<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
ACM Government Opportunity 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:
2
<PAGE>
<PAGE>
ACM GOVERNMENT OPPORTUNITY FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
Toll Free (800) 221-5672
February 18, 2000
To the Stockholders of ACM Government Opportunity Fund, Inc. (the "Fund"):
The accompanying Notice of Meeting and Proxy Statement present proposals to
be considered at the Fund's Annual Meeting of Stockholders on March 28, 2000.
The Board of Directors recommends that you vote FOR the election to the Board
of the three current Directors who are standing for re-election (Proposal 1),
vote FOR the ratification of the Board's selection of Ernst & Young LLP as the
Fund's independent auditors for its 2000 fiscal year (Proposal 2), and vote
AGAINST the proposal pursuant to the Fund's charter to convert the Fund to an
open-end fund (Proposal 3).
We welcome your attendance at the Annual Meeting. If you are unable to
attend, we encourage you to vote your proxy promptly, in order to spare the
Fund additional proxy solicitation expenses. Shareholder Communications
Corporation ("SCC"), a professional proxy solicitation firm, has been selected
to assist stockholders in the voting process. As the date of the Meeting
approaches, if we have not yet received your proxy, you may receive a telephone
call from SCC reminding you to exercise your right to vote. If you have any
questions regarding the Meeting agenda or how to give your proxy, please call
SCC at 1-800-605-7452.
Sincerely yours,
John D. Carifa
Chairman and President
<PAGE>
[LOGO OF ALLIANCE CAPITAL] ACM GOVERNMENT OPPORTUNITY FUND, INC.
- -------------------------------------------------------------------------------
1345 Avenue of the Americas, New York, New York 10105
Toll Free (800) 221-5672
- -------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
March 28, 2000
To the Stockholders of ACM Government Opportunity Fund, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of ACM Government Opportunity 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 Tuesday, March 28, 2000 at 11:00 a.m., for the following
purposes, all of which are more fully described in the accompanying Proxy
Statement dated February 18, 2000:
1.To elect three Directors of the Fund, each to hold office for a term
of three years and until his or her successor is duly elected and
qualifies;
2.To ratify the selection of Ernst & Young LLP as independent auditors
of the Fund for its fiscal year ending July 31, 2000; and
3.To vote on a proposal pursuant to the Fund's Charter to convert the
Fund to an open-end investment company; 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 December 31, 1999
as the record date for the determination of stockholders entitled to notice
of, and to vote at, the Meeting or any postponement or 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
February 18, 2000
- -------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
Please indicate your voting instructions on the enclosed Proxy Card, sign
and date it, and return it in the envelope provided, which needs no postage if
mailed in the United States. Your vote is very important no matter how many
shares you own. Please mark and mail your proxy promptly in order to save the
Fund any additional cost of further proxy solicitation and in order for the
Meeting to be held as scheduled.
- -------------------------------------------------------------------------------
(R) This registered service mark used under license from the owner, Alliance
Capital Management L.P.
<PAGE>
PROXY STATEMENT
ACM GOVERNMENT OPPORTUNITY FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
----------------
ANNUAL MEETING OF STOCKHOLDERS
MARCH 28, 2000
----------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of ACM Government Opportunity
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 Tuesday, March 28, 2000 at 11:00 a.m. The solicitation will be by
mail and the cost will be borne by the Fund. The Notice of Meeting, the Proxy
Statement and the accompanying Proxy Card are being mailed to stockholders on
or about February 18, 2000.
The Board of Directors has fixed the close of business on December 31, 1999
as the record date for the determination of stockholders entitled to notice
of, and to vote at, the Meeting and at any postponement or adjournment
thereof. The outstanding voting shares of the Fund as of December 31, 1999
consisted of 13,071,872 shares of common stock, each share being entitled to
one vote. All properly executed and timely received proxies 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 three Directors (Proposal One), for
the ratification of the selection of Ernst & Young LLP as the Fund's
independent auditors for the fiscal year ending July 31, 2000 (Proposal Two),
and against the proposal submitted for consideration pursuant to the Fund's
Charter to convert the Fund to an open-end investment company (Proposal
Three). 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.
Properly executed proxies may be returned with instructions to abstain from
voting or withhold authority to vote an ("abstention") or represent a broker
"non-vote" (which is a proxy from a broker or nominee indicating that the
broker or nominee has not received instructions from the beneficial owner or
other person entitled to vote shares on a particular matter with respect to
which the broker or nominee does not have the discretionary power to vote).
The shares represented by such a proxy with respect to matters to be
determined by a plurality or 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. If any proposal, other than
Proposals One, Two and Three, properly comes before the Meeting, shares
represented by the proxies will be voted on all such proposals in the
discretion of the person or persons voting the proxies.
1
<PAGE>
A quorum for the Fund for the Meeting will consist of the presence in person
or by proxy of the holders of a majority of the shares entitled to vote at the
Meeting. In the event that a quorum is not present at the Meeting or, even if
a quorum is so present, in the event that sufficient votes in favor of the
position recommended by the Board of Directors on any proposal described in
the Proxy Statement are not timely received, the persons named as proxies may
propose and vote for one or more adjournments of the Meeting with no other
notice than announcement at the Meeting in order to permit further
solicitation of proxies. The Meeting may be adjourned with respect to fewer
than all of the proposals in the Proxy Statement, and a stockholder vote may
be taken on any one of the proposals prior to any adjournment if sufficient
votes have been received for approval thereof. Shares represented by proxies
indicating a vote contrary to the position recommended by the Board of
Directors on a proposal will be voted against adjournment as to that proposal.
The Fund has engaged Shareholder Communications Corporation, 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 solicitation services plus reimbursement of out-of-pocket
expenses.
PROPOSAL ONE
ELECTION OF DIRECTORS
At the Meeting, three Directors will be elected to serve for terms of three
years and until their successors are elected and qualify. 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
listed below.
Pursuant to the Charter and By-Laws of the Fund, the Board of Directors has
been divided into three classes. The terms of the members in Class Three will
expire as of the Meeting, the terms of the members in Class One will expire as
of the annual meeting of stockholders for the year 2001, and the term of
office of the members in Class Two will expire as of the annual meeting of
stockholders for the year 2002. Upon expiration of the terms of the members of
a class as set forth above, the terms of their successors in that class will
continue until the third annual meeting of stockholders following their
election and until their successors are duly elected and qualify. John H.
Dobkin, Clifford L. Michel and Donald J. Robinson are currently the members
constituting Class One; David H. Dievler, William H. Foulk, Jr. and Dr. James
M. Hester are currently the members constituting Class Two; and John D.
Carifa, Ruth Block and Robert C. White are currently the members constituting
Class Three.
Under this classified Board structure, only those Directors in a single
class may be replaced in any one year. It would require two years to change a
majority of the Board of Directors of a Fund, although Maryland law provides
that stockholders may remove Directors under certain circumstances even if
they are not then standing for re-election and, under regulations of the
Securities and Exchange Commission (the "Commission"), appropriate stockholder
proposals may be included in the Fund's annual proxy statement. This
classified Board structure, 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, three Directors in Class Three of the Fund, Mr. John D.
Carifa, Ms. Ruth Block and Mr. Robert C. White, 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 will be unable to serve, but in
the event any nominee is unable to serve or for good cause will not serve, the
proxies received indicating a vote in favor of such nominee will be voted for
such substitute nominee as the Board of Directors may recommend.
2
<PAGE>
Certain information concerning the Fund's Directors, including the nominees
for election as Directors, is set forth below. Only the Class Three Directors
are standing for election as Directors.
<TABLE>
<CAPTION>
Name, positions and Number of shares
offices with the Fund, of the Fund
age, principal beneficially
occupations during Year first Year term owned directly or
the past five years became a as Director indirectly as of
and other directorships Director will expire December 31, 1999
----------------------- ---------- ----------- -----------------
<S> <C> <C> <C>
* John D. Carifa, Chairman of the 1988 2003++ 0
Board, 54. President, Chief (Class Three)
Operating Officer and a Director of
Alliance Capital Management
Corporation, the general partner of
the Adviser ("ACMC"), which he has
been associated with since prior to
1995.
**+ Ruth Block, Director, 69. Formerly 1988 2003++ 0
an Executive Vice President and (Class Three)
Chief Insurance Officer of The
Equitable Life Assurance Society of
the United States. She is a Director
of Ecolab Incorporated (specialty
chemicals) and BP Amoco Corporation
(oil and gas).
**+ David H. Dievler, Director, 70. 1988 2002 200
Independent Consultant. Formerly a (Class Two)
Senior Vice President of ACMC until
December 1994.
**+ John H. Dobkin, Director, 58. 1998 2001 0
President of Historic Hudson Valley (Class One)
(historic preservation) since prior
to 1995. Previously, he was Director
of the National Academy of Design.
**+ William H. Foulk, Jr., Director, 67. 1998 2002 521
Investment Adviser and Independent (Class Two)
Consultant. He was formerly Senior
Manager of Barrett Associates, Inc.,
a registered investment adviser,
with which he had been associated
since prior to 1995.
**+ Dr. James M. Hester, Director, 75. 1988 2002 815
President of The Harry Frank (Class Two)
Guggenheim Foundation, with which he
has been associated since prior to
1994. He was formerly President of
New York University and The New York
Botanical Garden and Rector of The
United Nations University.
</TABLE>
- --------
* "Interested person," as defined in the Investment Company Act of 1940, as
amended (the "Act"), of the Fund because of an affiliation with the Fund's
investment adviser, Alliance Capital Management L.P. (the "Adviser").
** Member of the Audit Committee.
+ Member of the Nominating Committee.
++ If re-elected at the Meeting.
3
<PAGE>
<TABLE>
<CAPTION>
Name, positions and Number of shares
offices with the Fund, of the Fund
age, principal beneficially
occupations during Year first Year term owned directly or
the past five years became a as Director indirectly as of
and other directorships Director will expire December 31, 1999
----------------------- ---------- ----------- -----------------
<S> <C> <C> <C>
**+ Clifford L. Michel, Director, 60. 1988 2001 1,000
Member of the law firm of Cahill (Class One)
Gordon & Reindel, with which he has
been associated since prior to 1995.
He is President and Chief Executive
Officer of Wenonah Development
Company (investments) and a Director
of Placer Dome, Inc. (mining).
**+ Donald J. Robinson, Director, 65. 1996 2001 0
Senior Counsel of the law firm of (Class One)
Orrick, Herrington & Sutcliffe since
January 1995. He was formerly a
senior partner and a member of the
Executive Committee of that firm. He
was also a Trustee of the Museum of
the City of New York from 1977-1995.
**+ Robert C. White, Director, 79. 1988 2003++ 0
Formerly Assistant Treasurer of Ford (Class Three)
Motor Company and, until September
30, 1994, a Vice President and the
Chief Financial Officer of the
Howard Hughes Medical Institute.
</TABLE>
- --------
* "Interested person," as defined in the Investment Company Act of 1940, as
amended (the "Act"), of the Fund because of an affiliation with the Fund's
investment adviser, Alliance Capital Management L.P. (the "Adviser").
** Member of the Audit Committee.
+ Member of the Nominating Committee.
++ If re-elected at the Meeting.
The Adviser has instituted a policy applicable to all registered investment
companies to which the advisor provides investment advisory services,
including the Fund (collectively, the "Alliance Fund Complex"), contemplating
that each Director will invest specified minimum amounts and (in most cases)
an overall total of at least $150,000 in shares of investment companies within
the Alliance Fund Complex.
During fiscal year ended July 31, 1999, the Board of Directors of the Fund
met four times, the Audit Committee met twice for the purposes described below
in Proposal Two, and the Nominating Committee did not meet. Both the Audit
Committee and the Nominating Committee are standing committees of the Board.
The Nominating Committee was constituted for the purpose of selecting and
nominating persons to fill any vacancies on the Board of Directors and does
not currently consider for nomination candidates proposed by stockholders for
election as Directors.
4
<PAGE>
The Fund does not pay any fees to, or reimburse expenses of, any Director
during a term when 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 the fiscal year ended July 31, 1999, the
aggregate compensation paid to each of the Directors during calendar year 1999
by all of the investment companies in the Alliance Fund Complex, and the total
number of investment companies (and separate investment 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 investment company in the Alliance Fund Complex
provides compensation in the form of pension or retirement benefits to any of
its directors or trustees.
<TABLE>
<CAPTION>
Total Number of
Total Number Investment Portfolios
of Investment within the
Companies in the Alliance Fund
Alliance Fund Complex, Including
Aggregate Complex, Including the Fund
Compensation Total Compensation the Fund, as to which the
from the Fund from the Alliance Fund as to which the Director is a
During its Fiscal Complex, Including Director is a Director Director
Name of Director Year Ended July 31, 1999 the Fund, During 1999 or a Trustee or a Trustee
---------------- ------------------------ ---------------------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
John D. Carifa $0 $0 50 103
Ruth Block $3,444 $154,263 38 80
David H. Dievler $3,567 $210,188 45 87
John H. Dobkin $3,567 $206,488 42 84
William H. Foulk, Jr. $3,567 $246,413 45 98
Dr. James M. Hester $3,567 $164,138 39 81
Clifford L. Michel $3,567 $183,388 39 83
Donald J. Robinson $2,833 $140,813 41 92
Robert C. White $7,050 $ 85,000 10 10
</TABLE>
As of December 31, 1999, the Directors and officers of the Fund owned less
than 1% of the shares of the Fund and the Directors and officers of the Fund
as a group owned less than 1% of the shares of the Fund. During the Fund's
most recently completed fiscal year, none of the Fund's Directors engaged in a
purchase or sale of the securities of the Adviser, or of any of its parents or
subsidiaries, in an amount exceeding 1% of the relevant class of outstanding
securities.
Your Board of Directors unanimously recommends that the stockholders vote
"FOR" the election of each of the foregoing nominees to serve as a Director of
the Fund.
PROPOSAL TWO
RATIFICATION OF SELECTION OF
INDEPENDENT AUDITORS
The Board of Directors recommends that the stockholders of the Fund ratify
the selection of Ernst & Young LLP, independent auditors, to audit the
accounts of the Fund for its fiscal year ending July 31, 2000. The selection
of Ernst & Young LLP was approved by the vote, cast in person, of a majority
of the Directors of the Fund, 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 14, 1999. Ernst & Young LLP has audited the
5
<PAGE>
accounts of the Fund since the Fund commenced 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 Ernst & Young LLP 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
normally meets twice during each full fiscal year with representatives of the
independent auditors to discuss the scope of the independent auditor's
engagement and to review the financial statements of the Fund and the results
of their examination thereof.
Your Board of Directors unanimously recommends that the stockholders vote
"FOR" the ratification of the selection of Ernst & Young LLP as independent
auditors of the Fund.
PROPOSAL THREE
PROPOSAL PURSUANT TO THE FUND'S CHARTER
The Fund's Charter requires that under certain circumstances the Fund submit
to the Fund's stockholders at the next annual meeting of stockholders a
proposal that the Fund, consistent with the Act as then in effect, amend its
Charter to convert the Fund from a closed-end investment company to an open-
end investment company. The submission is mandated if such a proposal is duly
requested in writing by the holders of 10% or more of the Fund's outstanding
shares during a calendar year in which the Fund's shares have traded on the
New York Stock Exchange at an average discount from net asset value of more
than 10% determined on the basis of the discount as of the end of the last
trading day in each week during the twelve weeks preceding the end of such
year. These conditions were fulfilled for submission of such a proposal at the
Meeting. Accordingly, Proposal Three is to amend the Charter of the Fund by
the adoption of the Articles of Amendment set forth in Appendix A hereto to
convert the Fund from a closed-end investment company to an open-end
investment company and to change the subclassification of the Fund from a
closed-end investment company to an open-end investment company. Pursuant to
the Fund's Charter, approval of Proposal Three requires the affirmative vote
of two-thirds of the Fund's outstanding shares.
For the reasons discussed below, your Board unanimously recommends that the
stockholders vote "AGAINST" Proposal Three.
Description of Proposal Three
Proposal Three would amend the Fund's Charter to convert the Fund to open-
end form. A closed-end fund like the Fund does not issue new shares or redeem
shares each day. Instead, the Fund's shares trade freely on the New York Stock
Exchange like those of any public company. Supply and demand forces and other
factors influence the market prices of your Fund's shares. Just as an
industrial company's shares can trade above or below book value, the Fund's
shares can trade at levels above their net asset value or below their net
asset value. In contrast, an open-end fund's shares are not traded on any
stock exchange. Stockholders obtain liquidity by selling their shares back to
the fund. By law, as an open-end fund, the Fund would be required to redeem
its shares on any business day with no advance notice from stockholders who so
request at the then current net asset value of the shares. Thus, shares of an
open-end fund are not purchased or sold at a discount or a premium from their
net asset value. Payments for redemptions, absent unusual circumstances as
permitted by law, would be made by seven
6
<PAGE>
days after the Fund's receipt of the redeemed shares and could be made in cash
or, at the Fund's option, wholly or partly in portfolio securities selected by
the Fund. It is not unusual for temporary redemption fees to be imposed after
a closed-end fund converts to open-end form in situations where large
redemptions soon after the conversion are anticipated. If amended, the Charter
would permit the Board, subject to applicable law, to impose a fee equal to a
percentage up to 2% of net asset value upon the redemption or exchange of
shares outstanding at the time of the conversion. Such a fee could be imposed
for a period of up to twenty-four months after the conversion. The Board of
Directors has not yet determined whether to impose a redemption fee, or the
rate at which and the period for which a redemption fee might be imposed. The
purpose of the redemption fee would be to offset costs and expenses directly
related to the redemption of Fund shares, including turnover and other costs
to be incurred by the Fund in connection with such redemptions; to reduce the
impact of initial redemptions upon the facilities of the Fund and its transfer
agent; and to spread out initial redemptions, thus alleviating to an extent
the disruptive effects of redemptions on the management of the Fund's
portfolio and investors choosing to remain Fund stockholders.
As discussed in Appendix B hereto, if Proposal Three is approved, conversion
of the Fund to an open-end fund would probably take as long as four to six
months, and would be effective upon the effectiveness of the Fund's
registration statement under the Securities Act of 1933, as amended, allowing
the continuous offering of Fund shares. Appendix B also discusses certain tax
and other aspects of the conversion if Proposal Three is approved by the
stockholders.
Your Board of Directors urges you to vote "AGAINST" Proposal Three.
During the last months of 1999, the Fund and a large majority of other U.S.
exchange-traded closed-end bond funds experienced abrupt and substantial
erosion of their market premiums and/or widening of their market discounts. As
the Adviser has advised the Fund's Board of Directors, the Adviser believes
that the primary cause of this event has been tax loss selling by stockholders
of such funds to reduce their net taxable gains. While such end of year tax
loss selling is not unusual, particularly in years such as 1999 when many
stock prices have increased substantially, the Adviser believes that this
year's selling has been both unusually heavy and abnormally concentrated in
closed-end bond funds, with correspondingly pronounced impact on closed-end
bond fund market prices. However, the market price deterioration that results
from tax loss selling tends to dissipate as such selling abates early in a new
calendar year. Such a recovery appears to have begun; the Fund's discount,
which had stood at 18.37% on December 24, 1999, has lowered to 8.2% as of the
close of business on February 11, 2000.
In response to these developments, at its January 20, 2000 Regular Meeting,
the Fund's Board of Directors considered and approved the Adviser's
recommendation that the Board institute a discretionary share repurchase
program for the purposes of enhancing stockholder values and reducing the
Fund's discount. Under the program as disclosed in the Fund's January 20 press
release, repurchases are made at such times and in such amounts as the Fund's
management believes will further the foregoing objectives, subject to board
review. As of the close of business on February 11, 2000, the Fund had
repurchased approximately 3% of its originally outstanding shares.
In the Board of Directors' view, it is quite understandable that certain
large stockholders of the Fund would request a Charter provision proposal at a
time when the Fund's discount had abruptly widened. The share repurchase
program instituted by the Board of Directors stems from its own concern that
stockholder values be preserved. It remains the policy of the Fund's Board of
Directors to take such action, including share repurchases and tender offers,
as may be appropriate under the circumstances to seek to alleviate market
discounts that are not in the best interests of the Fund and its stockholders.
7
<PAGE>
At the Board's January 20, 2000 Meeting, on the basis of the foregoing
considerations, as well as the relative advantages and disadvantages of open-
ending the Fund as summarized above, in Appendix C and in the following
paragraph, the Board of Directors also concluded that, from the standpoint of
the best interests of the Fund and its stockholders, it would be inappropriate
to open-end the Fund at this time.
Based on the experience of other similarly situated closed-end funds that
have open-ended in recent years, the Adviser believes that, open-ending the
Fund would result in a redemption of, depending upon the circumstances,
between approximately one-third and two-thirds of the Fund's outstanding
shares within a few months. The one-time costs relating to the conversion of
the Fund to open-end form, including printing, mailing and professional costs,
are estimated to be at least $175,000 amounting to at least an estimated 17
basis points per share ($.0017). The Fund's per-share expense ratio would also
substantially increase, for several reasons. First, those categories of Fund
expenses that are more or less fixed notwithstanding fluctuations in the
Fund's asset size would be spread over a substantially smaller asset base,
proportionally increasing their per-share effect. Second, for the Fund to have
any meaningful opportunity of realizing, in open-end form, significant new
assets from sales of shares over which Fund expenses would be spread, it would
be a practical necessity for the Fund to obtain stockholder approval of the
same pricing structure as is utilized by the numerous open-end Alliance Mutual
Funds, which involves the offering of multiple classes of shares. The class of
shares with the lowest expense ratio, Class A, is subject to an annual
distribution (or "Rule 12b-1") fee of .30 of 1% (i.e., 30 basis points). If
the stockholders approve Proposal Three, stockholders would receive, in the
course of the Fund's open-ending, Class A shares which would be subject to
that annual distribution fee, thus increasing the expense ratio for such
shares by these 30 basis points. In the event of a decrease in assets of
between one-third and two-thirds in connection with open-ending, it is
estimated that the Fund's per-share expense ratio for Class A shares,
including such an annual distribution fee, would increase from its current
level of 125 basis points to between approximately 186 basis points and 229
basis points, an increase of between 48.8% and 83.2%. The difference between
these two estimates is based primarily on the spread of administration,
custodian, accounting and audit fees over the smaller asset base.
For the foregoing reasons, the Board of Directors strongly believes that,
notwithstanding the benefit which those stockholders who would wish to redeem
their shares over the short term would derive from open-ending the Fund, on
balance the best interests of the Fund and its stockholders would be
substantially disserved by such action.
Accordingly, your Board of Directors unanimously recommends that the
stockholders vote "AGAINST" Proposal Three.
OTHER MATTERS
Management of the Fund does not know of any matters properly to be presented
at the Meeting other than those mentioned in this Proxy Statement. If any
other matter properly comes before the Meeting, the shares represented by
proxies will be voted with respect thereto in the discretion of the person or
persons voting the proxies.
According to information filed with the Securities and Exchange Commission,
as of December 27, 1999, Aon Corporation, Aon Advisors, Inc., Combined
Insurance Company of America and Virginia Surety Company, Inc., each with an
address of 123 North Wacker Drive, Chicago, Illinois 60606, beneficially owned
an aggregate of 4,350,000 shares, or 34.8%, of the Fund's outstanding common
stock.
8
<PAGE>
INFORMATION AS TO THE FUND'S PRINCIPAL OFFICERS,
INVESTMENT ADVISER AND ADMINISTRATOR
The principal officers of the Fund, their ages and their principal
occupations during the past five years are set forth below. Each of the
officers listed below also serves as an officer of one or more of the other
registered investment companies sponsored by the Adviser.
John D. Carifa, 54, a Director, Chairman and President of the Fund. (See
Proposal One, "Election of Directors," at page 3 for biographical
information).
Wayne D. Lyski, 58, a Senior Vice President of the Fund, is an Executive
Vice President of ACMC, with which he has been associated since prior to 1995.
Kathleen A. Corbet, 39, a Senior Vice President of the Fund, is an Executive
Vice President of ACMC, with which she has been associated since prior to
1995.
Bruce W. Calvert, 53, a Senior Vice President of the Fund, is a Director,
Chairman and Chief Executive Officer, and Chief Investment Officer of ACMC,
with which he has been associated since prior to 1995.
Thomas J. Bardong, 54, Vice President of the Fund, is a Senior Vice
President of ACMC, with which he has been associated since prior to 1995.
Paul J. DeNoon, 37, Vice President of the Fund, is a Vice President of ACMC,
with which he has been associated since prior to 1995.
Michael Mon, 30, Vice President of the Fund, is a Vice President of ACMC,
with which he has been associated since June 1999. Prior thereto he was a
Portfolio Manager at Brundage, Story & Rose since 1998. Previously, he was
employed as an Assistant Vice President at Mitchell Hutchins Asset Management
Inc. since prior to 1995.
Christian G. Wilson, 30, a Vice President of the Fund, is a Vice President
of ACMC, with which he has been associated since prior to 1995.
Mark D. Gersten, 49, Treasurer and Chief Financial Officer of the Fund, is a
Senior Vice President of Alliance Fund Services, Inc. ("AFS"), with which he
has been associated since prior to 1995.
Edmund P. Bergan, Jr., 49, Secretary of the Fund, is a Senior Vice President
and the General Counsel of Alliance Fund Distributors, Inc. and AFS, with
which he has been associated since prior to 1995.
The address of the foregoing officers, except Mr. Gersten, is c/o Alliance
Capital Management L.P., 1345 Avenue of the Americas, New York, New York
10105. Mr. Gersten's address is c/o Alliance Fund Services, Inc., 500 Plaza
Drive, Secaucus, New Jersey 07074.
The Fund's investment adviser and administrator is Alliance Capital
Management L.P., with principal offices at 1345 Avenue of the Americas, New
York, New York 10105.
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 Commission and the New York
Stock Exchange initial reports of ownership and reports of changes in
ownership of shares of the Funds. For the Fund's fiscal year ended July 31,
1999, a report of beneficial ownership on Form 3 on behalf of Michael Mon was
inadvertently filed late by the Adviser.
9
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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 October
21, 2000 for inclusion in the Fund's proxy statement and proxy card 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 requirements under the federal
securities laws and the Maryland General Corporation Law and must be submitted
in accordance with the Fund's then applicable By-laws.
The persons named as proxies for the 2001 Annual Meeting of Stockholders
will with respect to proxies in effect at that meeting have discretionary
authority to vote on any matter presented by a stockholder for action at that
meeting unless the Fund receives notice of the matter by January 4, 2001 (or
such earlier date as may be specified by an advance notice provision in the
Fund's By-laws). If the Fund receives such timely notice, these persons will
not have this authority except as provided in the applicable rules of the
Commission.
REPORTS TO STOCKHOLDERS
The Fund will furnish each person to whom this Proxy Statement is delivered
with a copy of the Fund's latest annual report to stockholders and, if
applicable, such Fund's subsequent semi-annual report to stockholders, upon
request and without charge. To request a copy, please call AFS at (800) 227-
4618 or write Christina Santiago at Alliance Capital Management L.P., 1345
Avenue of the Americas, New York, New York 10105.
By Order of the Boards of Directors,
Edmund P. Bergan, Jr.
Secretary
February 18, 2000
New York, New York
10
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APPENDIX A
ACM GOVERNMENT OPPORTUNITY FUND, INC.
ARTICLES OF AMENDMENT
ACM GOVERNMENT OPPORTUNITY FUND, INC., a Maryland corporation having its
principal office in the State of Maryland in the City of Baltimore
(hereinafter called the "Corporation"), hereby certifies to the State
Department of Assessments and Taxation of Maryland:
FIRST: Section (1) of Article FIFTH of the charter of the Corporation (the
"Charter") is amended to provide as follows:
(1) The total number of shares of capital stock which the Corporation shall
have authority to issue is Three Hundred Million (300,000,000), all of which
shall be Common Stock having a par value of one cent ($.01) per share and an
aggregate par value of Three Million Dollars ($3,000,000). Until such time as
the Board of Directors shall provide otherwise in accordance with paragraph
(1)(c) of Article SEVENTH hereof, the authorized shares of Common Stock of the
Corporation shall be of the same class./1/
SECOND: The following new Sections (5) through (13), in the order set forth
below, are added to Article FIFTH of the Charter immediately following Section
(4) of that Article FIFTH:
(5) As more fully set forth hereafter, the assets and liabilities and the
income and expenses of each class of the Corporation's stock shall be
determined separately from those of each other class of the Corporation's
stock and, accordingly, the net asset value, the dividends and distributions
payable to holders, and the amounts distributable in the event of dissolution
of the Corporation to holders of shares of the Corporation's stock may vary
from class to class. Except for these differences and certain other
differences hereafter set forth or provided for, each class of the
Corporation's stock shall have the same preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of and rights to require redemption of
each other class of the Corporation's stock except as otherwise provided for
by the Board of Directors pursuant to paragraph (1)(c) of Article SEVENTH
hereof.
(6) Except as otherwise provided herein, all consideration received by the
Corporation for the issuance or sale of shares of a class of the Corporation's
stock, together with all funds derived from any investment and reinvestment
thereof, shall irrevocably remain attributable to that class for all purposes,
subject only to any automatic conversion of one class of stock into another,
as hereinafter provided for, and the rights of creditors, and shall be so
recorded upon the books of account of the Corporation. The assets belonging to
a class shall be charged with the liabilities of the Corporation in respect of
such class and with such class' share of the general liabilities of the
Corporation, in the latter case in the proportion that the net asset value of
such class bears to the net asset value of all classes or as otherwise
determined by the Board of Directors in accordance with law. The determination
of the Board of Directors shall be conclusive as to the allocation of
liabilities, including accrued expenses and reserves, to a class.
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(/1/) This revised Section (1) would add the second sentence and delete the
phrase "subject to the following provisions:" from the end of the first
sentence.
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(7) The assets attributable to all classes of stock shall be invested in the
same investment portfolio of the Corporation. Notwithstanding the foregoing
provisions of paragraph (6) of this Article FIFTH, the allocation of
investment income and losses, realized and unrealized capital gains and
losses, expenses and liabilities of the Corporation among the classes of the
Corporation's stock shall be determined by the Board of Directors in a manner
that is consistent with the Investment Company Act of 1940, the rules and
regulations thereunder, and the interpretations thereof, in each case as from
time to time amended, modified or superseded. The determination of the Board
of Directors shall be conclusive as to the allocation of investment income and
losses, realized and unrealized capital gains and losses, expenses and
liabilities (including accrued expenses and reserves) and assets to a
particular class or classes.
(8) Shares of each class of stock shall be entitled to such dividends or
distributions, in stock or in cash or both, as may be declared from time to
time by the Board of Directors with respect to such class. Specifically, and
without limiting the generality of the foregoing, the dividends and
distributions of investment income and capital gains with respect to each
class of stock may vary with respect to each such class to reflect differing
allocations of the expenses of the Corporation among the holders of the
classes and any resultant differences between the net asset values per share
of the classes, to such extent and for such purposes as the Board of Directors
may deem appropriate. The Board of Directors may provide that dividends shall
be payable only with respect to those shares of stock that have been held of
record continuously by the stockholder for a specified period, not to exceed
72 hours, prior to the record date of the dividend.
(9) Except as provided below, on each matter submitted to a vote of the
stockholders, each holder of stock shall be entitled to one vote for each
share entitled to vote thereon standing in his, her or its name on the books
of the Corporation. Subject to any applicable requirements of the Investment
Company Act of 1940, as from time to time in effect, or rules or orders of the
Securities and Exchange Commission or any successor thereto, or other
applicable law, all holders of shares of stock shall vote as a single class
except with respect to any matter which affects only one or more (but less
than all) classes of stock, in which case only the holders of shares of the
classes affected shall be entitled to vote. Without limiting the generality of
the foregoing, and subject to any applicable requirements of the Investment
Company Act of 1940, as from time to time in effect, or rules or orders of the
Securities and Exchange Commission or any successor thereto, or other
applicable law, the holders of each class of stock shall have, respectively,
with respect to any matter submitted to a vote of stockholders (i) exclusive
voting rights with respect to any such matter that affects only the class of
stock of which they are holders, including, without limitation, the provisions
of any distribution plan adopted by the Corporation pursuant to Rule 12b-1
under the Investment Company Act of 1940 (a "Plan") with respect to the class
of which they are holders and (ii) no voting rights with respect to the
provisions of any Plan that affects one or more of such other classes of
stock, but not the class of which they are holders, or with respect to any
other matter that does not affect the class of stock of which they are
holders.
(10) In the event of the liquidation or dissolution of the Corporation,
stockholders of each class of the Corporation's stock shall be entitled to
receive, as a class, out of the assets of the Corporation available for
distribution to stockholders, but other than general assets not attributable
to any particular class of stock, the assets attributable to the class less
the liabilities allocated to that class; and the assets so distributable to
the stockholders of any class of stock shall be distributed among such
stockholders in proportion to the number of shares of the class held by them
and recorded on the books of the
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Corporation. In the event that there are any general assets not attributable
to any particular class of stock, and such assets are available for
distribution, the distribution shall be made to the holders of all classes in
proportion to the net asset value of the respective classes or as otherwise
determined by the Board of Directors.
(11) (a) Each holder of stock may require the Corporation to redeem all or
any part of the stock owned by that holder, upon request to the Corporation or
its designated agent, at the net asset value of the shares of stock next
determined following receipt of the request in a form approved by the
Corporation and accompanied by surrender of the certificate or certificates
for the shares, if any, less the amount of any applicable redemption charge or
deferred sales charge, redemption fee or other amount imposed by the Board of
Directors (to the extent consistent with applicable law) or provided for in
the Charter. The Board of Directors may establish procedures for redemption of
stock.
(b) The proceeds of the redemption of a share (including a fractional share)
of any class of stock of the Corporation shall be reduced by the amount of any
redemption charge or contingent deferred sales charge, redemption fee or other
amount payable on such redemption pursuant to the terms of issuance of such
share or provided for in the Charter.
(c) A redemption fee of such percentage as the Board of Directors may
specify, not exceeding 2%, of the net asset value of shares of Common Stock
when redeemed or exchanged as referred to below shall be imposed with respect
to any such shares outstanding immediately prior to this paragraph (c)
becoming effective, which during such period immediately thereafter as the
Board may specify, not exceeding 24 months, are either redeemed or exchanged
for shares of another open-end investment company sponsored by the investment
adviser of the Corporation. The proceeds of the aforesaid redemption fee shall
be retained by the Corporation. With the approval of the Board of Directors,
the aforesaid redemption fee may be reduced or waived, in whole or in part,
and any reductions or waivers may vary among the stockholders.
(d) (i) The term "Minimum Amount" when used herein shall mean two hundred
dollars ($200) unless otherwise fixed by the Board of Directors from time to
time, provided that the Minimum Amount may not in any event exceed five
million dollars ($5,000,000). The Board of Directors may establish differing
Minimum Amounts for categories of holders of stock based on such criteria as
the Board of Directors may deem appropriate.
(ii) If the net asset value of the shares of a class of stock held by a
stockholder shall be less than the Minimum Amount then in effect with respect
to the category of holders in which the stockholder is included, the
Corporation may redeem all of those shares, upon notice given to the holder in
accordance with paragraph (iii) of this subsection (d), to the extent that the
Corporation may lawfully effect such redemption under the laws of the State of
Maryland.
(iii) The notice referred to in paragraph (ii) of this subsection (d) shall
be in writing personally delivered or deposited in the mail, at least thirty
days (or such other number of days as may be specified from time to time by
the Board of Directors) prior to such redemption. If mailed, the notice shall
be addressed to the stockholder at his or her post office address as shown on
the books of the Corporation, and sent by first class mail, postage prepaid.
The price for shares acquired by the Corporation pursuant to this subsection
(d) shall be an amount equal to the net asset value of such shares, less the
amount of any applicable redemption charge or deferred sales charge,
redemption fee or other amount payable on such redemptions pursuant to the
terms of issuance of such shares or imposed by the Board of Directors (to the
extent consistent with applicable law) or provided for in the Charter.
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(e) Payment by the Corporation for shares of stock of the Corporation
surrendered to it for redemption shall be made by the Corporation within seven
days of such surrender out of the funds legally available therefor, provided
that the Corporation may suspend the right of the stockholders to redeem
shares of stock and may postpone the right of those holders to receive payment
for any shares when permitted or required to do so by applicable statutes or
regulations. Payment of the aggregate price of shares surrendered for
redemption may be made in cash or, at the option of the Corporation, wholly or
partly in such portfolio securities of the Corporation as the Corporation
shall select, and the method of payment may differ among redeeming
stockholders as the Corporation may determine.
(12) At such times as may be determined by the Board of Directors (or with
the authorization of the Board of Directors, by the officers of the
Corporation) in accordance with the Investment Company Act of 1940, applicable
rules and regulations thereunder and applicable rules and regulations of the
National Association of Securities Dealers, Inc. and from time to time
reflected in the registration statement of the Corporation (the "Corporation's
Registration Statement"), shares of a particular class of stock of the
Corporation or certain shares of a particular class of stock of the
Corporation may be automatically converted into shares of another class of
stock of the Corporation based on the relative net asset values of such
classes at the time of conversion, subject, however, to any conditions of
conversion that may be imposed by the Board of Directors (or with the
authorization of the Board of Directors, by the officers of the Corporation)
and reflected in the Corporation's Registration Statement. The terms and
conditions of such conversion may vary within and among the classes to the
extent determined by the Board of Directors (or with the authorization of the
Board of Directors, by the officers of the Corporation) and set forth in the
Corporation's Registration Statement.
(13) For the purpose of allowing the net asset value per share of a class of
the Corporation's stock to remain constant, the Corporation shall be entitled
to declare and pay and/or credit as dividends daily the net income (which may
include or give effect to realized and unrealized gains and losses, as
determined in accordance with the Corporation's accounting and portfolio
valuation policies) attributable to the assets attributable to that class. If
the amount so determined for any day is negative, the Corporation shall be
entitled, without the payment of monetary compensation but in consideration of
the interest of the Corporation and its stockholders in maintaining a constant
net asset value per share of that class, to redeem pro rata from all the
holders of record of shares of that class at the time of such redemption (in
proportion to their respective holdings thereof) sufficient outstanding shares
of that class, or fractions thereof, as shall permit the net asset value per
share of that class to remain constant.
(14) The Corporation may issue shares of stock in fractional denominations
to the same extent as its whole shares, and shares in fractional denominations
shall be shares of stock having proportionately to the respective fractions
represented thereby all the rights of whole shares, including, without
limitation, the right to vote, the right to receive dividends and
distributions, and the right to participate upon liquidation of the
Corporation, but excluding any right to receive a stock certificate
representing fractional shares.
(15) No stockholder shall be entitled to any preemptive right other than as
the Board of Directors may establish.
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THIRD: Paragraphs (c), (d) and (e) of Section (1) of Article SEVENTH of the
Charter are designated as paragraphs (d), (e) and (f), respectively, and new
paragraph (c) to provide as follows is added immediately following paragraph
(b) of that Section (1):
(c) to classify or to reclassify, from time to time, any unissued shares of
stock of the Corporation, whether now or hereafter authorized, by setting,
changing or eliminating the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications or terms and
conditions of or rights to require redemption of the stock. The provisions of
this Charter shall apply to each class of stock unless otherwise provided by
the Board of Directors prior to issuance of any shares of that class;
FOURTH: The amendment of the Charter as set forth above has been duly advised
by the Board of Directors and duly approved by the stockholders of the
Corporation.
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APPENDIX B
Certain Other Aspects of the Conversion and
Subsequent Actions if Proposal Three Is Approved
Tax Matters
In the opinion of Seward & Kissel LLP, counsel to the Fund, neither the Fund
nor its stockholders would realize any gain or loss for tax purposes upon the
Fund's conversion to open-end form, and the conversion would not affect a
stockholder's holding periods or adjusted tax basis in the stockholder's
shares of the Fund. The opinion is based upon the view that the conversion
does not, for federal income tax purposes, involve the exchange or disposition
of a stockholder's holdings in the Fund or, even if the conversion were deemed
to be such an exchange, the exchange would not be a taxable event. A
stockholder who redeems shares of the Fund after the conversion would
recognize a gain or loss to the extent that the redemption proceeds are
greater or less than the stockholder's adjusted tax basis in the shares. The
gain or loss would be capital gain or loss if the redeemed shares had been
held as a capital asset and would be long-term capital gain or loss if the
redeemed shares had been held for more than one year on the date of
redemption.
Expenses of the Conversion
In converting from a closed-end to an open-end investment company, the Fund
would incur legal, accounting and other expenses which the Fund estimates
would total at least $175,000, representing approximately 0.17% ($.0017) of
the Fund's current net asset value. Substantially all of these costs would be
incurred by the Fund prior to the effective date of the conversion. These
costs include costs associated with the preparation of a registration
statement and prospectus as required by federal securities laws (including
printing and mailing costs) and the payment of fees under state securities
laws.
Matters for Future Consideration by the Board of Directors
If Proposal Three is approved by the stockholders, it is contemplated that
among the matters the Board of Directors would proceed to consider would be
fixing the rate and period of application of any redemption fee as authorized
by the Articles of Amendment and referred to in the description of Proposal
Three. In addition, the Board will likely consider whether to pay for redeemed
shares partly or entirely in securities. The Articles of Amendment would also
make other changes in the Fund's Articles of Incorporation customary for open-
end investment companies of which the Adviser is the investment adviser,
including authorization of the Board of Directors to classify unissued shares
to establish classes of shares of the Fund with different preferences and
rights, such as rights to dividends and distributions, voting and redemptions.
If Proposal Three is approved, it is expected that the Board would also
proceed to consider the details of the system for the classification and
distribution of the Fund's shares, including the approval of an appropriate
distribution services agreement between the Fund and a principal underwriter
for the Fund. The expectation is that the Board would consider these matters
expeditiously.
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Matters for Future Consideration by the Stockholders
If Proposal Three is adopted, certain aspects of the operation of the Fund
subsequent to its conversion to open-end form would have to be decided by the
Fund's stockholders, and it is to be expected that a special meeting of
stockholders would be scheduled for that purpose as soon as practicable. These
matters include conforming certain of the Fund's investment policies to the
requirements of the Act applicable to open-end investment companies and making
changes in the Fund's investment management agreement considered appropriate
for an open-end form. Also, for probable consideration would be the adoption
of a Rule 12b-1 plan consistent with the system selected by the Board of
Directors for future distribution of the Fund's shares. The matters to be
considered at the special meeting of stockholders would not involve
reconsideration of the decision to convert the Fund to open-end form.
Effectiveness of the Conversion
The conversion of the Fund to an open-end investment company would be
accomplished by the filing of the Articles of Amendment with the State
Department of Assessments and Taxation of Maryland and changing the Fund's
subclassification under the 1940 Act from a closed-end investment company to
an open-end investment company. The Articles of Amendment would not be filed
until the Fund's registration statement under the Securities Act of 1933, as
amended, covering the offering of shares of the Fund became effective.
Preparation of the registration statement would commence shortly after the
adoption of Proposal Three, and the statement would be filed as soon as
practicable, which should be before the date of the special stockholders
meeting. The Articles of Amendment would become effective at the time the
conversion is implemented.
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APPENDIX C
Differences Between Closed-End and
Open-End Investment Companies
(a) Acquisition and Disposition of Shares. Closed-end investment companies
such as the Fund neither redeem their outstanding shares of stock nor
continuously offer new shares for sale, and thus operate with a relatively
fixed capitalization. The shares of a closed-end investment company are
normally bought and sold subject to applicable brokerage commissions on a
national securities exchange at prevailing market prices, which may be equal
to, or more or less than their net asset value. In contrast, open-end
investment companies, commonly referred to as "mutual funds," issue redeemable
shares for which there is no secondary market. The holders of the redeemable
shares have the right to surrender them to the mutual fund and receive an
amount equal to their then proportionate share of the Fund's net asset value
(less any applicable redemption fee or deferred sales charge). Most mutual
funds also continuously issue new shares to investors at a price based on the
net asset value of the shares at the time of issuance. Regulations adopted by
the Commission generally require open-end funds to value their assets on each
business day in order to determine the current net asset value at which shares
may be redeemed by stockholders or purchased by investors. The net asset
values of most open-end funds are published daily by leading financial
publications.
If the Fund were to convert into a mutual fund, investors wishing to acquire
shares of the Fund would be able to purchase them most probably either
directly from the Fund's principal underwriter or through financial
intermediaries. Stockholders desiring to realize the value of their shares
would be able to do so by redeeming shares at net asset value less any
applicable redemption fee or deferred sales charge. Payment for redemptions
would be made within seven days after receipt of a proper request for
redemption (in accordance with redemption procedures to be specified in the
open-end fund prospectus), except that such payment may be postponed, or the
right of redemption suspended, at times (a) when the Exchange is closed for
other than weekends and holidays, (b) when trading on the Exchange is
restricted, (c) when an emergency exists as a result of which disposal by the
Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of its net
assets, or (d) during any other period when the Commission, by order, so
permits. The Fund could pay for redeemed shares entirely or partly "in kind"
if, in the opinion of the Fund, such a payment would be advisable. In that
event, a stockholder would receive portfolio securities held by the Fund and
would incur transaction costs in disposing of the securities received.
Securities of foreign issuers which might be received could entail risks not
typically associated with U.S. securities, including risks of currency
fluctuation and risks of volatility and lower liquidity associated with the
relatively small and concentrated securities markets in which the Fund
invests.
(b) New York Stock Exchange Listing; State Securities Laws Filings. The
Fund's shares are currently listed and traded on the New York Stock Exchange
(the "NYSE"). It is believed in some investment circles that a fund listing on
a U.S. stock exchange, and, in particular, the NYSE, is an asset, especially
in terms of attracting non-U.S. investors. In addition, certain investors,
such as pension funds, are restricted as to a portion of their portfolio which
can be invested in non-listed securities. Upon conversion to an open-end, the
Fund's shares would be immediately delisted from the NYSE. Because the Fund is
now listed on the NYSE, it is exempt from state securities regulation. While
as an open-end
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fund, the Fund would not be subject to state investment restrictions, it would
be required to make state filings and pay state fees, which are expected to
exceed the current annual cost of NYSE listing. Any increased cost or net
savings to the Fund because of these different expenses is not expected to
materially affect the Fund's expense ratio.
(c) Elimination of Discount and Preclusion of Premium. The fact that
stockholders who wish to realize the value of their shares will be able to do
so by redemption will eliminate any market discount from net asset value (less
the applicable redemption fee). It will also eliminate any possibility that
the Fund's shares will trade at a premium over net asset value. If Proposal
Three is approved by the stockholders, the discount may be reduced prior to
the date of any conversion to the extent purchasers of shares in the open
market are willing to accept less of a discount in anticipation of a
prospective open-ending.
(d) Expenses; Potential Net Redemptions. As indicated in the discussion of
Proposal Three and in Appendix B, the Adviser believes that open-ending will
result in immediate, substantial redemptions and, hence, a marked reduction in
the size of the Fund, although it is possible that this result eventually over
a period of time could be offset by new sales of shares and reinvestment of
dividends and capital gains distributions in shares of the Fund. Consequences
of an asset base of decreased size on the Fund's expenses ratio are referred
to in the discussion of Proposal Three.
(e) Capital Gains. The treatment of capital gains required under U.S. tax
law can be very onerous to non-redeeming stockholders in the event of the
Fund's conversion to an open-end fund. To raise cash to satisfy redeeming
stockholders, the Fund would be required to sell portfolio securities to
satisfy redemption requests. If the Fund's basis in the portfolio securities
sold is less than the sale price obtained, net capital gain may be realized.
U.S. tax law imposes both an income tax and an excise tax on net capital gain
realized by closed-end and open-end funds unless the fund distributes net
capital gain to all stockholders, in which case the stockholders would be
subject to tax on such gain. In the event of the Fund's conversion to an open-
end fund, two negative results may occur: first, because the Fund would sell
securities, non-redeeming stockholders would recognize a greater amount of
capital gain than would be the case if the Fund held such securities; and,
second, to make the capital gains distribution necessary to avoid capital gain
recognition by the Fund, the Fund would probably need to sell additional
portfolio securities, thereby reducing further the size of the Fund and,
possibly, creating additional capital gain. The discussion of Proposal Three
includes an estimate of the magnitude of such capital gains.
(f) Underwriting Costs; Rule 12b-1 Distribution Plan. If the Fund converts
to open-end status it will need to sell new shares to offset redemptions;
otherwise redemptions will cause the Fund to become a diminishing asset. A
principal underwriter will be needed for selling new shares. There can be no
assurance that sufficient new sales can be generated to offset redemptions.
The cost of the underwriting would be paid either by purchasers (in the case
of a front-end sales charge) or by stockholders (in the case of a Rule 12b-1
distribution plan). Redemption fees may be payable upon redemption of both
current and newly-issued shares. In addition, contingent deferred sales
charges may also be payable upon redemption of newly-issued shares. In any
case, a selling effort is likely to result in increased costs to the Fund. An
open-end investment company, unlike a closed-end investment company, is
permitted to finance the distribution of its shares by adopting a plan of
distribution pursuant to Rule 12b-1 under the 1940 Act. If the Fund is
converted to open-end form, it is contemplated the Fund will adopt a
distribution plan pursuant to Rule 12b-1 in order to reimburse its principal
underwriter for costs incurred in distributing Fund shares. It is expected
that it would be proposed at the special meeting of
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stockholders that the Rule 12b-1 distribution plan apply to the Fund's shares
outstanding at the time of the conversion.
(g) Portfolio Management. Unlike open-end funds, closed-end investment
companies are not subject to pressures to sell portfolio securities at
disadvantageous times in order to meet net redemptions. Open-end funds
maintain adequate reserves of cash or cash equivalents in order to meet net
redemptions as they arise. Because closed-end investment companies do not have
to meet redemptions, their cash reserves can be substantial or minimal,
depending primarily on management's perception of market conditions and on
decisions to use fund assets to repurchase shares. The larger reserves of cash
or cash equivalents required to operate prudently as an open-end fund when net
redemptions are anticipated would reduce the Fund's investment flexibility and
the scope of its investment opportunities. The Fund may have to sell portfolio
securities in order to accommodate the need for larger reserves of cash or
cash equivalents, resulting in an increase in transaction costs and portfolio
turnover. Comparatively large net purchases of open-end fund shares often
occur around market highs and net redemptions around market lows, inopportune
times to invest or liquidate portfolio positions, respectively. In a falling
market, the result may be that the more liquid securities in the Fund's
portfolio would be sold first, leaving the open-end fund with less-liquid
securities not as well suited to meeting future redemptions or changes in
investment strategy.
(h) Voting Rights. If the Fund converts to open-end form, opportunities for
stockholders to vote on particular issues may be less frequent. As discussed
in the proxy statement, it is contemplated that at a future date the
stockholders will be asked to take action which will eliminate the need for
the Fund to elect directors each year. If the stockholders so act, the Fund
intends to hold a meeting of stockholders only when stockholder approvals are
necessary under the Act or Maryland law. Under the Act, the Fund would be
required to hold a stockholders meeting, for example, if the number of
Directors elected by the stockholders was less than a majority of the total
number of Directors, or if a change were sought in a fundamental investment
policy of the Fund or in the advisory agreement of the Fund. Under Maryland
law and the Fund's By-laws, a special meeting of stockholders is required to
be called upon request of the stockholders only when requested in writing by
stockholders entitled to cast not less than a majority of all the votes
entitled to be cast at the special meeting.
Stockholders will generally continue to have one vote on each matter
submitted to a vote of stockholders if the Fund converts to open-end form.
Under Maryland law and the Articles of Amendment, the Board of Directors would
have the authority to increase the number of shares of any class, to
reclassify unissued shares and to authorize the issuance of additional classes
of stock, in each case without the consent of stockholders. If the Board of
Directors approved a "multiple distribution system," as discussed in this
proxy statement, involving the issuance of classes of shares bearing different
expenses specifically related to the distribution of shares of each class, the
classes would have the same voting rights except that each class would vote
separately as a class with respect to aspects of the distribution plan of the
Fund and other matters that affect each class differently.
(i) Illiquid Securities. An open-end investment company is subject to the
1940 Act requirement that no more than 15% of its net assets may be invested
in securities that are not readily marketable. The Fund is currently subject
to a limitation on such "illiquid securities" of 20% of its total assets. If
the Fund is converted to an open-end form, it will be limited to no more than
15% in illiquid securities.
(j) Senior Securities and Borrowings. The 1940 Act prohibits open-end funds
from issuing "senior securities" representing indebtedness (i.e., bonds,
debentures, notes and other similar securities), other
C-3
<PAGE>
than indebtedness to banks where there is an asset coverage of at least 300%
for all borrowings. Closed-end investment companies, on the other hand, are
permitted to issue senior securities representing indebtedness to any lender
if the 300% asset coverage is met. In addition, closed-end investment
companies may issue preferred stock, whereas open-end investment companies may
not issue preferred stock. This greater ability to issue senior securities may
give closed-end investment companies more flexibility than open-end funds in
"leveraging" their investments. At present, a fundamental investment policy of
the Fund prohibits borrowing except that the Fund may borrow from a bank or
other entity in a privately arranged transaction or issue commercial paper,
bonds, debentures or notes, in series or otherwise, with such interest rates,
conversion rights and other terms and provisions as are determined by the
Board if after such borrowing or issuance the 300% asset coverage test is met,
and the Fund may also borrow for temporary purposes in an amount not exceeding
5% of the value of the Fund's total assets. A change in this fundamental
policy to conform with the Act would be placed before the Fund's stockholders
at the envisioned future special stockholders meeting if Proposal Three is
approved.
(k) Stockholder Services. Various services are sometimes made available to
stockholders of open-end funds and not to closed-end fund stockholders. These
services may include participation in an exchange privilege that allows
stockholders to exchange their shares for shares of the same class of other
mutual funds advised by the same adviser, the use of the fund for retirement
plans, and permitting stockholders to effect exchange and redemption
transactions by telephone. The cost of such services is normally borne by the
fund rather than by individual stockholders. No decision has been made as to
what, if any, such services would be made available to stockholders of the
Fund if Proposal Three is approved.
(l) Dividend Reinvestment Plan. It is expected that as an open-end fund, the
Fund would continue to provide the opportunity for stockholders to receive
income dividends and capital gains distributions in cash or, at no charge to
stockholders, in shares of the Fund. Such reinvestments in shares would be
made, however, at net asset value, rather than, as is currently the case, at
market value (if Fund shares are trading at a discount from net asset value)
or at the greater of net asset value or 95% of market value (if Fund shares
are trading at or above net asset value).
(m) Minimum Investments and Involuntary Redemptions. If the Fund is
converted to open-end form, in order to reduce the administrative burdens
incurred in monitoring numerous small accounts, it is expected that the Fund
would adopt requirements that an initial investment in Fund shares equal at
least $250 and that any subsequent investment (other than upon the
reinvestment of dividends or distributions) be in a minimum amount of $50. The
Articles of Amendment would authorize the Fund to redeem all the shares of any
stockholder the value of whose account has remained below $200 (or such other
amount as may be determined by the Board) for at least 90 days. Stockholders
would receive prior written notice to increase the account value before the
account was closed. The Fund would be permitted to waive or reduce these
minimums for certain retirement plans or custodial accounts for the benefit of
minors. The minimum initial investment requirement would not apply to
stockholders holding shares at the time of conversion.
(n) Stock Certificates. If Proposal Three is approved, each certificate
representing shares of the Fund as a closed-end investment company will
automatically represent the same number of shares of the Fund as an open-end
investment company. Each stockholder at the time of conversion will have the
right to exchange the stockholder's old certificates for new certificates as
an open-end fund or to surrender the certificates and have the shares
maintained in book-entry form by the Fund's transfer agent.
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<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
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<S> <C>
Introduction............................................................. 1
Proposal One: Election of Directors...................................... 2
Proposal Two: Ratification of Selection of Independent Auditors.......... 5
Proposal Three: Proposal Pursuant to the Fund's Charter.................. 6
Description of Proposal Three.......................................... 6
Your Board of Directors Urges You to Vote AGAINST Proposal Three....... 7
Other Matters............................................................ 8
Information as to the Fund's Principal Officers, Investment Adviser and
Administrator........................................................... 9
Submission of Proposals for the Next Annual Meeting of Stockholders...... 10
Reports to Stockholders.................................................. 10
Appendix A (Articles of Amendment)....................................... A-1
Appendix B (Certain Other Aspects of the Conversion and Subsequent
Actions if Proposal Three is Approved).................................. B-1
Appendix C (Differences Between Closed-End and Open-End Investment
Companies).............................................................. C-1
</TABLE>
ACM Government Opportunity Fund, Inc.
- -------------------------------------------------------------------------------
[LOGO OF ALLIANCE CAPITAL]
Alliance Capital Management L.P.
- -------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT MARCH 28, 2000
<PAGE>
PROXY ACM GOVERNMENT OPPORTUNITY FUND, INC. PROXY
PROXY IN CONNECTION WITH THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON MARCH 28, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF THE CORPORATION
The undersigned stockholder of ACM Government Opportunity Fund,
Inc., a Maryland corporation (the "Corporation"), hereby
instructs each of Carol H. Rappa and Christina Santiago, or
either of them, as proxies for the undersigned, each with full
power of substitution, to attend the Annual Meeting of
Stockholders of the Corporation to be held at 11:00 a.m., Eastern
Time, on March 28, 2000 at the offices of the Corporation, 1345
Avenue of the Americas, 33rd Floor, New York, New York 10105, and
any postponement or adjournment thereof, to cast on behalf of the
undersigned all votes that the undersigned is entitled to cast at
the Annual Meeting and otherwise to represent the undersigned
with all powers possessed by the undersigned if personally
present at such Annual Meeting. The undersigned hereby
acknowledges receipt of the Notice of Meeting and accompanying
Proxy Statement.
IF THIS PROXY IS PROPERLY EXECUTED, THE VOTES ENTITLED TO BE CAST
BY THE UNDERSIGNED WILL BE CAST IN THE MANNER DIRECTED ON THE
REVERSE SIDE HEREOF. IF NO DIRECTION IS MADE AS REGARDS A
PARTICULAR PROPOSAL OR OTHER MATTERS, SUCH VOTES ENTITLED TO BE
CAST BY THE UNDERSIGNED WILL BE CAST "FOR" THE ELECTION OF THE
NOMINEES REFERRED TO IN PROPOSAL ONE AS DIRECTORS, "FOR" THE
RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS THE
INDEPENDENT AUDITORS FOR THE CORPORATION (PROPOSAL TWO),
"AGAINST" THE PROPOSAL (PROPOSAL THREE) PURSUANT TO THE
CORPORATION'S CHARTER TO CONVERT THE CORPORATION TO AN OPEN-END
INVESTMENT COMPANY AS DESCRIBED IN THE PROXY STATEMENT, "FOR" ANY
POSTPONEMENT OR ADJOURNMENT OF THE MEETING WITH RESPECT TO ANY
PROPOSAL DESCRIBED IN THE PROXY STATEMENT IN THE EVENT THAT
SUFFICIENT VOTES IN FAVOR OF THE POSITION ON SUCH PROPOSAL
RECOMMENDED BY THE BOARD OF DIRECTORS ARE NOT TIMELY RECEIVED,
AND IN THE DISCRETION OF THE PROXY HOLDER(S) ON ANY OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY
ADJOURNMENT OR POSTPONEMENT THEREOF.
1
<PAGE>
Please refer to the Proxy Statement for
a discussion of each of the Proposals.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE HEREOF
AND RETURN THE SIGNED PROXY PROMPTLY IN THE ENCLOSED ENVELOPE.
2
<PAGE>
ACM GOVERNMENT OPPORTUNITY FUND, INC.
Please mark votes as in this example: /X/
1. Election of Directors FOR ALL FOR ALL
NOMINEES WITHHOLD EXCEPT
/ / / / / /
Class Three Directors
(term expires 2003):
John D. Carifa NOTE: If you do not wish your shares
Ruth Block voted "FOR" any particular Nominee, mark
Robert C. White 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 Nominees(s).
Your Board of Directors urges
you to vote "FOR" the election
of all Nominees.
2. Ratification of the selection of FOR AGAINST ABSTAIN
Ernst & Young LLP as the / / / / / /
independent auditors for the
Corporation for the fiscal year
ending July 31, 2000.
Your Board of Directors urges
you to vote "FOR" Proposal Two.
3. To approve a proposal FOR AGAINST ABSTAIN
(Proposal Three) pursuant / / / / / /
to the Corporation's Charter
to convert the Corporation to an
open-end investment company.
Your Board of Directors urges
you to vote "AGAINST" Proposal
Three.
4. In their discretion upon any
other matters that may properly
come before the Annual Meeting
or any postponement or
adjournment thereof, as
described in the Proxy
Statement.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT / /
3
<PAGE>
NOTE: 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, the signature
should be that of an
authorized officer who
should state his or her
title.
______________________________________
(Signature of Stockholder)
______________________________________
(Signature of joint owner, if any)
Dated _______________, 2000
4
00250127.AI6
