<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. __)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
The Spain Fund, Inc.
- ----------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X / No fee required
/ / Fee computed on table below per Exchange Act Rule 14a-
6(i)(1) and 0-11.
(1) Title of each class of securities to which
transaction applies:
- ----------------------------------------------------------------
(2) Aggregate number of securities to which transaction
applies:
- ----------------------------------------------------------------
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11
(Set forth the amount on which the filing fee is
calculated and state how it was determined):
- ----------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- ----------------------------------------------------------------
(5) Total fee paid:
- ----------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
<PAGE>
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
<PAGE>
THE SPAIN FUND, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
TOLL FREE (800) 221-5672
July 27, 1998
To the Stockholders of The Spain Fund, Inc. (the "Fund"):
The accompanying Notice of Meeting and Proxy Statement present the proposals
to be considered at the Fund's Annual Meeting of Stockholders on September 10,
1998.
The Board of Directors recommends that you re-elect to the Board the four
current Directors who are standing for re-election (Proposal 1) and ratify the
Board's selection of PricewaterhouseCoopers LLP as the Fund's independent
accountants for its 1998 fiscal year (Proposal 2).
The Notice and Proxy Statement also refer to a stockholder proposal (Proposal
3) which the Fund understands is to be presented at the Annual Meeting. This
proposal seeks to remove Alliance Capital Management L.P. ("Alliance") as the
Fund's Investment Manager and Administrator. For the reasons detailed in the
Proxy Statement, YOUR BOARD OF DIRECTORS UNANIMOUSLY URGES YOU TO VOTE AGAINST
THIS PROPOSAL. Alliance is responsible for the Fund's outstanding performance--
the Fund's net asset value has increased 42% during the first six months of
1998 alone. In addition, Alliance has demonstrated its commitment to
stockholder values by initiating the Fund's innovative managed distribution
policy. Moreover, approval of the stockholder proposal would sever the Fund's
relationship with Alliance, thus disrupting the Fund's investment program and
creating a period of uncertainty which could substantially harm your
investment.
We welcome your attendance at the Annual Meeting. If you are unable to
attend, please complete, sign, date and return the enclosed proxy card
promptly, in order to spare the Fund 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 card, you may receive a telephone call from SCC reminding you to
exercise your right to vote.
Sincerely,
Dave H. Williams
Chairman and President
<PAGE>
[LOGO OF ALLIANCE CAPITAL APPEARS HERE] THE SPAIN FUND, INC.
- -------------------------------------------------------------------------------
1345 Avenue of the Americas, New York, New York 10105
Toll Free (800) 221-5672
- -------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 10, 1998
To the Stockholders of The Spain Fund, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of The Spain Fund, Inc. (the "Fund") will be held at the offices of
the Fund, 1345 Avenue of the Americas, 33rd Floor, New York, New York 10105,
on September 10, 1998 at 11:00 a.m., for the following purposes, all of which
are more fully described in the accompanying Proxy Statement dated July 27,
1998:
1. To elect four Directors of the Fund, each to hold office for a term of
three years and 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 November 30, 1998;
3. To act upon, if presented, a certain stockholder proposal; and
4. To transact such other business as may properly come before the Meeting.
The Board of Directors has fixed the close of business on July 17, 1998 as
the record date for the determination of stockholders entitled to notice of,
and to vote at, the Meeting or any adjournment thereof. The enclosed proxy is
being solicited on behalf of the Board of Directors.
By Order of the Board of Directors,
Edmund P. Bergan, Jr. Secretary
New York, New York
July 27, 1998
- -------------------------------------------------------------------------------
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. IN ORDER TO SAVE THE FUND ANY ADDITIONAL EXPENSE
OF FURTHER SOLICITATION, PLEASE MAIL YOUR PROXY PROMPTLY.
- -------------------------------------------------------------------------------
(R) This registered service mark used under license from the owner, Alliance
Capital Management L.P.
<PAGE>
PROXY STATEMENT
THE SPAIN FUND, INC.
1345 AVENUE OF THE AMERICAS NEW YORK, NEW YORK 10105
----------------
ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 10, 1998
----------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of The Spain Fund, Inc., a
Maryland corporation ("the Fund"), to be voted at the Annual Meeting of
Stockholders of the Fund (the "Meeting"), to be held at the offices of the
Fund, 1345 Avenue of the Americas, 33rd Floor, New York, New York 10105, on
September 10, 1998 at 11:00 a.m. The solicitation will be by mail and the cost
will be borne by the Fund. The Notice of Meeting, Proxy Statement and Proxy
Card are being mailed to stockholders on or about July 27, 1998.
The Board of Directors has fixed the close of business on July 17, 1998 as
the record date for the determination of stockholders entitled to notice of,
and to vote at, the Meeting and at any adjournment thereof. The outstanding
voting shares of the Fund as of July 17, 1998 consisted of 10,026,745 shares
of common stock, each share being entitled to one vote. All properly executed
proxies received prior to the Meeting will be voted at the Meeting in
accordance with the instructions marked thereon or otherwise provided therein.
Accordingly, unless instructions to the contrary are marked, proxies will be
voted for the election of four Directors, for the ratification of the
selection of PricewaterhouseCoopers LLP as the Fund's independent accountants
for its fiscal year ending November 30, 1998 and against the stockholder
proposal as described herein, if presented. 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.
If a proxy properly executed is returned accompanied by instructions to
withhold authority to vote (an abstention) or represents a broker "non-vote"
(that is, a proxy from a broker or nominee indicating that such person 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 thereby,
with respect to matters to be determined by a plurality or specified majority
of the votes cast on such matters (i.e., Proposals One and Two), will be
considered present for purposes of determining the existence of a quorum for
the transaction of business but, not being cast, will have no effect on the
outcome of such matters. With respect to Proposal Three, the adoption of which
requires the affirmative vote of a specified proportion of Fund shares, an
abstention or broker non-vote will be considered present for purposes of
determining the existence of a quorum but will have the effect of a vote
against the matter.
A quorum for the Meeting will consist of a majority of the shares
outstanding. In the event that a quorum is not represented at the Meeting or,
even if a quorum is so represented, in the event that
1
<PAGE>
sufficient votes in favor of any proposal set forth in the Notice of Meeting
are not received prior to the Meeting, 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 in order
to permit further solicitation of proxies with respect to such proposal. 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 of the
proposals prior to adjournment if sufficient votes have been received for
approval thereof. Shares represented by proxies indicating a vote against any
proposal will be voted against adjournment.
The Fund has engaged Shareholder Communications Corporation, 17 State
Street, New York, New York 10004, to assist the Fund in soliciting proxies for
the Meeting. Shareholder Communications Corporation will receive a fee of
$20,000 for its services plus reimbursement of out-of-pocket expenses.
PROPOSAL ONE
ELECTION OF DIRECTORS
At the Meeting, four Directors will be elected to serve for terms of three
years, and until their successors are elected and qualified. The affirmative
vote of a plurality of the votes cast at the Meeting is required to elect a
Director. It is the intention of the persons named in the enclosed proxy to
nominate and vote in favor of the election of the persons in Class Three as
described below.
Pursuant to the Articles of Incorporation and By-laws of the Fund, the Board
of Directors has been divided into three classes. The terms of office of the
members of Class Three will expire as of the Meeting, the terms of office of
the members of Class One will expire as of the annual meeting of stockholders
to be held in 1999 and the terms of office of the members of Class Two will
expire as of the annual meeting of stockholders to be held in 2000. Upon
expiration of the terms of office of the members of a class as set forth
above, those persons then elected as Directors in that class will serve until
the third annual meeting of stockholders following their election. Messrs.
Dave H. Williams, Francisco Gomez Roldan and Juan Manuel Sainz de Vicuna, and
Ms. Inmaculada de Habsburgo-Lorena are the members constituting Class Three.
Messrs. Angel Corcostegui and Ignacio Gomez-Acebo and Dr. Reba White Williams
are the members constituting Class One; and Messrs. Enrique L. Fevre and
Carlos Delclaux Zulueta and H.R.H. Pilar de Borbon y Borbon, Duchess of
Badajoz, are the members constituting Class Two.
As a result of this system, only those Directors in a single class may be
changed in any one year, and it would require two years to change a majority
of the Board of Directors (although, under Maryland law, procedures are
available for the removal of Directors even if they are not then standing for
re-election and, under Securities and Exchange Commission regulations,
procedures are available for including appropriate stockholder proposals in
management's annual proxy statement). This system of electing Directors, which
may be regarded as an anti-takeover provision, may make it more difficult for
the Fund's stockholders to change the majority of Directors and, thus, have
the effect of maintaining the continuity of management.
At the Meeting, the Directors in Class Three, Messrs. Dave H. Williams,
Francisco Gomez Roldan and Juan Manuel Sainz de Vicuna and Ms. Inmaculada de
Habsburgo-Lorena, are standing for re-election. Each nominee has consented to
serve as a Director. The Board of Directors knows of no reason why any of
these nominees would be unable to serve, but in the event of such inability,
the proxies received will be voted for such substitute nominees as the Board
of Directors may recommend.
2
<PAGE>
Certain of the Fund's Directors and officers are residents of Spain or the
United Kingdom and substantially all of the assets of such persons may be
located outside of the United States. As a result, it may be difficult for
U.S. investors to effect service upon such Directors or officers within the
United States, or to realize judgments of courts of the United States
predicated upon civil liabilities of such Directors or officers under the
federal securities laws of the United States. The Fund has been advised that
there is substantial doubt as to the enforceability in Spain or in the United
Kingdom of the civil remedies and criminal penalties afforded by the federal
securities laws of the United States. Also, it is unclear if extradition
treaties now in effect between the United States and each of Spain and the
United Kingdom would subject Directors and officers residing in these
countries to effective enforcement of the criminal penalties of the federal
securities laws.
Certain information concerning the Fund's Directors is set forth below. Mr.
Dave H. Williams and Dr. Reba W. Williams are each a director or trustee of
one or more other investment companies sponsored by Alliance Capital
Management L.P., the Fund's investment adviser and administrator ("Alliance").
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME, AGE, POSITIONS AND OFFICES BENEFICIALLY
WITH THE FUND, PRINCIPAL YEAR FIRST YEAR TERM OWNED DIRECTLY OR
OCCUPATIONS DURING THE PAST BECAME A AS A DIRECTOR INDIRECTLY AS OF
FIVE YEARS AND OTHER DIRECTORSHIPS DIRECTOR WILL EXPIRE JULY 17, 1998
- ---------------------------------- ---------- ------------- -----------------
<S> <C> <C> <C>
*+ Dave H. Williams, Chairman,
65. Chairman of the Board of
Alliance Capital Management
Corporation ("ACMC")***
since prior to 1993 and
Director of The Equitable
Companies Incorporated and
The Equitable Life Assurance
Society of the United
States...................... 1988 2001++ 3,514
**+ H.R.H. Pilar de Borbon y
Borbon, Duchess of Badajoz,
62. Director of Cartier,
France and member of the
Advisory Board of Sotheby's
Holdings Inc. and the Board
of Plus Ultra (insurance
company); Chairman of
International Equestrian
Federation and member of the
International Olympic
Committee................... 1991 2000 890
**+ Angel Corcostegui, 47. Chief
Executive Officer of Banco
Central Hispanoamericano,
Vice Chairman of Compania
Espanola Petroleo, Chairman
of OHCH Holding Co. and
member of the International
Board of The Wharton School
of the University of
Pennsylvania. .............. 1992 1999 1,014
* Carlos Delclaux Zulueta, 41.
Managing Director of BBV
Privanza Banco, S.A., Chief
Executive Officer of BBV
Privanza since April 1994,
Vice-Chairman of Vidrala,
S.A. (glass packaging
production) and Chairman of
Arenas de Arija, S.A.
(industrial sand
production)................. 1994 2000 895
</TABLE>
- --------
* "Interested person", as defined in the Investment Company Act of 1940 (the
"Act"), of the Fund because of affiliation with Alliance or BBV Privanza
Banco, S.A. ("Privanza").
** Member of the Audit Committee.
*** For purposes of this Proxy Statement, ACMC shall refer to Alliance Capital
Management Corporation, the general partner of Alliance, and to the
predecessor general partner of Alliance of the same name.
+ Member of the Nominating Committee.
++ If re-elected at the Meeting.
3
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME, AGE, POSITIONS AND OFFICES BENEFICIALLY
WITH THE FUND, PRINCIPAL YEAR FIRST YEAR TERM OWNED DIRECTLY OR
OCCUPATIONS DURING THE PAST BECAME A AS A DIRECTOR INDIRECTLY AS OF
FIVE YEARS AND OTHER DIRECTORSHIPS DIRECTOR WILL EXPIRE JULY 17, 1998
- ---------------------------------- ---------- ------------- -----------------
<S> <C> <C> <C>
* Enrique L. Fevre, 54. Senior
Vice President Latin
America--AXA, Vice President
of AXA Aurora, Managing
Director of Aurora Polar
Sociedad Anonima de Seguros
y Reaseguros, President of
Espacio Gestion Espana, S.A.
and Director of Ahorro
Familiar, S.A.; formerly
Finance Director of Peugeot
Talbot Espana, S.A.,
Director of Barcelona de
Automocion and Managing
Director of PSA Credit S.A.
and PSA Leasing Espana,
S.A......................... 1991 2000 793
**+* Ignacio Gomez-Acebo, 66.
Senior Partner of Gomez-
Acebo & Pombo, Chairman of
the Board of Clarke, Modet
& Co. and Peugeot Leasing &
COFIC, Member of the Board
of AXA..................... 1995 1999 770
**+ Inmaculada de Habsburgo-
Lorena, 53. Director of The
Spanish Institute, Trustee
of Samuel H. Kress
Foundation, Trustee of
Independent Curators
Incorporated, Founder and
Trustee of the King Juan
Carlos International Center
of New York University
Foundation, Member of the
Board of World Monuments
Fund Espana................. 1988 2001++ 840
**+ Francisco Gomez Roldan, 44.
Chief Executive Officer of
Argentaria, Corporacion
Bancaria de Espana; formerly
Deputy General Manager of
Banco Bilbao Vizcaya, S.A.,
the parent of the sub-
advisor, General Manager of
BBV Interactivos, S.A. and
General Manager of Banca
Catalana, S.A............... 1989 2001++ -0-
**+ Juan Manuel Sainz de Vicuna,
72. Honorary Chairman of
Coca-Cola Espana, President
of the Fundacion Coca-Cola
Espana, Director of
Rendelsur (Coca-Cola
franchisee Southern Spain)
and President of Perfumeria
Gal, S.A.; Member of the
Fundacion de Amigos del
Museo del Prado, the
Fundacion para el Apoyo de
la Cultura, the Board of
World Monuments Fund Espana,
the Notre Dame University
International Advisory
Council..................... 1988 2001++ 1,000
* Dr. Reba White Williams, 61.
Director of ACMC, Director
of Special Projects, ACMC;
art historian and writer.
She was formerly Vice
President and security
analyst for Mitchell
Hutchins, Inc. and an
analyst for McKinsey &
Company, Inc. .............. 1990 1999 10,073
</TABLE>
- --------
* "Interested person", as defined in the Act, of the Fund because of
affiliation with Alliance or Privanza.
** Member of the Audit Committee.
+ Member of the Nominating Committee.
++ If re-elected at the Meeting.
4
<PAGE>
Alliance has instituted a policy applicable to all the investment companies
to which Alliance provides investment advisory services (collectively, the
"Alliance Fund Complex") contemplating, in the case of the Fund, that the
Directors of the Fund will each invest at least $10,000 in shares of the Fund.
During the fiscal year ended November 30, 1997, the Board of Directors met
eight times, the Audit Committee met twice for the purposes described below in
Proposal Two, and the Nominating Committee did not meet. The Nominating
Committee was constituted for the purpose of selecting and nominating persons
to fill any vacancies on the Board of Directors. The Nominating Committee of
the Fund does not currently consider candidates proposed by stockholders for
election as Directors.
The Fund does not pay any fees to, or reimburse expenses of, any Director
during which time such Director is considered an "interested person" of the
Fund, as defined in the Act. The aggregate compensation paid by the Fund to
each of the Directors during its fiscal year ended November 30, 1997, the
aggregate compensation paid to each of the Directors during calendar year 1997
by all of the investment companies in the Alliance Fund Complex and the total
number of investment companies (and separate portfolios within those
companies) in the Alliance Fund Complex with respect to which each of the
Directors serves as a director or trustee, are set forth below. Neither the
Fund nor any other fund in the Alliance Fund Complex provides compensation in
the form of pension or retirement benefits to any of its directors or
trustees.
<TABLE>
<CAPTION>
TOTAL NUMBER OF TOTAL NUMBER OF
COMPENSATION INVESTMENT COMPANIES INVESTMENT PORTFOLIOS
FROM THE IN THE ALLIANCE FUND WITHIN THE ALLIANCE FUND
ALLIANCE FUND COMPLEX, INCLUDING THE COMPLEX, INCLUDING THE
TOTAL AGGREGATE COMPLEX, FUND, AS TO WHICH THE FUND, AS TO WHICH THE
NAME OF DIRECTOR COMPENSATION INCLUDING DIRECTOR IS A DIRECTOR DIRECTOR IS A DIRECTOR
OF THE FUND FROM THE FUND THE FUND OR TRUSTEE OR TRUSTEE
---------------- --------------- ------------- ---------------------- ------------------------
<S> <C> <C> <C> <C>
Dave H. Williams........ $ 0 $ 0 6 15
H.R.H. Pilar de Borbon y
Borbon................. $10,500 $12,500 1 1
Angel Corcostegui....... $11,000 $13,000 1 1
Carlos Delclaux Zulueta. $ 0 $ 0 1 1
Enrique L. Fevre........ $10,000 $10,000 1 1
Ignacio Gomez-Acebo..... $11,500 $10,000 1 1
Inmaculada de Habsburgo-
Lorena................. $12,000 $14,500 1 1
Francisco Gomez Roldan.. $10,000 $10,250 1 1
Juan Manuel Sainz de Vi-
cuna................... $11,500 $13,500 1 1
Dr. Reba White Williams. $ 0 $ 0 3 3
</TABLE>
As of July 17, 1998, the Directors and officers of the Fund as a group owned
less than 1% of the shares of the Fund.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE ELECTION OF THE NOMINEES NAMED ABOVE TO SERVE AS DIRECTORS OF THE FUND.
5
<PAGE>
PROPOSAL TWO
RATIFICATION OF SELECTION
OF INDEPENDENT ACCOUNTANTS
The Board of Directors, including a majority of the Directors who are not
"interested persons" of the Fund as defined in the Act, at a meeting held on
October 18, 1997, selected Price Waterhouse LLP, independent accountants, to
audit the accounts of the Fund for the fiscal year ending November 30, 1998.
Effective July 1, 1998, Price Waterhouse LLP merged with Coopers & Lybrand LLP
and became PricewaterhouseCoopers LLP (hereafter before and after the merger
referred to as "Pricewaterhouse"). Pricewaterhouse has audited the accounts of
the Fund since the Fund's commencement of operations and does not have any
direct financial interest or any material indirect financial interest in the
Fund. The affirmative vote of a majority of the votes cast at the Meeting is
required to ratify such selection.
A representative of Pricewaterhouse is expected to attend the Meeting and to
have the opportunity to make a statement and respond to appropriate questions
from the stockholders. The Audit Committee of the Board of Directors generally
meets twice during each fiscal year with representatives of the independent
accountants to discuss the scope of the independent accountants' engagement
and review the financial statements of the Fund and the results of their
examination thereof.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE RATIFICATION OF THE SELECTION OF PRICEWATERHOUSE AS INDEPENDENT
ACCOUNTANTS OF THE FUND.
PROPOSAL THREE
STOCKHOLDER PROPOSAL
An owner (the "proponent") of shares of the Fund has informed the Fund that
he intends to present the proposal set forth below (the "Stockholder
Proposal") for action at the Meeting. The proponent's name and address and the
number of shares he owns will be furnished by the Secretary of the Fund upon
request. The proponent has stated to the Fund that he personally owns 1,200
shares of the Fund in an "individual retirement account" which he indicates to
be his qualifying ownership for purposes of causing the Stockholder Proposal
to be included in this Proxy Statement. Adoption of this proposal requires the
affirmative vote of the holders of a majority of the outstanding shares of the
Fund which, as defined by the Act, means the vote of (1) 67% or more of the
shares present at the Meeting if the holders of more than 50% of the
outstanding shares are present or represented by proxy; or (2) more than 50%
of the outstanding shares of the Fund, whichever is less.
PROPOSAL
RESOLVED: The Fund's investment advisory agreement with its investment
advisor ("Alliance") shall be terminated and the shareholders recommend
that the board solicit competitive proposals for a new investment
advisor.
PROPONENT'S SUPPORTING STATEMENT
I believe Alliance's investment advisory contract should be terminated
because shareholder investment results with the Fund have been poor compared
to the Spanish market, and because
6
<PAGE>
management fees are so lucrative to Alliance that effective steps to enhance
shareholder value are not taken.
The Fund's shareholders paid $120 million to buy newly issued shares of the
Fund at its inception on 6/28/88. Shareholders have received $36 million in
distributions through 12/26/97, when the market value of all shares totaled
$157 million. The resulting total investment return of the Fund was +71%.
During this period, the "unmanaged" Morgan Stanley Capital International
(MSCI) benchmark total return index of Spanish Securities increased +159% in
dollar terms, doing considerably better than the Spain Fund shareholders. (The
MSCI benchmark is not subject to the same investment policies and restrictions
as the Fund, which may affect the investment results of the index.)
The Fund's shareholders have paid about $32 million in advisory fees,
director fees, underwriting fees, and other expenses. The market discount of
the Fund's shares on 12/26/97 represents an additional $26 million in lost
shareholder value.
After 25 years as a private investor and 10 additional years as an
investment professional managing up to $200 million in closed-end fund shares,
I am convinced that the greatest impediment to enhancing shareholder value in
funds with large discounts is the advisory contract. It is so lucrative that
the fund manager will rarely recommend more than token steps (such as a 10%
distribution policy) to enhance shareholder value. In my opinion, the Boards
of Directors owe their positions to the advisor and therefore will not take
effective actions such as massive share buy-backs, tender offers, or fund
open-endings. Such steps would significantly reduce the size of the Fund and
the advisory fees paid to the manager.
The discount is the result of supply and demand. A negligible increase in
the expense ratio resulting from the Net Asset Value and discount impacts of
massive buy-backs would, in my opinion, be well worth it. This is the only
investment I am aware of where the shareholders are certain to receive added
return without any added risk, but it doesn't happen because it reduces
advisory fees!
It is prohibitively expensive for shareholders to wage successful proxy
fights to replace staggered Boards of Directors which have been hand picked by
the investment advisor. Fortunately, the Investment Company Act of 1940 gives
the shareholders one effective and practical tool to fix this problem. A
majority of them can vote to "fire" the investment manager. This Fund's
investment advisor and its Board of Directors fought unsuccessfully to prevent
you from ever seeing this shareholder resolution and its supporting statement.
The advisory contract is a valuable commodity. Qualified advisors can be
easily found that will work with a motivated Board to enhance shareholder
value.
We have a chance to send a loud and clear message to the Board that we want
the Fund run exclusively for the benefit of the Fund's owners. Vote for this
shareholder sponsored resolution.
OPPOSING STATEMENT OF YOUR BOARD OF DIRECTORS
Your Board of Directors urges you to vote against the stockholder proposal
(the "Proposal") to terminate the investment management agreement between
Alliance and the Fund.
7
<PAGE>
Overview
Alliance is responsible for the Fund's outstanding performance, and Alliance
has demonstrated its commitment to stockholder values by initiating the Fund's
innovative managed distribution policy. If approved, the Proposal would sever
the Fund's relationship with Alliance, thus disrupting the Fund's investment
program and creating a period of uncertainty that could substantially harm your
investment.
Setting the Record Straight
The Board of Directors believes that the Proposal's Supporting Statement is
misleading in several important respects. Here are the facts.
1. Alliance is responsible for the Fund's outstanding performance. Alliance
is one of the world's largest global investment managers. Unlike almost all of
its competitors, Alliance has long had a presence in Spain and has significant
investment resources specifically dedicated to the Spanish markets. In
addition, at Alliance's recommendation--and at Alliance's expense--the Fund
retains as its "Sub-Advisor" BBV Privanza Banco, S.A. ("Privanza"), the
investment management arm of Spain's largest bank. The combined resources of
Alliance and Privanza have conferred exceptional performance on the Fund:
. During the two-year period ended December 31, 1997, the Fund's cumulative
net asset value total return was 74% compared to 67% for the "Madrid
General Index" (the broadly representative Madrid Stock Exchange index
which is the Fund's benchmark).
. During 1996 and 1997, the Fund's net asset value total returns were
outstanding: 37% and 27%, respectively.
. During 1996 and 1997 the Fund also outperformed the two other U.S.-
registered country funds concentrating their investments in Spain.
. Through June 30, 1998 the Fund has had among the best 1998 net asset
value total return performance--42%--of any U.S.-registered closed-end
country fund.
The Board of Directors believes that the Supporting Statement's depiction of
the Fund's performance is misleading. As the widely respected closed-end
analyst, Celso Sanchez, then with PaineWebber, has written: "the calculation of
a fund's performance using the market price return rather than the net asset
value return--without distinguishing it as such--and comparing this to a
"unmanaged' benchmark is certainly confusing and potentially misleading. The
net asset value return is the conventional measure employed to assess the
performance of an investment manager or advisor in a mutual fund, either
closed- or open-ended. To the extent that proposals to dismiss investment
advisors are taken seriously by voters, portfolio managers should be judged on
the value they have added to the portfolio in terms of NAV return."
2. In your Board's view, it's almost absurd to suggest, as the Supporting
Statement does, that the Fund's investment management agreement is
prohibitively "lucrative" to Alliance. This contention overlooks the fact that
Alliance has approximately $250 billion under management. The Fund's total
assets of $226 million comprise only 0.0009 of the total net assets under
Alliance's management. And it was Alliance that recommended the Fund's
innovative 10% managed distribution policy, even though it is likely to reduce
Alliance's fee revenues from the Fund.
Under the Fund's managed distribution policy, the Fund distributes to its
shareholders quarterly an amount equal to at least 2.5% of the Fund's total net
assets--a total of at least 10% annualized. The
8
<PAGE>
managed distribution policy was adopted by the Board of Directors, at
Alliance's recommendation, in December 1997, and the first quarterly
distribution was made in April of this year. The Board instituted the managed
distribution policy with a view to reducing substantially the Fund's market
discount and thus enhancing stockholder values. In adopting the managed
distribution policy the Board carefully considered extensive data provided by
Alliance and certain widely recognized consultants, as well as the advice of
Sullivan & Cromwell, the Board's independent counsel. Although no country fund
had previously implemented a managed distribution policy, Alliance's and the
industry's experience lead Alliance to believe that such a policy is likely to
produce significant and sustained discount reduction for the Fund. Alliance
and the Board of Directors are monitoring and evaluating the managed
distribution policy's effect on an ongoing basis.
3. The Board concluded that other steps--including the "massive share buy-
backs" and tender offers suggested in the Supporting Statement--aren't likely
to provide sustained discount reduction. In the Board's judgment, the managed
distribution policy is the only currently available technique likely to
produce sustained discount reduction for the Fund in a manner consistent with
the best interests of the Fund and its stockholders. A great many experts
agree with this assessment. For instance, Celso Sanchez has stated: "Country
funds, in seeking to respond to investors' concerns about excessive and
pervasive discounts have historically engaged in alternative strategies--
including tender offers and share buybacks--to narrow discounts. However, as
we have observed repeatedly, such actions have typically had little success in
achieving the goal of narrowing a fund's discount."
The Supporting Statement suggests that "massive buy-backs" would cause a
"negligible" increase in the Fund's expense ratio. This is false. Let's assume
that the Fund's assets decreased 65% as the result of "massive buy-backs."
This would cause the Fund's expense ratio to increase by approximately 30%
(from its current level of 138 basis points annualized, to approximately 179
basis points, annualized).
4. Open-ending the Fund would, in the Board's judgment, be ill-advised. The
Board has concluded that, notwithstanding the benefits which some stockholders
might derive from open-ending the Fund, on balance the best interests of the
Fund and its stockholders would not be served by such action. The Board is
particularly concerned that if the Fund were open-ended, Alliance would
thereafter be severely hampered in its effort to maximize the Fund's long-term
performance through appropriate diversification, sector allocation, and
investment in medium and smaller-capitalization companies in a manner
consistent with the Fund's successful past practice and, your Board believes,
stockholder expectations.
The Board believes that the closed-end form is especially well suited for
investing, as does the Fund, primarily in the stocks of a single foreign
country such as Spain. The closed-end form frees the portfolio manager to
concentrate on optimizing stock selection, rather than holding large parts of
the Fund's assets in easier-to-sell securities and unproductive cash reserves
in order to meet open-end redemptions.
5. The Supporting Statement's contention that the Board "fought
unsuccessfully to prevent you from ever assessing this shareholder resolution"
is misleading. The Fund merely followed the customary procedure of filing with
the SEC its objections to the Proposal and its Supporting Statement, both of
which were changed significantly as a result.
Conclusion
If approved, the Proposal would directly terminate the Fund's investment
management agreement with Alliance. The Fund would immediately lose Alliance's
and Privanza's services, and the Fund's
9
<PAGE>
investment program would be completely disrupted. This would not eliminate the
Fund's market discount, and might very well increase it. The Proposal does not
suggest any successor advisor and, frankly, your Board of Directors doubts
that another investment manager would duplicate the expertise and resources
that the combination of Alliance and Privanza brings to the Fund. Approval of
the Proposal would override your Board's determination, reached after careful
deliberations, that continuance of the current advisory arrangements with
Alliance and Privanza is in the best interests of the Fund. A new agreement
with any advisor would require stockholder approval, which could only occur
months later, after considerable stockholder expense. During this time your
investment in the Fund could be substantially harmed.
THEREFORE, YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
AGAINST THIS PROPOSAL.
INFORMATION AS TO THE FUND'S PRINCIPAL
OFFICERS, INVESTMENT ADVISER,
SUB-ADVISOR AND ADMINISTRATOR
The principal officers of the Fund and their principal occupations during
the past five years are set forth below.
Dave H. Williams, Chairman (see Proposal One, Election of Directors, at page
3 for biographical information).
Norman S. Bergel, Vice President, 48, a Vice President of ACMC since prior
to 1993; Director and Vice President of Alliance Capital Limited ("ACL") since
prior to 1993.
Mark H. Breedon, Vice President, 45, a Vice President of ACMC since prior to
1993; Director and a Vice President of ACL since prior to 1993.
Russell Brody, Vice President, 31, an Assistant Vice President of ACMC, with
which he has been associated since April 1997. Prior thereto he was a Trader
for Lombarg Investment Management since prior to 1993.
Mark D. Gersten, Treasurer and Chief Financial Officer, 47, a Senior Vice
President of Alliance Fund Services, Inc. ("AFS"), with which he has been
associated since prior to 1993.
Edmund P. Bergan, Jr., Secretary, 48, a Senior Vice President and the
General Counsel of Alliance Fund Distributors, Inc. and AFS, with which he has
been associated since prior to 1993.
The address of Messrs. Williams and Bergan is c/o Alliance Capital
Management L.P., 1345 Avenue of the Americas, New York, New York 10105. The
address of Mr. Bergel is c/o Alliance Capital Management International, 53
Stratton Street, London, W1X 6JJ. The address of Messrs. Breedon and Brody is
c/o Alliance Capital Limited, 53 Stratton Street, London, W1X 6JJ. The address
of Mr. Gersten is c/o Alliance Fund Distributors, Inc., 500 Plaza Drive,
Secaucus, New Jersey 07094.
The investment adviser and administrator for the Fund is Alliance Capital
Management L.P., with principal offices at 1345 Avenue of the Americas, New
York, New York 10105. The Fund's sub-advisor is BBV Privanza Banco, S.A., with
principal offices at 17 Padilla, Madrid, Spain 28006.
10
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 30(h) of the Act and the rules under Section 16 of the Securities
Exchange Act of 1934 require that the Directors and officers of the Fund and
the Directors of ACMC, among others, file with the Securities and Exchange
Commission and the New York Stock Exchange initial reports of ownership of
shares of the Fund. During the fiscal year ended November 30, 1997 there were
no delinquent reports filed with respect to the Fund.
SUBMISSION OF PROPOSALS FOR THE NEXT
ANNUAL MEETING OF STOCKHOLDERS
Proposals of stockholders intended to be presented at the next annual
meeting of stockholders of the Fund must be received by the Fund by March 29,
1999 for inclusion in the Fund's proxy statement and form of proxy relating to
that meeting. The submission by a stockholder of a proposal for inclusion in
the proxy statement does not guarantee that it will be included. Stockholder
proposals are subject to certain regulations under the federal securities
laws.
OTHER MATTERS
Management of the Fund does not know of any matters to be presented at the
Meeting other than those mentioned in this Proxy Statement. If any other
matters properly come before the Meeting, the shares represented by proxies
will be voted with respect thereto in accordance with the best judgment of the
person or persons voting the proxies.
According to information filed with the Securities and Exchange Commission,
as of December 31, 1997, the following persons were the beneficial owners of
more than 5% of the Fund's common stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT OF BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP COMMON STOCK
------------------- -------------------- ------------
<S> <C> <C>
President and Fellows of Harvard College 1,214,300 12.1%
c/o Harvard Management Company, Inc.
600 Atlantic Avenue
Boston, Massachusetts 02210
Morgan Stanley, Dean Witter, Discover & Co. 708,230 7.06%
1585 Broadway
New York, New York 10036
FMR Corp. 642,500 6.41%
82 Devonshire Street
Boston, Massachusetts 02109
Deep Discount Advisors, Inc./Ron Olin 545,100 5.4%
Investment Management Company
One West Pack Square, Suite 777
Asheville, North Carolina 28801
</TABLE>
11
<PAGE>
REPORTS TO STOCKHOLDERS
The Fund will furnish each person to whom the 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 at (800)
227-4618 or contact Christina Santiago at Alliance Capital Management L.P.,
1345 Avenue of the Americas, New York, New York 10105.
By Order of the Board of Directors,
Edmund P. Bergan, Jr. Secretary
July 27, 1998
New York, New York
12
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
- -------------------------------------------------------------------------------
<S> <C>
Introduction.............................................................. 1
Proposal One: Election of Directors....................................... 2
Proposal Two: Ratification of Selection of Independent Accountants........ 6
Proposal Three: Stockholder Proposal and Supporting Statement............. 6
Opposing Statement of Your Board of Directors............................. 7
Information as to the Fund's Principal Officers, Investment Adviser, Sub-
Advisor and Administrator................................................ 10
Submission of Proposals for the Next Annual Meeting of Stockholders....... 11
Other Matters............................................................. 11
Reports to Stockholders................................................... 12
</TABLE>
THE SPAIN FUND, INC.
- --------------------------------------------------------------------------------
[LOGO OF ALLIANCE CAPITAL APPEARS HERE]
Alliance Capital Management L.P.
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT SEPTEMBER 10, 1998
<PAGE>
APPENDIX
PROXY THE SPAIN FUND, INC. PROXY
INSTRUCTIONS TO THE STOCKHOLDERS OF THE SPAIN FUND, INC. (THE
"CORPORATION"), IN CONNECTION WITH THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON SEPTEMBER 10, 1998.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE CORPORATION.
The undersigned hereby instructs Christina Santiago and Carol H.
Rappa, and each of them, to vote all shares of the Common Stock
of the Corporation registered in the name of the undersigned at
the Annual Meeting of Stockholders of the Corporation to be held
at 11:00 a.m., Eastern Time, on September 10, 1998 at the offices
of the Corporation, 1345 Avenue of the Americas, in the Audio-
Visual Conference Room, 33rd Floor, New York, New York, 10105,
and at all adjournments thereof. The undersigned hereby
acknowledges receipt of the Notice of Meeting and accompanying
Proxy Statement and hereby instructs said proxies to vote said
shares as indicated hereon.
THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES AS DIRECTORS, FOR
THE RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP
AS THE INDEPENDENT ACCOUNTANTS FOR THE CORPORATION AND AGAINST
THE STOCKHOLDER PROPOSAL AS DESCRIBED IN THE PROXY STATEMENT FOR
THE ANNUAL MEETING, IF PRESENTED.
PLEASE REFER TO THE PROXY STATEMENT FOR
A DISCUSSION OF EACH OF THE PROPOSALS.
PLEASE VOTE, DATE AND SIGN ON REVERSE
AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name(s) appear(s) on the
books of the Corporation. Joint owners should each sign
personally. Trustees and other fiduciaries should indicate the
capacity in which they sign, and where more than one name
appears, a majority must sign. If a corporation, this signature
should be that of an authorized officer who should state his or
her title.
<PAGE>
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
___________________________ ______________________________
___________________________ ______________________________
___________________________ ______________________________
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE
1. Election of Directors.
Class Three Directors (term expires in 2001)
For All For All
DAVE H. WILLIAMS Nominees Withhold Except
FRANCISCO GOMEZ ROLDAN / / / / / /
JUAN MANUEL SAINZ DE VICUNA
INMACULADA DE HABSBURGO-LORENA
NOTE: IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" ANY
PARTICULAR NOMINEE, MARK THE "FOR ALL EXCEPT" BOX AND STRIKE
A LINE THROUGH THE NAME(S) OF THE NOMINEE(S). YOUR SHARES
WILL BE VOTED FOR THE REMAINING NOMINEE(S).
2. Ratification of the
selection of For Against Abstain
PricewaterhouseCoopers LLP / / / / / /
as the independent
accountants for the
Corporation for the fiscal
year ending
November 30, 1998.
3. To approve, if presented,
a stockholder proposal as For Against Abstain
described in the Proxy / / / / / /
Statement for the Annual
Meeting.
YOUR BOARD OF DIRECTORS URGES YOU TO VOTE "AGAINST" PROPOSAL
3 AND "FOR" PROPOSALS 1 AND 2.
4. In their discretion, upon
such other matters
as may properly come
before the Annual Meeting
or any adjournment thereof.
<PAGE>
Please be sure to sign and date this Proxy. Date
Stockholder sign here Co-owner sign here
RECORD DATE SHARES:
00250031.BE1
