vote "FOR" Proposal Four.
5. To approve the reclassification of For Against Abstain
the Corporation's fundamental policy [ ] [ ] [ ]
relating to portfolio diversification
as a non-fundamental policy and the
revision of that policy to permit
the Corporation to fully utilize the
investment latitude for diversified
funds established by the 1940 Act.
Your Board of Directors urges you to vote "FOR" Proposal Five.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE IF YOU ARE NOT VOTING VIA THE INTERNET OR BY TELEPHONE.
