<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:
/X / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/ / 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>
Alliance Capital [LOGO](R)
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
<PAGE>
- -----------------------------------------------------------------
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 [ ] 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 and for the ratification of
the selection of PricewaterhouseCoopers LLP as the Fund's
independent accountants for its fiscal year ending November 30,
1998. 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
2
<PAGE>
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 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 $3,000 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.
3
<PAGE>
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.
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
4
<PAGE>
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").
5
<PAGE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES
YEAR BENEFICIALLY
TERM OWNED
NAME, AGE, POSITIONS AND OFFICES YEAR AS A DIRECTLY
WITH THE FUND, PRINCIPAL OCCUPATIONS FIRST DIRECTOR OR INDIRECTLY
DURING THE PAST FIVE YEARS BECAME A WILL AS OF
AND OTHER DIRECTORSHIPS DIRECTOR EXPIRE July 17, 1998
------------------------------------ -------- -------- -------------
<S> <C> <C> <C>
*+ Dave H. Williams, Chairman, 65. Chair- 1988 2001++ 3,514
man of the Board of Alliance Capital (Class Three)
Management Corporation ("ACMC")***
since prior to 1993 and Director of
The Equitable Companies Incorporated
and The Equitable Life Assurance Soci-
ety of the United States.
**+ H.R.H. Pilar de Borbon y Borbon, Duch- 1991 2000 890
ess of Badajoz, 62. Director of Cartier, (Class Two)
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.
**+ Angel Corcostegui, 47. Chief Executive 1992 1999 1,014
Officer of Banco Central Hispanoamericano, (Class One)
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.
* Carlos Delclaux Zulueta, 41. Managing 1994 2000 895
Director of BBV Privanza Banco, (Class Two)
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).
* Enrique L. Fevre, 54. Senior Vice 1991 2000 793
President Latin America - AXA, Vice (Class Two)
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
6
<PAGE>
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.
</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.
7
<PAGE>
<TABLE>
<CAPTION>
NUMBER
OF SHARES
YEAR BENEFICIALLY
TERM OWNED
NAME, AGE, POSITIONS AND OFFICES YEAR AS A DIRECTLY
WITH THE FUND, PRINCIPAL OCCUPATIONS FIRST DIRECTOR OR INDIRECTLY
DURING THE PAST FIVE YEARS BECAME A WILL AS OF
AND OTHER DIRECTORSHIPS DIRECTOR EXPIRE July 17, 1998
------------------------------------ -------- -------- -------------
<S> <C> <C> <C>
**+* Ignacio Gomez-Acebo, 66. Senior Partner 1995 1999 770
of Gomez-Acebo & Pombo, Chairman of (Class One)
the Board of Clarke, Modet & Co. and
Peugeot Leasing & COFIC, Member of the
Board of AXA.
**+ Inmaculada de Habsburgo-Lorena, 53. 1988 2001++ 840
Director of The Spanish Institute, (Class Three)
Trustee of Samuel H. Kress Foundation,
Trustee of Independent Curators Incor-
porated, Founder and Trustee of the
King Juan Carlos International Center
of New York University Foundation,
Member of the Board of World Monuments
Fund Espana.
** Francisco Gomez Roldan, 44. Chief Exec- 1989 2001++ -0-
utive Officer of Argentaria, (Class Three)
Corporacion Bancaria de Espana; for-
merly 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.
**+ Juan Manuel Sainz de Vicuna, 72. Honor- 1988 2001++ 1,000
ary Chairman of Coca-Cola Espana, (Class Three)
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 In-
ternational Advisory Council.
* Dr. Reba White Williams, 61. Director 1990 1999 10,073
of ACMC, Director of Special Projects, (Class One)
8
<PAGE>
ACMC; art historian and writer. She
was formerly Vice President and security
analyst for Mitchell Hutchins, Inc. and
an analyst for McKinsey & Company,
Inc.
</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.
9
<PAGE>
Alliance has instituted a policy applicable to all funds 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 to which Alliance
provides investment advisory services (collectively, 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.
10
<PAGE>
<TABLE>
<CAPTION>
TOTAL NUMBER TOTAL NUMBER
OF INVESTMENT OF INVESTMENT
COMPANIES IN PORTFOLIOS WITHIN
THE ALLIANCE THE ALLIANCE
FUND COMPLEX, FUND COMPLEX,
COMPENSATION INCLUDING THE INCLUDING THE
FROM THE FUND, AS TO FUNDS, AS TO
TOTAL ALLIANCE FUND WHICH THE WHICH THE
AGGREGATE COMPLEX, DIRECTOR IS DIRECTOR
NAME OF DIRECTOR COMPENSATION INCLUDING A 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.
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
July 3, 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
11
<PAGE>
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 3: 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 for action at the
Meeting (the "Stockholder Proposal"). 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.
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 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
12
<PAGE>
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--a majority of whom have no
affiliation with Alliance--urges you to vote against the
stockholder proposal (the "Proposal") to terminate the
13
<PAGE>
investment management agreement between Alliance and the
Fund.
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 [ ], 1998 the Fund has had the [ ]
1998 net asset value total return performance --
[ ]% -- of any U.S.-registered closed-end country
fund.
14
<PAGE>
The Board of Directors believes that the Supporting Statement's depiction
of the Fund's performance is misleading. As the widely respected PaineWebber
closed-end analyst, Celso Sanchez, 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 an
'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 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, PaineWebber's 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."
15
<PAGE>
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 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, A MAJORITY OF WHOM HAVE NO AFFILIATION
WITH ALLIANCE, UNANIMOUSLY RECOMMENDS THAT YOU VOTE AGAINST THIS PROPOSAL.
16
<PAGE>
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 [ ] 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 Reeves 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.
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.
17
<PAGE>
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.
Name and Address Amount of Beneficial Percent of
of Beneficial Owner Ownership Common Stock
___________________ ____________________ ____________
President and Fellows 1,214,300 12.1%
of Harvard College
c/o Harvard Management
Company, Inc.
600 Atlantic Avenue
Boston, Massachusetts 02210
Morgan Stanley, Dean 708,230 7.06%
Witter, Discover & Co.
1585 Broadway
New York, New York 10036
FMR Corp. 642,500 6.41%
82 Devonshire Street
Boston, Massachusetts 02109
Deep Discount Advisors, Inc. 545,100 5.4%
Ron Olin Investment Management
Company
One West Pack Square, Suite 777
Asheville, North Carolina 28801
18
<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
19
<PAGE>
TABLE OF CONTENTS PAGE
- -----------------------------------------------------------------
Introduction...............................................
Proposal One: Election of Directors........................
Proposal Two: Ratification of Selection of
Independent Accountants..................................
Proposal Three: Stockholder Proposal and
Supporting Statement.....................................
Opposing Statement of Your Board of Directors..............
Information as to the Fund's Principal Officers,
Investment Adviser, Sub-Advisor and Administrator..........
Submission of Proposals for the Next Annual Meeting of
Stockholders.............................................
Other Matters..............................................
Reports to Stockholders....................................
<PAGE>
THE SPAIN FUND, INC.
-------------------------------------------
Alliance Capital [LOGO](R)
Alliance Capital Management L.P.
-------------------------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
AND PROXY STATEMENT
September 10, 1998
<PAGE>
July [27], 1998
To the Stockholders of
The Spain Fund, Inc. (the "Fund")
The accompanying Notice of Meeting and Proxy Statement
presents 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. YOUR BOARD OF DIRECTORS--A
MAJORITY OF WHOM HAVE NO AFFILIATION WITH ALLIANCE--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 [ ] during the first [ ] months of 1998
alone. Moreover, Alliance has demonstrated its commitment to
stockholder values by initiating the Fund's innovative managed
distribution policy. Finally, 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.
<PAGE>
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
2
<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 TO TERMINATE THE INVESTMENT MANAGEMENT
AGREEMENT BETWEEN ALLIANCE CAPITAL MANAGEMENT L.P. ("ALLIANCE")
AND THE CORPORATION.
PLEASE REFER TO THE PROXY STATEMENT FOR
A DISCUSSION OF EACH OF THE PROPOSALS.
PLEASE VOTE, DATE AND SIGN ON REVERSE SIDE
AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
Please sign this proxy 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.
<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
DAVE H. WILLIAMS For Withhold Except
FRANCISCO GOMEZ ROLDAN / / / / / /
JUAN MANUEL SAINZ DE VICUNA
INMACULADA DE HABSBURGO-LORENA
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 SHALL 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--A MAJORITY OF WHOM HAVE NO
AFFILIATION WITH ALLIANCE--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
Mark box at right if an address change or comment / /
has been noted on the reverse side of this card.
RECORD DATE SHARES:
00250031.BD7
