<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
Alliance Global Environment 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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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
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<PAGE>
ALLIANCE GLOBAL ENVIRONMENT FUND, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
TOLL FREE (800) 221-5672
June 4, 1997
To the Stockholders of Alliance Global Environment Fund, Inc. (the "Fund"):
The accompanying Notice of Meeting and Proxy Statement presents to the
Fund's stockholders a proposal, to be considered at the Annual Meeting of
Stockholders on July 17, 1997, for the conversion of the Fund from a closed-
end investment company to an open-end investment company (the "Conversion").
As the Proxy Statement is long and detailed, your Board of Directors thought
it desirable to summarize this proposal, which the Board is recommending for
your approval.
As you know, the Fund's shares have been trading on the New York Stock
Exchange at a substantial discount from their net asset value, 19% at the time
the Board approved the Conversion. It is your Board's policy to take action to
attempt to reduce or eliminate such market discounts. Accordingly, in March
1996 the Board approved the recommendation of Alliance Capital Management L.P.
("Alliance"), your Fund's Adviser, that the Fund repurchase up to 20% of its
outstanding shares during the ensuing twelve months. Pursuant to this program
the Fund repurchased 13.6% of its outstanding shares, thereby adding 4.4% to
the Fund's March 15, 1996 net asset value. The repurchase program provided to
stockholders an antidilutive benefit which we believe to be the largest
resulting from any recent closed-end fund repurchase program. Nonetheless, the
repurchase program did not meaningfully affect the Fund's market discount.
Alliance thereafter concluded that it would be appropriate to take further
action to deal with the Fund's discount, and accordingly recommended the
Conversion to the Board of Directors. As the Proxy Statement discusses,
Alliance advised the Board that in its view the Conversion would, on balance,
confer substantial benefits on the Fund and its stockholders, and would be
clearly more beneficial than any available alternative. After carefully
reviewing Alliance's analysis, the Board of Directors concurred with
Alliance's conclusions and unanimously recommended the Conversion for
stockholder approval.
If the stockholders approve the Conversion at their July 17, 1997 Annual
Meeting, the Fund is expected to convert to open-end status shortly
thereafter. After the Conversion, the Fund's shares would no longer be listed
on the New York Stock Exchange, and stockholders would be able to redeem their
shares on a daily basis at their current net asset value, i.e., without any
market discount, less the temporary 2% redemption fee discussed below.
The proposed conversion of the Fund to open-end form, which entails
amendments to the Fund's Articles of Incorporation, as well as a small
modification to an investment restriction of the Fund and technical amendments
to the investment management agreement between the Fund and Alliance, is
discussed under Proposal One in the Proxy Statement.
If Proposal One is approved the Fund will, following the Conversion,
continuously offer its shares in the same manner as other Alliance Mutual
Funds. In this regard, the Board of Directors believes that the Fund and its
stockholders are most likely to experience the benefits of asset growth if,
following the
<PAGE>
Conversion, the Fund offers four classes of shares under the "Multiple
Distribution System" currently utilized by most Alliance Mutual Funds.
Proposal One discusses the proposed Multiple Distribution System, which
includes the adoption of a distribution plan and conforming amendments to the
Fund's Articles of Incorporation. As discussed in the Proxy Statement, in the
course of the Conversion all outstanding Fund shares would, without any sales
charges or other fee, be classified as Class A Shares.
The Fund's Board of Directors has voted to impose a temporary redemption fee
of 2% on redemptions and exchanges from the Fund effected during the first
twelve months after the Conversion. The purpose of the redemption fee, WHICH
WOULD BE PAID ENTIRELY TO THE FUND AND THUS PROVIDE AN ANTIDILUTIVE BENEFIT TO
THE FUND'S STOCKHOLDERS, is to moderate any adverse impact on the Fund's
investment operations resulting from satisfying a potentially large number of
redemption requests in a short period of time. The redemption fee may be
reduced or terminated at any time at the discretion of the Board of Directors.
Your Board of Directors has given full and careful consideration to the
proposed Conversion and the proposed implementation of the Multiple
Distribution System. The Board has concluded that these measures are in the
best interests of the Fund and its stockholders. ACCORDINGLY, YOUR BOARD
RECOMMENDS THAT YOU VOTE TO APPROVE PROPOSAL ONE.
The Board of Directors also recommends that you re-elect seven of the Fund's
current Directors (Proposal Two) and ratify the Board's selection of Ernst &
Young LLP as independent auditors for the Fund for the fiscal year ending
October 31, 1997 (Proposal Three).
The Board of Directors believes that the Fund's stockholders will agree that
Proposal One, the proposed Conversion, is clearly in their best interests.
Under the Fund's Articles of Incorporation, however, Proposal One requires the
affirmative vote of 75% of the Fund's outstanding shares. IN ORDER FOR THE
CONVERSION TO OCCUR, IT IS THUS VERY IMPORTANT THAT YOU SIGN, DATE AND RETURN
THE ENCLOSED PROXY CARD PROMPTLY. Thank you for taking the time to do so.
Sincerely,
John D. Carifa
Chairman of the Board
2
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ALLIANCE GLOBAL ENVIRONMENT FUND, INC.
[LOGO OF ALLIANCE CAPITAL APPEARS HERE]
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1345 Avenue of the Americas, New York, New York 10105
Toll Free (800) 221-5672
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 17, 1997
To the Stockholders of Alliance Global Environment Fund, Inc.:
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Alliance Global Environment 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 Thursday, July 17, 1997 at 4:00 p.m., for the following
purposes, all of which are more fully described in the accompanying Proxy
Statement dated June 4, 1997.
1. To approve the conversion of the Fund from a closed-end investment
company to an open-end investment company, including in connection therewith:
a. Changing the subclassification of the Fund from that of a closed-end
investment company to that of an open-end investment company;
b. Amending and Restating the Articles of Incorporation of the Fund to:
i. provide for the conversion,
ii. eliminate certain "anti-takeover" provisions, and
iii. reclassify the outstanding shares of the Fund as Class A shares;
c. Modifying an investment restriction of the Fund;
d. Approving an Advisory Agreement with Alliance Capital Management L.P.
(the "Adviser") to replace the Fund's existing Investment Management and
Administration Agreement with the Adviser; and
e. Establishing a Multiple Distribution System pursuant to which the Fund
will offer its shares following such conversion, including in connection
therewith, adopting a distribution plan that provides for the imposition of
distribution fees on outstanding shares.
2. If Proposal No. 1 is approved, to elect seven Directors, each to hold
office for an indefinite term, and until his successor is duly elected and
qualified, or, if Proposal No. 1 is not approved, to elect three Directors,
each to hold office for a term of three years and until his successor is duly
elected and qualified.
3. To ratify the selection of Ernst & Young LLP as independent auditors of
the Fund for its fiscal year ending October 31, 1997.
4. To transact such other business as may properly come before the Meeting.
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(R) This registered service mark used under license from the owner, Alliance
Capital Management L.P.
<PAGE>
The Board of Directors has fixed the close of business on May 16, 1997 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
June 4, 1997
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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.
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2
<PAGE>
PROXY STATEMENT
ALLIANCE GLOBAL ENVIRONMENT FUND, INC.
1345 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10105
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ANNUAL MEETING OF STOCKHOLDERS
JULY 17, 1997
----------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Alliance Global Environment
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 Thursday, July 17, 1997 at 4:00 p.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 June 4,
1997.
The Board of Directors has fixed the close of business on May 16, 1997 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 that date consisted of 5,967,269 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, and subject to
the discussion contained in the following paragraph, proxies will be voted for
Proposal One, for the election of Directors and for the ratification of the
selection of Ernst & Young LLP as the Fund's independent auditors for the
fiscal year ending October 31, 1997. Any stockholder may revoke that
stockholder's proxy at any time prior to exercise thereof by giving written
notice to the Secretary of the Fund at 1345 Avenue of the Americas, New York,
New York 10105, by signing another proxy of a later date or by personally
voting at the Meeting.
If a proxy properly executed is returned accompanied by instructions to
withhold authority to vote (an abstention) or represents a broker "non-vote"
(that is, a proxy from a broker or nominee indicating that such person has not
received instructions from the beneficial owner or other person entitled to
vote shares on a particular matter with respect to which the broker or nominee
does not have discretionary power), the shares represented thereby, with
respect to matters to be determined by a specified majority or plurality of
the votes cast on such matters, 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 matters requiring the affirmative vote of a
1
<PAGE>
specified majority of the total shares outstanding, 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 such matters.
A quorum for the Meeting will consist of a majority of the shares
outstanding and entitled to vote. 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 by July 17, 1997, 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, and further solicitation of proxies
with respect to such proposal may be made. Shares represented by proxies
indicating a vote against any proposal will be voted against adjournment. In a
filing made with the Securities and Exchange Commission (the "Commission"), on
April 7, 1997, Bowling Portfolio Management, Inc., 2651 Observatory Avenue,
Cincinnati, Ohio 45208-2040, reported beneficial ownership of 740,328 shares,
representing approximately 12.4%, of the Fund's common stock.
PROPOSAL ONE
CONVERSION OF THE FUND FROM A CLOSED-END
INVESTMENT COMPANY TO AN OPEN-END
INVESTMENT COMPANY AND RELATED MATTERS
At a meeting held on April 23, 1997, the Board of Directors considered and
unanimously approved a recommendation of Alliance Capital Management L.P. (the
"Adviser") to submit to stockholders a proposal to convert the Fund from a
closed-end investment company to an open-end investment company. In connection
therewith, the Board of Directors also considered and unanimously approved the
amendment of the Fund's sub-classification under the Investment Company Act of
1940, as amended (the "1940 Act"), from that of a closed-end management
investment company to that of an open-end management investment company and a
related modification of the Fund's fundamental investment restrictions, and
declared advisable and unanimously approved the amendment and restatement of
the Fund's Articles of Incorporation to provide for such conversion. At the
April 23 meeting, the Board of Directors also considered and unanimously
approved related amendments to the Fund's Investment Management and
Administration Agreement.
Stockholders of the Fund are now being asked to consider the conversion of
the Fund from a closed-end to an open-end investment company and certain
related matters approved by the Board of Directors in connection with the
conversion. If this Proposal is approved by the stockholders, subject to a
registration statement under the Securities Act of 1933, as amended, becoming
effective and thereby allowing the continuous offering of shares of the Fund,
the Fund will shortly thereafter be converted to an open-end investment
company. If this Proposal is not approved, the Fund will remain a closed-end
investment company and the Board of Directors will consider whether other
action, if any, should be taken.
Conversion of the Fund to an open-end investment company should permit the
continued operation of the Fund in accordance with its investment objective
while providing stockholders with the ability to redeem their shares at a
price based on net asset value instead of a price set in the market. The
Adviser does not anticipate that conversion of the Fund to open-end form would
require any
2
<PAGE>
significant portfolio restructuring either to enable the Fund to operate as an
open-end investment company or to meet potential significant redemption
requests following a conversion.
BACKGROUND OF THE PROPOSAL
When the Fund was organized in 1990, the closed-end format was chosen as most
appropriate to the Fund's character and intended method of operation because it
was believed that such a structure, among other things, would permit management
of the portfolio of the Fund consistent with its investment objective and
policies without the pressures and constraints to which open-end investment
companies are subject as a result of cash inflows from sales of shares and cash
outflows from redemptions of shares. As shares of many closed-end funds
frequently sell at a discount from net asset value, at the outset the Board of
Directors established a policy that it is in the interest of stockholders for
the Fund to take action to attempt to reduce or eliminate any market value
discount from net asset value. During the period October 1994 through February
1996, the market value discount of the Fund's shares at all times exceeded 20%.
Consequently, in March 1996, when the discount was approximately 21%, the Board
of Directors approved an open-market share repurchase program permitting the
repurchase by the Fund, during the ensuing twelve months, of up to 20% of its
outstanding shares.
Under the repurchase program, the Fund acquired 939,900 shares of its common
stock, representing approximately 13.6% of its 6,907,169 shares outstanding at
the commencement of the program, at a total cost of $11,934,475 and an average
cost of $12.70 per share. These repurchases added $0.64, or 4.4% per share, to
the Fund's March 15, 1996 net asset value, providing an antidilutive benefit to
stockholders that the Adviser believes to be among the largest resulting from
any recent closed-end fund repurchase program. Notwithstanding this benefit,
during 1996 the Fund's discount averaged 20.1%--essentially no better than
before the repurchase program either in absolute terms or in comparison to the
other closed-end funds in the "specialized equity" grouping of The Wall Street
Journal. Although the Fund's discount narrowed somewhat in early 1997, prior to
the announcement of the proposed conversion the discount was above 19%, or a
full five to six percentage points higher than the discounts of other closed-
end "specialized equity" funds.
The Adviser informed the Board of Directors of the Fund at the April 23
meeting that the repurchase program had not altered the Fund's status as the
only closed-end fund sponsored by the Adviser whose discount performance over
both the shorter and longer terms has not been at least competitive with those
of comparable closed-end funds. Further, the Adviser noted that, among the
several closed-end funds sponsored by it whose shares have in recent years
consistently traded at discounts in excess of 15%, the Fund is also the only
one that possesses the ample underlying portfolio liquidity to allow the large
portfolio security liquidations that open-ending is likely to require without
substantial detriment to remaining stockholders. Moreover, given the Fund's
excellent short-term performance record and the Adviser's continuing
conviction, which it expressed to the Board, in the attractiveness of the
Fund's basic investment theme, the Adviser stated its view that shares of the
Fund could be successfully marketed in open-end form over the near term,
although it was noted that no assurances could be given as to the results of
such marketing. In light of these factors, and following the failure of the
repurchase program as a discount reduction measure, at the April 23 meeting the
Adviser expressed its belief that many of the Fund's stockholders have a
reasonable expectation that further significant action will be taken to reduce
the discount and that such further action will have a higher probability of
success than the repurchase program. Accordingly, as is discussed in detail in
this proxy statement, at the April 23 meeting the Adviser recommended that the
Fund be converted from a closed-
3
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end investment company to an open-end investment company and that the Board
take the requisite action in connection therewith.
At the April 23 meeting, the Adviser also stated its view that open-ending
the Fund would confer very substantial benefits on the Fund's stockholders.
The Board was informed that, following a conversion, stockholders would be
able to redeem their shares at net asset value, less the redemption fee
discussed below, as opposed to the approximately 81% of net asset value (less
any brokerage costs) that a seller of the Fund's shares would realize at the
discount as it existed immediately prior to the date of the Board meeting. In
addition, a stockholder could redeem all of his or her shares without
limitation or "proration," as likely would be the case if the Fund were to
pursue certain of the alternative discount-reduction measures referred to
below, considered by the Adviser and discussed with the Board. The Board was
also informed that, while conversion to open-end form most probably would
result in an initial shrinkage of the Fund resulting from redemption requests,
over the longer term conversion would create the opportunity, which the Fund
does not enjoy at its current discount level, to achieve the benefits
associated with greater asset size through sales of Fund shares following the
conversion. Further, the Board was advised that the benefits of elimination of
the Fund's discount, together with continuous liquidity, could be expected to
outweigh the potential drawbacks, also discussed below, resulting from open-
ending the Fund.
The Board was informed by the Adviser that redemption requests following a
conversion could be substantial. The Adviser indicated that the size of the
Fund's discount as it existed on April 23 created a strong incentive for
stockholders, even many of those who regard the environmental sector as an
attractive long-term growth opportunity, to recover the Fund's historical
discount by redeeming their shares. In addition, the Board was advised of the
Adviser's belief that a growing number of market professionals who view
closed-end funds as arbitrage opportunities could take sizable positions in
shares of the Fund for the purpose of profiting through redemption immediately
following an open-ending. This phenomenon could serve to increase the
percentage of Fund shares subject to redemption requests. In this regard, the
Adviser stated its belief that, with the redemption fee discussed below, the
Fund could absorb the redemption of as much as approximately 50% of its
outstanding shares during the year following a conversion without
necessitating significant alteration of the composition of its investment
portfolio and without incurring any significant dilution from the market
impact of portfolio liquidations.
Further, the Adviser informed the Board that conversion of the Fund to open-
end form and the anticipated redemption requests would result in an immediate
increase in the Fund's expense ratio because the Fund's fixed expenses would
be spread over a smaller asset base. In addition, the Adviser stated that,
following such a conversion, continuing stockholders would pay an annual
distribution fee, as well as incremental costs associated with transfer agency
fees. It is estimated that if the Fund's net assets decrease by 50% due to
redemption requests, the Fund's expense ratio, currently 1.56%, would increase
to approximately 2.53%. The Fund's overall expense ratio following conversion
to open-end form would increase or decrease depending on the Fund's investment
performance and its future net sales or net redemptions. The Adviser has
undertaken with the Board to assess this situation on an ongoing basis in
order to determine to what extent, if any, it may be advisable for the Adviser
or its affiliates to waive fees or reimburse expenses in an effort to maintain
the Fund's expense ratio at a competitive level.
4
<PAGE>
The levels of portfolio activity that would be necessitated by redemption
requests of 50% of the Fund's outstanding shares during the year following a
conversion could result in the Fund's realization of significant additional
capital gains, which would be distributed to stockholders. The Board was
advised that such distributions would be taxable to the stockholders who
receive them. As of April 10, 1997, the Fund had net undistributed realized
short-term capital gains of $1.76 per share. The Fund estimates that if it
were required to sell one-half of each of its April 23 portfolio positions (at
their April 10, 1997 valuations) in order to meet potential redemption
requests, net undistributed realized capital gains, expected to consist
principally of net short-term capital gains, would rise to $3.93 per share.
Distributed net short-term capital gains are taxable to recipient stockholders
as ordinary income.
In its presentation at the April 23 meeting, the Adviser also informed the
Board of Directors that, although redemptions of shares following any
conversion to open-end form could be expected to be partially offset by new
sales of Fund shares, it was not possible to predict the extent of such
redemptions or new sales or whether the net redemptions anticipated in the
short run would require the sale of significant portfolio positions. In this
regard, the Adviser noted that other closed-end funds that had converted to
open-end form had, in order to provide stockholders with an incentive to
refrain from immediately exercising their right to redeem and to offset some
of the direct and indirect costs associated with a conversion to and operation
as an open-end fund, imposed a redemption fee that was paid by stockholders
who redeemed their shares shortly after conversion. For these reasons, and as
discussed in greater detail below, upon the Adviser's recommendation, the
Board authorized the imposition of a 2% redemption fee during the first twelve
months following the date of any conversion. Any such fee would be retained by
the Fund and, therefore, would tend to increase its net asset value.
In the course of making its presentation to the Board of Directors, the
Adviser presented the Board with information concerning several possible
alternative means of reducing the Fund's market value discount. These included
a share repurchase program such as that previously conducted by the Fund, a
tender offer for a relatively small percentage of the Fund's outstanding
shares and "managed distribution policies," one involving minimum quarterly
distributions, regardless of the Fund's investment results, and the other
involving the retention, as opposed to distribution, by the Fund of net
investment income and net realized capital gains. The Adviser also presented
the Board with information concerning the possibility of converting the Fund
to "interval fund" form or conducting a large tender offer for the Fund's
shares. As to these alternatives, the Board was advised that industry
experience with each of them either has shown them to be ineffective in
reducing market value discounts to net asset value to any meaningful degree or
that industry experience is too limited to recommend them to the Board with
confidence that they would have a high probability of eliminating or
substantially reducing the Fund's discount. The final alternative discount
reduction technique presented to the Board of Directors was merging the Fund
into an appropriate mutual fund sponsored by the Adviser. The Board was
advised that there is no open-end fund sponsored by the Adviser that is very
similar to the Fund. Consequently, the Adviser expressed its belief that such
a merger would not be consistent with the reasonable expectations of the
Fund's stockholders, most of whom are believed to be seeking exposure to
environmental equity securities. Accordingly, the Adviser recommended against
merging the Fund with an Adviser-sponsored open-end fund.
After taking into consideration the potential drawbacks of a conversion of
the Fund to open-end form, the Board of Directors determined that the
liquidity provided to stockholders and the elimination of the Fund's discount
as a result of such a conversion were sufficient to outweigh such drawbacks
and that conversion to open-end form would be in the best interests of the
Fund and its stockholders.
5
<PAGE>
DIFFERENCES BETWEEN OPEN-END AND CLOSED-END INVESTMENT COMPANIES
The Fund is a closed-end investment company. Closed-end investment companies
neither redeem their outstanding shares of stock nor engage in the continuous
sale of new shares, and thus operate with a relatively fixed capitalization.
The shares of closed-end investment companies are normally bought and sold on
national securities exchanges; the Fund's shares are traded on the New York
Stock Exchange, Inc. (the "Exchange"). The Fund's shares would be delisted
from the Exchange upon the conversion of the Fund to open-end form.
In contrast, open-end investment companies, commonly referred to as "mutual
funds," issue redeemable securities. The holders of redeemable securities have
the right to surrender those securities to the mutual fund and receive an
amount equal to the net asset value of the shares (less any redemption fee or
deferred sales charge imposed by the fund). Many mutual funds (including the
Fund, if the proposed conversion is effected) also continuously issue new
shares to investors based on the net asset value of the shares at the time of
such issuance.
Some of the legal and practical differences between operation of the Fund as
a closed-end and an open-end investment company are as follows:
(a) Acquisition and Disposition of Shares. If the Fund converts into a
mutual fund, investors wishing to acquire shares of the Fund would be able
to purchase them either through selected financial intermediaries or
directly from Alliance Fund Distributors, Inc., the Fund's proposed
principal underwriter (the "Principal Underwriter"). 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.
The Board of Directors currently intends to impose a fee, payable to the
Fund, on Fund shares outstanding at the time of the conversion that are
redeemed or exchanged on or before the first anniversary of the conversion
to open-end form. The fee would be equal to 2% of the net asset value of
the shares at the time of redemption or exchange. Any such temporary
redemption fee would be retained by the Fund and would tend to increase its
net asset value. The Board of Directors believes that the redemption fee
would tend to spread out the initial redemptions of Fund shares and thus
alleviate to an extent any possible disruptive effects on the management of
the Fund's portfolio, reduce the impact of initial redemptions upon the
facilities of the Fund and its transfer agent, and offset some of the
direct and indirect costs associated with a conversion to and operation as
an open-end fund.
(b) Voting Rights. If the Fund converts to open-end form, opportunities
for stockholders to vote on particular issues will be less frequent, since
under Maryland corporate law, an open-end fund is not required to hold
stockholder meetings unless the election of directors is required to be
acted on under the 1940 Act. Although the Fund's By-Laws currently require
the holding of annual meetings of stockholders, the Board of Directors has
adopted amended and restated By-Laws, to go into effect if this Proposal is
approved, which provide that the Fund will not be required to hold an
annual meeting in any year in which the election of Directors is not
required to be acted upon under the 1940 Act. The Fund does not intend to
hold an annual meeting in any year in which it is not required to do so. By
not having to hold annual stockholder meetings, the Fund would save the
costs of preparing proxy materials and soliciting stockholders' votes on
the usual proposals contained therein. Based on the number of outstanding
shares and stockholders as of the record date for the Meeting, such costs
aggregate approximately $16,000 per year.
6
<PAGE>
Nevertheless, the Fund would be required to hold a meeting of
stockholders when stockholder approvals are necessary under the 1940 Act or
Maryland law. Under the 1940 Act, the Fund would be required to hold a
stockholder meeting 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 the fundamental investment policies of the Fund, in the
proposed Advisory Agreement of the Fund or, in certain circumstances, in
the proposed Rule 12b-1 distribution plan of the Fund. Under Maryland law
and the Fund's proposed amended and restated 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, the Board of Directors has 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. As discussed below, the Board of Directors has
approved a "Multiple Distribution System" involving the issuance of four
classes of shares bearing different expenses specifically related to the
distribution of shares of each class. The four classes would have the same
voting rights except that each class would vote separately as a class with
respect to the proposed Rule 12b-1 distribution plan of the Fund and other
matters that affect each class differently.
(c) Determination of Net Asset Value. 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.
(d) Expenses; Potential Net Redemptions. The Fund's expenses may increase
as a result of open-ending, whether as a result of the cost of additional
services available to stockholders or otherwise. Open-ending may result in
immediate, substantial redemptions and, hence, a marked reduction in the
size of the Fund, although this result eventually could be offset by new
sales of shares and reinvestment of dividends and capital gains
distributions in shares of the Fund. An asset base of decreased size could
produce less income and lower gains per share, than are currently being
produced. Accordingly, the Fund's ratio of operating expenses to average
net assets could increase substantially. For the fiscal year ended October
31, 1996, the Fund's ratio of expenses, including the fee paid to the
Adviser, to average net assets was 1.56%. It is estimated that the Fund's
expense ratio would increase to approximately 2.53% due to redemption
requests. In addition, the Fund might be required to sell portfolio
securities in order to meet potential redemptions, thereby resulting in
realization of gains (or losses). As stated above, as of April 10, 1997,
the Fund had net undistributed realized short-term capital gains of $1.76
per share. The Fund estimates that if it were required to sell one-half of
each of its April 23 portfolio positions (at their April 10, 1997
valuations) in order to meet redemption requests following conversion to
open-end form, net undistributed realized capital gains, expected to
consist principally of net short-term capital gains, would rise to $3.93
per share.
Significant net redemptions could also render the Fund an uneconomical
venture by virtue of its diminished size. In the event the Fund were to
become too small to be considered economically viable, the Board of
Directors might consider alternatives to continuing the Fund's operations,
ranging from merger of the Fund with another investment company to
liquidation of the Fund. Under current conditions the Fund does not foresee
that it will become an uneconomical
7
<PAGE>
venture by virtue of diminished size. Therefore, the Fund has no plans to
pursue such alternatives at this time, and any such merger or liquidation
would require stockholder approval.
(e) Elimination of Discount. 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 temporary
redemption fee). It will also eliminate any possibility that the Fund's
shares will trade at a premium over net asset value. If this Proposal 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. Indeed, the Fund's discount declined to approximately 5% within a
week of the announcement of the proposed conversion (from an average of
approximately 17% in the four weeks prior to such announcement).
(f) Dividend Reinvestment Plan. The Fund intends to 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. Effective upon conversion to an open-end investment company, such
reinvestments in shares would be made 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).
(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. Most 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 could 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.
Nevertheless, the Adviser does not expect significant changes in the Fund's
investment policies or procedures as a result of open-ending.
(h) 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 25% of
total assets, although the Fund currently has, and historically generally
has had, less than 15% of its net assets invested in illiquid securities.
If the Fund is converted to an open-end form, it will be limited to no more
than 15% in illiquid securities.
(i) 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 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. To date, the Fund
has not leveraged its assets.
8
<PAGE>
As discussed above, the Board of Directors has approved and is
recommending to the stockholders for their approval an amendment to the
Fund's fundamental investment restrictions which would provide that the
Fund may not borrow money except from banks and only if immediately after
such borrowing there is asset coverage of at least 300% for all borrowings
of the Fund. The Fund does not currently intend to utilize leverage after
conversion to open-end form.
(j) Shareholder Services. If this Proposal is approved, various services
will be made available to stockholders. These will include participation in
an exchange privilege that allows stockholders to exchange their shares for
shares of the same class of other mutual funds in the Adviser's mutual fund
complex, the use of the Fund for retirement plans, and permitting
stockholders to effect exchange and redemption transactions by telephone.
The cost of such services will normally be borne by the Fund rather than by
individual stockholders.
(k) Rule 12b-1 Distribution Plan. 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, the Fund
will adopt a distribution plan pursuant to Rule 12b-1 in order to reimburse
the Principal Underwriter for costs incurred by it in distributing the
shares of the Fund. Further, if stockholders approve this Proposal, the
Fund's currently outstanding shares will be reclassified as Class A shares
and the proposed Rule 12b-1 distribution plan would apply to that class. In
addition, if stockholders approve this Proposal, the Fund will implement
Rule 12b-1 distribution plans for the proposed Class B shares and Class C
shares of the Fund.
(l) Minimum Investment 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 will adopt requirements
that an initial investment in Fund shares equal at least $250 and any
subsequent investment (other than upon the reinvestment of dividends or
distributions) be in a minimum amount of $50. The Fund expects to redeem
all the shares of any stockholder whose account has remained below $200 in
value for at least 90 days. Stockholders will receive 60 days' written
notice to increase the account value before the account is 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 will not apply to stockholders holding shares at the
time of conversion.
(m) Qualification as a Regulated Investment Company. The Fund intends to
continue to qualify for treatment as a regulated investment company under
the Internal Revenue Code of 1986, as amended (the "Code"), after
conversion to open-end form. Such qualification will allow the Fund to
continue to be relieved of federal income tax on that part of its
investment company taxable income and net capital gain that are distributed
to stockholders. To so qualify, the Fund must meet several requirements,
one of which is that not more than 30% of the Fund's gross income each
taxable year may be derived from the sale or other disposition of
securities, options or futures contracts held for less than three months.
The Adviser anticipates that the Fund would continue to be able to meet
this requirement after the conversion. No assurance exists, however, that
this requirement would be met under all possible circumstances,
particularly if the Fund is required to sell recently acquired portfolio
securities because of unexpectedly large net redemptions or large influxes
of cash followed within a short time by significant redemptions.
(n) Stock Certificates. As discussed below under "Amendment and
Restatement of Articles of Incorporation," if this Proposal is approved
each certificate representing shares of the Fund as a
9
<PAGE>
closed- end investment company will automatically represent the same number
of Class A shares of the Fund as an open-end investment company. Each
current stockholder will have the right to exchange his 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.
CONVERSION TO OPEN-END FORM
Since shares of an open-end investment company are offered on a continuous
basis, the Board of Directors has approved a Distribution Services Agreement
between the Fund and the Principal Underwriter to take effect at the time of
the conversion. The conversion will not be implemented until after a
registration statement under the Securities Act of 1933, as amended, allowing
the continuous offering of shares of the Fund becomes effective.
Although the Fund will use all practicable measures to keep costs at a
minimum, certain costs will be incurred, many of which will be nonrecurring,
in connection with the change from a closed-end to an open-end investment
company, including costs associated with the preparation of a registration
statement and prospectuses as required by federal securities laws (including
printing and mailing costs) and the payment of fees under state securities
laws. The Fund estimates that these additional costs, which will be paid by
the Fund, will be approximately $300,000, or approximately 0.30% of the Fund's
current net asset value. It is anticipated that substantially all of these
costs will be incurred by the Fund prior to the effective date of the
conversion.
In the opinion of Seward & Kissel, counsel to the Fund, neither the Fund nor
its stockholders will realize any gain or loss for tax purposes upon the
Fund's conversion, and the conversion will not affect a stockholder's holding
periods or adjusted tax bases in his or her shares of the Fund. Such 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 bases 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. Payment for redemptions is made within seven
days after receipt of a proper request for redemption (in accordance with
redemption procedures specified in the open-end fund prospectus). 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 reserves the right to pay for redeemed shares "in
kind" if, in the opinion of the Adviser, such a redemption would be advisable.
In such event, a stockholder would receive portfolio securities held by the
Fund and would incur transaction costs in disposing of the securities
received. The Fund has no current intention to redeem shares in kind.
AMENDMENT AND RESTATEMENT OF ARTICLES OF INCORPORATION
If the proposed conversion to open-end form is approved, the conversion will
be accomplished by amending and restating the Articles of Incorporation of the
Fund to authorize the issuance of
10
<PAGE>
redeemable securities at net asset value, to provide that the Fund's shares
will be redeemable at the option of the stockholders and to otherwise reflect
the change to open-end form. In connection with implementation of the Multiple
Distribution System, certain technical amendments to the Articles of
Incorporation of the Fund will be necessary in order to authorize the Fund to
reclassify shares outstanding at the time of the conversion as Class A shares,
and to reclassify certain unissued shares as Class B shares, Class C shares or
Advisor Class shares. In connection with the amendment and restatement to the
Articles of Incorporation, the Board of Directors will make certain conforming
changes to the By-Laws. A copy of the proposed Articles of Amendment and
Restatement, which will amend and restate the Charter of the Fund and thereby
reflect the amendments contemplated by this Proposal, is attached hereto as
Exhibit A.
The stockholders are being asked to approve an amendment to the Articles of
Incorporation providing that the presence in person or by proxy of
stockholders entitled to cast one-third of the votes entitled to be cast
constitutes a quorum for a meeting of stockholders. Currently, the presence in
person or by proxy of stockholders entitled to cast a majority of the votes
entitled to be cast constitutes a quorum at stockholder meetings. This
amendment would bring the Fund's quorum requirements in line with those of the
other open-end investment companies managed by the Adviser.
Among the other amendments to the Articles of Incorporation the stockholders
are being asked to approve are the elimination of certain provisions that are
intended to have the effect of limiting (a) the ability of other entities and
persons to acquire control of the Fund, (b) the freedom of the Fund to engage
in certain transactions, and (c) the ability of the Board of Directors or
stockholders to amend the Articles of Incorporation or effect changes in the
management of the Fund. These amendments would remove provisions that limit
the Fund's ability to consolidate with or merge with or into another
corporation or to liquidate or dissolve. Under the Articles of Incorporation,
the affirmative vote of 75% (which is higher than the percentage otherwise
required under Maryland law or the 1940 Act) of the votes entitled to be cast
by stockholders is required to authorize the liquidation or dissolution of the
Fund in the absence of approval of the liquidation or dissolution by a
majority of the "continuing directors" (as defined in the Articles of
Incorporation). The affirmative vote of 75% of the votes entitled to be cast
by stockholders also is generally required to authorize certain transactions
involving a corporation, person or entity that is directly, or indirectly
through affiliates, the beneficial owner of more than 5% of the outstanding
shares of the Fund, or to amend the provisions of the Articles of
Incorporation relating to such transactions.
In addition, the stockholders are being asked to approve an amendment to the
Articles of Incorporation that would eliminate the requirement that a Director
be removed only by the affirmative vote of 75% of the votes entitled to be
cast for the election of Directors. This is higher than the majority vote
otherwise required under the Maryland Law. Moreover, the stockholders are
being asked to approve an amendment to the Articles of Incorporation to
declassify the Board of Directors. Currently, the Board of Directors is
divided into three classes. Upon the expiration of the term of office of each
class, the Directors in that class are elected for a term of three years to
succeed the Directors whose terms of office had expired. The amendment also
would eliminate the requirement that the number of Directors may not exceed
twenty.
The provisions described in the preceding two paragraphs, which may be
regarded as "anti-takeover" provisions, were intended to have the effect of
making it more difficult and time-consuming
11
<PAGE>
to change majority control of the Board of Directors without its consent and
thus to reduce the Fund's vulnerability to an unsolicited takeover proposal
and to deter changes in control of the Fund. The conversion of the Fund to
open-end form would eliminate the need for these precautionary measures.
Therefore, the Board of Directors has considered and unanimously approved,
subject to stockholder approval of this Proposal, amendments to the Articles
of Incorporation eliminating these provisions.
MODIFICATION OF INVESTMENT RESTRICTION
As noted above, open-end investment companies are precluded from incurring
debt other than borrowings from banks not in excess of the 1940 Act's 300%
asset coverage limitations. If the Fund converts to open-end form, its
investment restriction governing borrowings and the issuance of senior
securities will have to be modified. This investment restriction is deemed
fundamental, which means it may not be changed without the approval of a
"majority of [the Fund's] outstanding voting securities," as defined in the
1940 Act.
The proposed modification to the investment restriction is set forth below.
If this Proposal is approved, the modification will become effective upon
conversion of the Fund to open-end form. The Adviser does not anticipate that
the modification will materially change the current investment practices of
the Fund. (In the paragraph below, which sets forth the proposed modification
to the Fund's investment restriction concerning borrowing, material to be
added is underscored and that to be deleted is in brackets.)
The Fund will not borrow money or issue senior securities, except
that the Fund may borrow (I) from a bank [or other entity in a
privately arranged transaction for (i) the repurchase and/or tenders
for its shares,] if immediately after such borrowing there is asset
coverage of at least 300% as defined in the 1940 Act and (ii) FOR
temporary purposes in an amount not exceeding 5% of the value of the
total assets of the Fund.
APPROVAL OF ADVISORY AGREEMENT
The Adviser. The Adviser is an Exchange-listed company with principal
offices at 1345 Avenue of the Americas, New York, New York 10105. It has been
retained under an Investment Management and Administration Agreement (the
"Management Agreement") to provide investment advice and, in general, to
conduct the management and investment program of the Fund under the
supervision and control of the Board of Directors of the Fund.
The Adviser is a leading international investment manager supervising client
accounts with assets as of March 31, 1997 of more than $182 billion (of which
more than $66 billion represented the assets of investment companies). The
Adviser's clients are primarily major corporate employee benefit funds, public
employee retirement systems, investment companies, foundations and endowment
funds. As of March 31, 1997, the Adviser managed employee benefit assets for
31 of the FORTUNE 100 companies. As of that date, the Adviser and its
subsidiaries employed approximately 1,450 employees who operated out of five
domestic offices and the offices of subsidiaries in Bombay, Istanbul, London,
Paris, Sao Paolo, Sydney, Tokyo, Toronto, Bahrain, Luxembourg and Singapore.
Fifty-two registered investment companies comprising 110 separate investment
portfolios managed by the Adviser currently have more than two million
shareholders.
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<PAGE>
Alliance Capital Management Corporation ("ACMC"), the sole general partner
of, and the owner of a 1% general partnership interest in, the Adviser, is an
indirect wholly-owned subsidiary of The Equitable Life Assurance Society of
the United States ("Equitable"), one of the largest life insurance companies
in the United States and a wholly-owned subsidiary of The Equitable Companies
Incorporated ("ECI"), a holding company controlled by AXA-UAP, a French
insurance holding company. As of March 1, 1997, ACMC, Inc. and Equitable
Capital Management Corporation, each a wholly-owned direct or indirect
subsidiary of Equitable, together with Equitable, owned in the aggregate
approximately 58% of the issued and outstanding units representing assignments
of beneficial ownership of limited partnership interests in the Adviser
("Units"). As of March 1, 1997, approximately 33% and 9% of the Units were
owned by the public and employees of the Adviser and its subsidiaries,
respectively, including an employee of the Adviser who serves as a Director of
the Fund. Certain information concerning the Directors and principal executive
officers of ACMC and the ownership of ECI is provided below under "Information
as to the Fund's Principal Officers and the Adviser."
Certain other clients of the Adviser may have investment objectives and
policies similar to those of the Fund. The Adviser may, from time to time,
make recommendations that result in the purchase or sale of a particular
security by its other clients simultaneously with the Fund. If transactions on
behalf of more than one client during the same period increase the demand for
securities being purchased or the supply of securities being sold, there may
be an adverse effect on price or quantity. It is the policy of the Adviser to
allocate advisory recommendations and the placing of orders in a manner which
is deemed equitable by the Adviser to the accounts involved, including the
Fund. When two or more of the clients of the Adviser (including the Fund) are
purchasing or selling the same security on a given day from the same broker-
dealer, such transactions may be averaged as to price.
Management Agreement. Under the Management Agreement, the Adviser provides
investment advisory services and order placement facilities for the Fund and
pays all compensation of Directors and officers of the Fund who are affiliated
persons of the Adviser. The Adviser or its affiliates also furnish the Fund,
without charge, management supervision and assistance and office facilities
and provide persons satisfactory to the Board of Directors to serve as the
officers of the Fund. For the fiscal year ended October 31, 1996, the Adviser
received fees from the Fund of $1,073,769 pursuant to the Management
Agreement. Pursuant to a Shareholder Inquiry Agreement, Alliance Fund
Services, Inc. ("AFS"), a wholly owned subsidiary of the Adviser, received
reimbursement from the Fund during the fiscal year ended October 31, 1996 of
$2,106 relating to shareholder servicing costs. The Fund did not pay brokerage
commissions during its most recent fiscal year to any broker that is an
affiliated person of the Fund or the Adviser or to any affiliated person of
any such person.
The Management Agreement is terminable without penalty by a vote of a
"majority of [the Fund's] outstanding voting securities" (as defined in the
1940 Act), or by a vote of a majority of the Directors on 60 days' written
notice or by the Adviser on 60 days' written notice, and automatically
terminates in the event of its assignment. The Management Agreement provides
that in the absence of willful misfeasance, bad faith or gross negligence on
the part of the Adviser, or of reckless disregard of its obligations
thereunder, the Adviser shall not be liable for any action or failure to act
in accordance with its duties thereunder.
The Management Agreement, which was approved by the stockholders of the Fund
at a meeting held on March 31, 1992 in anticipation of the termination of a
prior management agreement due to a
13
<PAGE>
technical "assignment" thereof, became effective on July 22, 1992. The
Management Agreement has continued in effect since 1992 and by its terms is to
continue in effect for successive twelve-month periods (computed from each
January 1), provided that such continuance is specifically approved at least
annually by a vote of a majority of the outstanding voting securities of the
Fund or by the Board of Directors, and in either case, by a majority of the
Directors who are not parties to the Advisory Agreement or "interested
persons" of any such party as defined by the 1940 Act.
Advisory Agreement. On April 23, 1997, the Board of Directors, unanimously
approved an advisory agreement between the Fund and the Adviser (the "Advisory
Agreement") the terms of which are similar to the terms of the Management
Agreement, except as discussed below. If this Proposal is approved by the
stockholders, the Management Agreement will be terminated and the Advisory
Agreement will become effective upon the conversion of the Fund to open-end
form. The form of Advisory Agreement (with additions to the Management
Agreement shown by underscoring and deletions therefrom shown in brackets) is
attached hereto as Exhibit B.
Under the Advisory Agreement, the advisory fee payable to the Adviser by the
Fund would be accrued daily and paid monthly at the annual rate of 1.10% of
the Fund's average daily net assets up to $100 million, .95% of the next $100
million of the Fund's average daily net assets, and .80% of the Fund's average
daily net assets over $200 million. The rate of the advisory fee under the
Management Agreement is the same as the rate under the Management Agreement
except that under the Advisory Agreement, the Adviser is paid a monthly fee at
an annual rate computed upon the Fund's average weekly net assets.
Under the Management Agreement the Adviser provides, and under the Advisory
Agreement the Adviser would provide, personnel to render such clerical,
accounting, administrative, and other non-advisory services to the Fund as
would be requested from time to time by the Fund. The terms of the Advisory
Agreement, like those of the existing advisory agreements between the Adviser
and the other open-end funds sponsored by the Adviser, provide for the Fund to
pay the Adviser the cost of such personnel. Nonetheless, the Adviser has
undertaken with the Board of Directors, subject to subsequent notice to the
Board, not to seek reimbursement from the Fund for such personnel, thereby
waiving, for an indefinite period of time, the Adviser's right to such
payments. The Management Agreement contains a similar provision and the Fund
has never made payments to the Adviser pursuant thereto.
The Advisory Agreement contains provisions not found in the Management
Agreement that accommodate the possible creation of additional investment
portfolios of the Fund and the adoption of the Multiple Distribution System,
including the adoption of a Rule 12b-1 distribution plan. The Fund does not
have any current plans to establish additional investment portfolios.
ESTABLISHMENT OF MULTIPLE DISTRIBUTION SYSTEM
At its April 23, 1997 meeting, the Board of Directors unanimously approved
the establishment of a Multiple Distribution System upon the conversion of the
Fund to open-end form, and, in connection therewith, approved and declared
advisable (a) an amendment to the Articles of Incorporation of the Fund
classifying the authorized shares of the Fund into four classes, (b) the
adoption of a distribution plan pursuant to Rule 12b-1 under the 1940 Act (the
"Rule 12b-1 Plan") and (c) a Distribution Services Agreement (the
"Distribution Agreement") to be entered into between the Fund and the
Principal
14
<PAGE>
Underwriter. Rule 12b-1 under the 1940 Act regulates the circumstances under
which an open-end fund may, directly or indirectly, bear the expenses of
distributing its shares. The Multiple Distribution System will be implemented
only if this Proposal is approved at the Meeting. The Board of Directors
recommends the Multiple Distribution System and Rule 12b-1 Plan to the
stockholders for approval. The Distribution Agreement does not require, and is
not being submitted for, stockholder approval.
The Multiple Distribution System would enable the Fund to offer investors
the option of purchasing shares subject to varying fee arrangements. The
shares to be offered by the Fund to retail investors, Class A shares, Class B
shares and Class C shares, would enhance the attractiveness of the Fund by
permitting investors to select the distribution option that is most suited to
their particular circumstances. A fourth class of shares, Advisor Class
shares, would be available only to limited categories of investors, including
certain fee-based program participants, self-directed defined contribution
retirement plans, certain registered investment advisers and other financial
intermediaries and their clients, investment advisory clients of the Adviser
and the directors and trustees of the registered investment companies
sponsored by the Adviser. The Board of Directors has adopted a plan pursuant
to Rule 18f-3 under the 1940 Act which would govern the issuance and sale of
these four classes of shares.
If the Multiple Distribution System is implemented, the Fund would classify
all shares outstanding at the time of the conversion of the Fund to open-end
form, and shares sold in the future subject to a front-end sales charge, as
Class A shares, and would create three new classes of shares, Class B, Class C
and Advisor Class. Thereafter, the Fund would offer four classes of shares:
(a) Class A shares, subject to a front-end sales charge or a 1% contingent
deferred sales charge ("CDSC") in certain circumstances (except that no sales
charge would be imposed with respect to Class A shares classified as such at
the time of the conversion) and a distribution services fee of up to .30%
(annualized on aggregate daily net assets); (b) Class B shares, subject to a
CDSC and a distribution services fee of up to 1% (correspondingly annualized)
until conversion of such shares to Class A shares after eight years; (c) Class
C shares, which would not be subject to a front-end sales charge, but would be
subject to a 1% CDSC for one year and to a distribution services fee of up to
1% (also correspondingly annualized) for the life of the investment; and
(d) Advisor Class shares, which would not be subject to a front-end sales
charge, a CDSC or distribution services fee and would be subject to a
mandatory conversion to Class A shares upon the occurrence of certain events.
The four classes would each represent interests in the Fund's investment
portfolio and would be otherwise identical, except that: (a) Advisor Class
shares would not pay a distribution services fee; (b) the distribution
services fees would be higher for Class B and Class C shares; (c) transfer
agency fees would be higher for Class B and Class C shares; (d) only Class B
and Advisor Class shares would have a feature providing for conversion to
another class of shares; and (e) each class would have exclusive voting rights
with respect to matters that affect only its interests.
Shares of the three retail classes would be sold under a single prospectus,
which would describe the Multiple Distribution System and considerations that
investors may wish to bear in mind in selecting among the classes. A separate
prospectus offering the Advisor Class shares would describe the eligible
categories of purchasers of such shares and the different distribution
arrangements that apply to those shares.
The alternative purchase arrangements available with respect to Class A
shares, Class B shares and Class C shares would permit retail investors to
choose the method of purchasing shares that they consider most beneficial
given the amount to be purchased, the length of time they expect to hold the
15
<PAGE>
shares, and other circumstances. Investors would be able to consider whether,
during the anticipated life of their investment in the Fund, the accumulated
distribution services fee and CDSC on Class B shares prior to conversion to
Class A shares, or the accumulated distribution services fee and CDSC on Class
C shares, would be less than the initial sales charge and accumulated
distribution services fee on Class A shares purchased at the same time, and to
what extent that differential would be offset by the higher return on Class A
shares.
Rule 12b-1 Plan. Under the Rule 12b-1 Plan, the Fund would pay to the
Principal Underwriter each month a distribution services fee that will not
exceed, on an annualized basis, .30 of 1% of the aggregate average daily net
assets of the Fund attributable to Class A shares (including the Class A
shares classified as such at the time of conversion) and 1% of the respective
aggregate average daily net assets of the Fund attributable to the Class B
shares and the Class C shares. With respect to the Class A shares, under the
Rule 12b-1 Plan the Fund would not be obligated to pay any distribution
expense in excess of the distribution services fee described above, and any
distribution expenses accrued by the Principal Underwriter in one fiscal year
of the Fund may not be paid from distribution services fees received from the
Fund in subsequent fiscal years of the Fund. The Rule 12b-1 Plan further
provides that the Adviser may make payments from its own resources, which may
include the advisory fees paid by the Fund or other funds managed by the
Adviser and the Adviser's other revenues, for expenditures under the Rule 12b-
1 Plan. Expenses incurred by the Principal Underwriter in the distribution of
Advisor Class shares would be paid by the Adviser or the Principal Underwriter
from their own resources.
If the Multiple Distribution System is implemented, the Rule 12b-1 Plan
would continue in effect from year to year with respect to each retail class,
provided that such continuance is specifically approved at least annually by
the Board of Directors of the Fund or by vote of the stockholders of that
class, and in either case by the Directors who are not "interested persons" of
the Fund and who have no financial interest in the Rule 12b-1 Plan or any
related agreement (the "Independent Directors"), pursuant to a vote cast in
person at a meeting called for that purpose. If the Rule 12b-1 Plan were
terminated with respect to a class, no amounts (other than amounts accrued but
not yet paid) would be owed by the Fund to the Principal Underwriter with
respect to that class. Each class of shares would have exclusive voting rights
with respect to the provisions of the Rule 12b-1 Plan that are applicable to
that particular class.
Under the Rule 12b-1 Plan, the Treasurer of the Fund would furnish the
Directors with quarterly statements of distribution revenues and expenditures.
These statements will set forth distribution revenues and expenditures with
respect to Class A, Class B and Class C shares of the Fund. In the statements,
and on the books of the Fund, only distribution expenditures properly
attributable to the sale of a particular class will be allocated against the
distribution services fee charged to that class. Distribution expenses
attributable to the sale of all four classes of shares will be allocated to a
class of shares based upon the ratio in which the sales of shares of that
class bears to the sales of all four classes, although, as discussed above,
any distribution expenses allocated to the Advisor Class shares will not be
paid by the Fund.
The Rule 12b-1 Plan provides that it may not be amended to increase
materially the distribution costs that a class may bear without stockholder
approval and that any material amendments of the Plan must be approved by the
Board of Directors or by a vote of a "majority of the outstanding voting
securities" (as defined in the 1940 Act) of that class, and in either case by
the Independent Directors, by vote cast in person at a meeting called for that
purpose.
16
<PAGE>
The Rule 12b-1 Plan would be terminable by the Fund with respect to a class
without notice or penalty at any time by vote of a majority of the Independent
Directors or by vote of the holders of a majority of the outstanding voting
securities of such class, or by the Principal Underwriter with respect to any
class upon 60 days' written notice to the Fund.
The Board of Directors, in approving the Rule 12b-1 Plan, determined that
there is a reasonable likelihood that it will benefit the Fund and each of
Class A, Class B and Class C thereof and the stockholders. In making their
determination to adopt the Rule 12b-1 Plan, the Directors considered the
following factors: (a) the need to consult independent counsel or experts to
assist them in reaching a determination whether to adopt the Rule 12b-1 Plan;
(b) the nature of the problems or circumstances that make implementation of
the Rule 12b-1 Plan necessary or appropriate and the causes of such problems
or circumstances; (c) the way in which the Rule 12b-1 Plan would address these
problems or circumstances and how it would be expected to resolve or alleviate
them, including the nature and approximate amount of the anticipated
expenditures, the relationship of such expenditures to the overall cost
structure of the Fund, the nature of the anticipated benefits, and the time it
would take for those benefits to be achieved; (d) the merits of possible
alternative plans; (e) the interrelationship between the Rule 12b-1 Plan and
the activities of any other person who would finance distribution of the
Fund's shares, including whether any payments by the Fund to any such other
person will be made in such a manner as to constitute the indirect financing
of distribution by the Fund; (f) the possible benefits of the Rule 12b-1 Plan
to any other person relative to those expected to inure to the Fund; and (g)
the effect of the Rule 12b-1 Plan on the Fund's existing stockholders.
Operation of the Multiple Distribution System. Class A shares would be sold
at net asset value plus a conventional front-end sales load. Class B and Class
C shares would be sold at net asset value without the imposition of a sales
load at the time of purchase. The purpose of the Class B conversion feature is
to relieve the holders of Class B shares from the burden of the higher ongoing
distribution fees in those instances where the shares have been outstanding
for a time period sufficient for the Principal Underwriter to have been
compensated to a large extent for distribution expenses related to the shares.
Class C shares redeemed within one year of purchase will be subject to a 1%
CDSC. Class C shares will not convert to any other class and will, therefore,
under the Rule 12b-1 Plan always be subject to an annual 1% distribution
services fee.
Advisor Class shares would be sold at net asset value without the imposition
of a sales charge at the time of purchase or redemption. Advisor Class shares
will automatically convert to Class A shares in the event an investor who owns
Advisor Class shares ceases to participate in an eligible fee-based program or
plan, ceases to be associated with an eligible investment adviser or financial
intermediary, or if the stockholder is otherwise no longer eligible to
purchase Advisor Class shares as described in the Advisor Class prospectus.
The exchange privileges of each class of shares would also differ. Each
class of shares offered by the Fund will be exchangeable, at any time and
without the imposition by the Fund or the Principal Underwriter of a sales
charge (or, subject to the temporary 2% redemption fee discussed above, other
fee), for the same class of shares offered by other mutual funds sponsored by
the Adviser.
The net asset value per share of Class A shares, Class B shares, Class C
shares and Advisor Class shares would be determined separately. Income or gain
from investments by the Fund and general expenses and liabilities of the Fund
will be allocated to each class based on the net asset value of each
17
<PAGE>
class. Distribution expenses and transfer agency expenses and liabilities
allocable to a particular class will be allocated to that class. Because the
distribution fees and transfer agency expenses allocable to the Class B shares
and Class C shares will be higher than those for the Class A shares and
Advisor Class shares, the net asset value of Class B shares and Class C shares
may be lower than that of the Class A shares and Advisor Class shares, and
dividends per share on Class B shares and Class C shares are expected to be
less than those on Class A shares and Advisor Class Shares.
The Multiple Distribution System would provide retail investors with the
option of purchasing shares of the Fund pursuant to a traditional front-end
sales load method or pursuant to several different fee arrangements. This
system addresses the differing requirements and preferences of potential
retail investors and allows each investor to choose the option that is most
beneficial under the circumstances. For example, if an investor qualifies for
a significant discount of the front-end sales load, the investor may prefer to
purchase Class A shares rather than pay the higher distribution fee applicable
to Class B or Class C shares. If an investor does not qualify for a discount,
the investor may prefer to invest in Class B or Class C shares and defer the
payment of a sales charge. On the other hand, if such an investor anticipates
holding the shares for an extended period of time, it may be more beneficial
for the investor to pay the initial sales charge applicable to Class A shares
than to be subject to the higher distribution fee applicable to Class B and
Class C shares. If an investor qualifies as an eligible purchaser for Advisor
Class shares, the investor may choose to purchase these shares and avoid
paying a sales charge at the time of purchase or redemption.
If the Fund converts to open-end form, the Board of Directors expects the
Multiple Distribution System to help attract new investors to the Fund by
creating multiple purchase method choices, which will benefit all of the
Fund's stockholders by decreasing the Fund's operating expenses per share. It
is also believed that the Multiple Distribution System will help to discourage
redemptions to a certain extent. In addition, adoption of the Multiple
Distribution System will enable the Fund to compete with other mutual funds
that offer similar multiple distribution arrangements.
If the Multiple Distribution System is implemented, it is contemplated that
the amendment to the Fund's Articles of Incorporation referred to above will
become effective upon the filing of Articles of Amendment and Restatement in
the form attached hereto as Exhibit A. The Rule 12b-1 Plan is incorporated
into the Distribution Agreement. A copy of the provisions of the Distribution
Agreement that constitute the Rule 12b-1 Plan is attached hereto as Exhibit C.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
CONVERSION OF THE FUND TO AN OPEN-END INVESTMENT COMPANY.
Under the Fund's Articles of Incorporation, amendments to the Fund's
Articles of Incorporation must be approved by the holders of a majority of the
Fund's outstanding shares. However, the Fund's Articles of Incorporation
provide that the conversion of the Fund from a closed-end investment company
to an open-end investment company and the elimination of the "anti-takeover"
provisions described above requires the approval of 75% or more of the
outstanding shares. Accordingly, as all of the matters discussed above are to
be acted upon as a single proposal, adoption of Proposal One will require the
vote of 75% or more of the outstanding shares of the Fund. This vote is higher
than the 1940 Act requirement that would otherwise be necessary for the
modification of an investment restriction and the approval of the Advisory
Agreement and the Rule 12b-1 Plan. If Proposal One is not
18
<PAGE>
adopted the Fund will continue to operate as a closed-end fund, the current
provisions of the Articles of Incorporation and the Management Agreement will
remain in effect, and the Board of Directors will consider what further
actions, if any, may be appropriate.
PROPOSAL TWO
ELECTION OF DIRECTORS
If Proposal One is approved, then at the Meeting the stockholders will be
asked to elect seven Directors to office for a term of indefinite duration and
until their successors are elected and qualified. If Proposal One is not
approved, then at the Meeting the stockholders will be asked to elect the
three Directors in Class Three to serve for a term 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 Card to nominate
and vote in favor of the election of the persons named below.
Pursuant to the Articles of Incorporation and By-Laws of the Fund, the Board
of Directors has been divided into three classes. The term of office of Class
Three expires as of the Meeting, that of Class One will expire as of the
annual meeting of stockholders to be held in 1998 and that of Class Two will
expire as of the annual meeting of stockholders to be held in 1999. Upon
expiration of the terms of office of each class as set forth above, those
persons then elected as Directors in that class would serve until the third
annual meeting of stockholders following their election. Messrs. John H.
Dobkin, W.M. Henderson and Stig Host are members constituting Class Three;
Messrs. David H. Dievler and Alan Stoga are the members constituting Class
One; and Messrs. John D. Carifa, Richard M. Lilly, and Robert C. White 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 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. If Proposal One is approved,
however, the stockholders will be asked to elect seven Directors to office for
a term of indefinite duration and until their successors are elected and
qualified. If Proposal One is approved, the stockholders would not be asked to
elect Mr. Robert C. White as a Director, as it is anticipated that, consistent
with the retirement policies of the open-end funds sponsored by the Adviser,
he would then retire as a Director. If Proposal One is not approved, it is
anticipated that Mr. White would continue to serve as a Director who is a
member of Class Two.
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 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 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
19
<PAGE>
for U.S. investors to effect service of process 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. The Fund has been advised that there is
substantial doubt as to the enforceability in the United Kingdom of the civil
remedies and criminal penalties afforded by the federal securities laws. Also,
it is unclear if extradition treaties now in effect between the United States
and the United Kingdom would subject these Directors and officers to effective
enforcement of the criminal penalties of the federal securities laws.
Certain information concerning the Directors is set forth below.
<TABLE>
<CAPTION>
NAME, POSITIONS AND OFFICES
WITH THE FUND, NUMBER OF SHARES
AGE, PRINCIPAL OCCUPATIONS YEAR BENEFICIALLY OWNED
DURING FIRST YEAR TERM DIRECTLY OR
THE PAST FIVE YEARS AND OTHER BECAME A AS DIRECTOR INDIRECTLY AS OF
DIRECTORSHIPS DIRECTOR WILL EXPIRE* MAY 16, 1997
- ----------------------------- -------- ------------ ------------------
<S> <C> <C> <C>
** John D. Carifa, Chairman 1990 1999 2,000
and President, 52. (Class Two)
President, Chief
Operating Officer and a
Director of ACMC.
***+ David H. Dievler, 67. 1990 1998 800
Independent Financial (Class One)
Consultant. Formerly a
Senior Vice President of
ACMC and Chairman of the
Board of the Fund.
***+ John H. Dobkin, 55. 1992 2000++ -0-
President of Historic (Class Three)
Hudson Valley (historic
preservation) since 1990.
He was formerly Director
of the National Academy
of Design. From 1987 to
1992, he was a Director
of the general partner of
the Adviser.
***+ W.H. Henderson, 70. 1990 2000++ 733
Retired oil company (Class Three)
executive and independent
oil and gas consultant.
Director of Fidelity
Japan OTC and Regional
Markets Fund.
***+ Stig Host, 70. Chairman 1990 2000++ 830
and Director of Kriti (Class Three)
Exploration, Inc. (oil
and gas exploration and
production), Managing
Director of Kriti Oil and
Minerals, N.V., Chairman
of Kriti Properties and
Development Corporation
(real estate), Chairman
of International Marine
Sales, Inc. (marine
fuels), Director of
Florida Fuels, Inc.
(marine fuels), President
of Alexander Host
Foundation and Trustee of
the Winthrop Focus Funds.
</TABLE>
- ----------------
* If Proposal One is approved, the terms of the Directors would be of an
indefinite duration.
** "Interested person," as defined in the 1940 Act, of the Fund because of
affiliation with the Adviser.
*** Member of the Audit Committee.
+ Member of the Nominating Committee.
++ If re-elected at the Meeting and Proposal One is not approved.
20
<PAGE>
<TABLE>
<CAPTION>
NAME, POSITIONS AND OFFICES WITH
THE FUND, NUMBER OF SHARES
AGE, PRINCIPAL OCCUPATIONS YEAR BENEFICIALLY OWNED
DURING FIRST YEAR TERM DIRECTLY OR
THE PAST FIVE YEARS AND OTHER BECAME A AS DIRECTOR INDIRECTLY AS OF
DIRECTORSHIPS DIRECTOR WILL EXPIRE* MAY 16, 1997
- -------------------------------- -------- ------------ ------------------
<S> <C> <C> <C>
***+ Richard M. Lilly, 67. 1992 1999 1,000
President and Chief (Class Two)
Executive Officer of Esso
Italiana, S.p.A. from 1990
to 1992. From 1985 to 1989,
he was President and Chief
Executive Officer of Esso
Europe-Africa Services and,
previously, affiliated in
other capacities with Exxon
Corporation since 1957.
***+ Alan Stoga, 46. President 1992 1998 -0-
of Ruder-Finn-Stoga, L.L.C., (Class One)
Managing Director and a
member of the Board of
Directors of Kissinger
Associates, Inc. He is also
the President and General
Partner of Zemi Investments,
L.P.
***+ Robert C. White, 76. 1990 1999 900
Currently an independent (Class Two)
consultant. Formerly a Vice
President and Chief
Financial Officer of the
Howard Hughes Medical
Institute. Prior to 1985 he
was Assistant Treasurer of
Ford Motor Company.
</TABLE>
- --------
* If Proposal One is approved, the terms of the Directors would be of an
indefinite duration.
*** Member of the Audit Committee.
+ Member of the Nominating Committee.
++ If re-elected at the Meeting and Proposal One is not approved.
Alliance has instituted a policy applicable to all the Directors of the funds
in the Alliance Fund Complex contemplating that each such Director will invest,
before the end of 1997, a specific minimum total amount of as much as $150,000
in shares of funds in the Alliance Fund Complex on whose boards the Director
serves, including, for Directors of the Fund, a total of at least $10,000 in
shares of the Fund.
During the fiscal year ended October 31, 1996, the Board of Directors met
five times, the Audit Committee met twice for the purposes described below in
Proposal Three 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, its Directors
who are considered "interested persons" of the Fund. The aggregate compensation
paid by the Fund to each of the Directors during the fiscal year ended October
31, 1996, the aggregate compensation paid to each of the Directors during the
calendar year 1996 by all of the funds to which Alliance provides investment
advisory services (collectively, the "Alliance Fund Complex") and the total
number of funds in the Alliance Fund Complex with respect to which each of the
Directors serves as a director or trustee, are
21
<PAGE>
set forth below. Neither the Fund nor any other fund in the Alliance Fund
Complex provides compensation in the form of pension or retirement benefits to
any of its directors or trustees.
<TABLE>
<CAPTION>
TOTAL NUMBER OF FUNDS
IN THE ALLIANCE FUND
TOTAL COMPENSATION COMPLEX, INCLUDING
AGGREGATE FROM THE ALLIANCE THE FUND, AS TO WHICH
COMPENSATION FUND COMPLEX, THE DIRECTOR IS A
NAME OF DIRECTOR FROM THE FUND INCLUDING THE FUND DIRECTOR OR TRUSTEE
---------------- ------------- ------------------ ---------------------
<S> <C> <C> <C>
John D. Carifa........... $ 0 $ 0 50
David H. Dievler......... $ 4,900 $182,000 43
John H. Dobkin........... $ 4,900 $121,250 30
W.H. Henderson........... $10,500 $ 31,750 5
Stig Host................ $10,500 $ 31,750 5
Richard M. Lilly......... $10,500 $ 31,750 5
Alan Stoga............... $10,500 $ 31,750 5
Robert C. White.......... $ 4,900 $130,750 11
</TABLE>
As of May 16, 1997, the Directors and officers of the Fund as a group owned
less than 1% of the shares of the Fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
ELECTION OF THE FOREGOING NOMINEES TO SERVE AS DIRECTORS OF THE FUND.
PROPOSAL THREE
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 the fiscal year ending October 31, 1997. Their
selection was unanimously approved by the vote, cast in person, of the
Directors at the meeting held on April 23, 1997. The affirmative vote of a
majority of the votes cast at the Meeting is required to ratify such
selection. Ernst & Young LLP has audited the accounts of the Fund since the
Fund's commencement of operations in 1990 and does not have any direct
financial interest or any material indirect financial interest in the Fund. A
representative of Ernst & Young LLP is expected to attend the Meeting and to
have the opportunity to make a statement and to 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 Ernst & Young LLP to discuss the
scope of the independent accountants' engagement and to review the financial
statements of the Fund and the results of their examination thereof.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS OF
THE FUND.
22
<PAGE>
INFORMATION AS TO THE FUND'S PRINCIPAL OFFICERS
AND THE ADVISER
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 currently serves as an officer of one or more of the
other registered investment companies sponsored by the Adviser.
John D. Carifa, 52, Chairman of the Board and President (see Proposal Two,
Election of Directors, at page 20 for biographical information).
Mark H. Breedon, 44, Vice President-Investments, is a Vice President of ACMC
and a Director and Senior Vice President of Alliance Capital Limited ("ACL"),
with which he has been associated since prior to 1992.
Francis P. Reeves, 23, Vice President, is a Vice President of ACL with which
he has been associated since March 1996. Prior thereto, he was an investment
adviser for Citibank and an assistant trader of Mitsubishi Finance
International.
Jeremy R. Kramer, 35, Vice President-Investments, is a Vice President of
ACMC with which he has been associated since 1993. Previously, he was a
securities analyst with Neuberger & Berman.
Daniel V. Panker, 58, Vice President, is a Senior Vice President of ACMC,
with which he has been associated since prior to 1992.
Mark D. Gersten, 46, Treasurer and Chief Financial Officer, is a Senior Vice
President of AFS, with which he has been associated since prior to 1992.
Edmund P. Bergan, Jr., 47, Secretary, is a Senior Vice President and the
General Counsel of the Principal Underwriter and of AFS, with which he has
been associated since prior to 1992.
The Directors of ACMC are Messrs. Dave H. Williams, Luis J. Bastida, Claude
Bebear, James M. Benson, Bruce W. Calvert, John D. Carifa, Henri de Castries,
Kevin C. Dolan, Denis Duverne, Alfred Harrison, Jean-Pierre Hellebuyck,
Benjamin D. Holloway, Joseph J. Melone, Peter D. Noris, Frank Savage, Jerry M.
de St. Paer, Robert B. Zoellick and Mses. Madelon DeVoe Talley and Reba White
Williams.
Mr. Williams is the chairman of the Board of Directors and Chief Executive
Officer of ACMC and a Senior Executive Vice President of AXA-UAP. Mr. Bastida
is the Chief Financial Officer of Banco Bilbao Vizcaya, S.A. Mr. Bebear is the
Chairman of the Executive Board of AXA-UAP and Chairman of ECI. Mr. Benson is
a Senior Executive Vice President and the Chief Operating Officer of ECI, the
President and Chief Executive Officer of Equitable and a Senior Executive Vice
President of AXA-UAP. Mr. Calvert is a Vice Chairman and the Chief Investment
Officer of ACMC. Mr. Carifa is the President and Chief Operating Officer of
ACMC. Mr. de Castries is a Senior Executive Vice President of AXA-UAP and a
Vice Chairman of ECI. Mr. Dolan is the Chief Executive Officer of AXA Asset
Management (France). Mr. Duverne is a Senior Vice President of AXA-UAP. Mr.
Harrison is a Vice Chairman of ACMC. Mr. Hellebuyck is Chairman of the Board
of Directors of AXA Asset Management (Europe). Mr. Holloway is a financial
consultant. Mr. Melone is the President and Chief Executive Officer of ECI,
the Chairman of the Board of Directors of Equitable and a Senior Executive
Vice President of AXA-UAP. Mr. Noris is an
23
<PAGE>
Executive Vice President and the Chief Investment Officer of ECI and
Equitable. Mr. Savage is the Chairman of Alliance Capital Management
International. Mr. de. St. Paer is a Senior Executive Vice President and the
Chief Financial Officer of ECI and an Executive Vice President of Equitable.
Mr. Zoellick is the Executive Vice President of the Federal National Mortgage
Association. Ms. Devoe Talley is Commissioner of the Port Authority of New
York and New Jersey. Ms. Williams is the Director of Special Projects for
ACMC.
The address of Messrs. Calvert, Carifa, Savage and Williams and Dr. Williams
is c/o Alliance Capital Management L.P., 1345 Avenue of the Americas, New
York, New York 10105. The address of Messrs. Benson, de St. Paer and Melone is
c/o The Equitable Life Assurance Society of the United States, 787 Seventh
Avenue, New York, New York 10019. The address of Mr. Harrison is c/o Alliance
Capital Management L.P., 3600 Piper Jaffray Tower, Minneapolis, Minnesota
55402. The address of Mr. Hellebuyck is c/o AXA, 50 Rue du Colisee, Paris,
France 75008. The address of Mr. Holloway is c/o Continental Companies, 3250
Mary Street, Miami, Florida 33133. The address of Ms. Talley is 876 Park
Avenue, New York, New York 10021. The address of Mr. Bastida is c/o Banco
Bilbao Vizcaya, P. Castellana, 81, 25 28046 Madrid, Spain. The address of
Messrs. Bebear, de Castries, Dolan, Duverne and Noris is c/o AXA, 50 Rue du
Colisee, Paris, France 75008. The address of Mr. Zoellick is c/o Fannie Mae,
3900 Wisconsin Avenue, N.W., Washington D.C. 20016.
As of March 1, 1997, AXA-UAP and its subsidiaries owned 60.7% of the issued
and outstanding shares of the capital stock of ECI. ECI is a public company
with shares traded on the Exchange. AXA-UAP, a French company, is the holding
company for an international group of insurance and related financial services
companies. AXA-UAP's insurance operations include activities in life
insurance, property and casualty insurance and reinsurance. The insurance
operations are diverse geographically with activities, principally in Western
Europe, North America and the Asia/Pacific area. AXA-UAP is also engaged in
asset management, investment banking, securities trading, brokerage, real
estate and other financial services activities principally in the United
States, as well as in Western Europe and the Asia/Pacific area.
Based on information provided by AXA-UAP, on March 1, 1997, 22.5% of the
issued ordinary shares (representing 33.0% of the voting power) of AXA-UAP
were controlled directly and indirectly by Finaxa, a French holding company.
As of March 1, 1997, 61.4% of the shares (representing 72.0% of the voting
power) of Finaxa were owned by four French mutual insurance companies (the
"Mutuelles AXA") (one of which, AXA Assurances I.A.R.D. Mutuelle, owned 34.9%
of the shares, representing 40.0% of the voting power), and 23.7% of the
shares of Finaxa (representing 14.6% of the voting power) were owned by Banque
Paribas, a French bank ("Paribas"). Including the ordinary shares owned by
Finaxa, on March 1, 1997, the Mutuelles AXA directly or indirectly controlled
26.0% of the issued ordinary shares (representing 38.1% of the voting power)
of AXA-UAP. Acting as a group, the Mutuelles AXA control AXA-UAP and Finaxa.
In November 1996, AXA offered (the "Exchange Offer") to acquire 100% of the
ordinary shares ("UAP Shares") of FF10 each of Compagnie UAP, a societe
anonyme organized under the laws of France ("UAP"), in exchange for ordinary
shares ("Shares") and Certificates of Guaranteed Value ("Certificates") of
AXA. Each UAP shareholder that tendered UAP Shares in the Exchange Offer
received two Shares and two Certificates for every five UAP Shares so
tendered. On January 24, 1997, AXA acquired 91.37% of the outstanding UAP
Shares. AXA-UAP currently intends to merge (the "Merger") with UAP at some
future date in 1997. It is anticipated that approximately 11,706,826
24
<PAGE>
additional Shares will be issued in connection with the Merger to UAP
shareholders who did not tender UAP Shares in the Exchange Offer. If the
Merger had been completed at March 1, 1997, Finaxa would have beneficially
owned (directly and indirectly) approximately 21.7% of the Shares
(representing approximately 32.0% of the voting power), and the Mutuelles AXA
would have controlled (directly or indirectly through their interest in
Finaxa) 25.1% of the issued ordinary shares (representing 36.8% of the voting
power) of AXA-UAP. On January 17, 1997, AXA announced its intention to redeem
its outstanding 6% Bonds (the "Bonds"). Between February 14, 1997 and May 14,
1997, holders of the Bonds had the option to convert each Bond into 5.15
Shares. On May 15, 1997, each Bond still outstanding was redeemed into cash at
FF1,285 plus FF9.29 accrued interest. Finaxa converted the Bonds it had owed
into 2,153,308 Shares. After giving effect to the conversion of all
outstanding Bonds into Shares and to the Merger as if it had been completed at
March 1, 1997, Finaxa would have beneficially owned (directly and indirectly)
approximately 21.4% of the Shares (representing 31.3% of the voting power),
and the Mutuelles AXA would have controlled (directly or indirectly through
their interest in Finaxa) 24.7% of the issued ordinary shares (representing
36.0% of the voting power) of AXA-UAP.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 30(h) of the 1940 Act and the rules under Section 16 of the
Securities Exchange Act of 1934, as amended, require that the Directors and
officers of the Fund and the Directors of ACMC, among others, file with the
Commission and the Exchange initial reports of ownership of shares and reports
of changes in ownership of shares of the Fund. A report of changes in
beneficial ownership on Form 4 was inadvertently filed late by Alliance on
behalf of each of Messrs. Dievler and Host, Directors of the Fund, with
respect to a purchase of Fund shares. In each case, the transaction occurred
prior to December 1993.
SUBMISSION OF PROPOSALS FOR
MEETINGS OF STOCKHOLDERS
If Proposal One is not approved, then proposals of stockholders intended to
be presented at the next annual meeting of stockholders of the Fund must be
received by the Fund by February 4, 1998 for inclusion in the Fund's proxy
statement and form of proxy card relating to that meeting. If Proposal One is
approved then the Fund will convert to open-end form and will not hold annual
or other regular meetings of stockholders, in which case proposals of
stockholders must be received by the Fund a reasonable time prior to the
mailing of the proxy materials for a meeting of stockholders. 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 described 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.
25
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REPORTS TO STOCKHOLDERS
The Fund will furnish, upon request and without charge, to each person to
whom the proxy statement is delivered a copy of the Fund's annual report to
stockholders for the fiscal year ended October 31, 1996, and, when it becomes
available, which will be on or before June 30, 1997, a copy of the Fund's semi-
annual report to stockholders for the six months ended April 30, 1997. To
request a copy of one or both of these reports, please call Alliance Fund
Services, Inc. at (800) 227-4618 or contact Karen Cheng 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
June 4, 1997
New York, New York
26
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EXHIBIT A
ARTICLES OF AMENDMENT AND RESTATEMENT
OF
ALLIANCE GLOBAL ENVIRONMENT FUND, INC.
Alliance Global Environment Fund, Inc., a Maryland corporation having its
principal office in the City of Baltimore, State of Maryland (hereinafter
called the "Corporation"), hereby certifies to the State Department of
Assessments and Taxation of Maryland:
FIRST: The Charter of the Corporation is amended and as so amended is
restated in its entirety by striking out article First through Ninth and
inserting in lieu thereof the following:
"FIRST:(1) The name of the incorporator is Frank I. Nasta.
(2) The incorporator's post office address is One Battery Park
Plaza, New York, New York 10004.
(3) The incorporator is over eighteen years of age.
(4) The incorporator is forming the corporation named in these
Articles of Incorporation under the general laws of the State of
Maryland.
SECOND: The name of the corporation (hereinafter called the Corporation)
is Alliance Global Environment Fund, Inc.
THIRD:(1) The purpose for which the Corporation is formed is to conduct,
operate and carry on the business of an investment company.
(2) The Corporation may engage in any other business and shall
have all powers conferred upon or permitted to corporations by the
Maryland General Corporation Law.
FOURTH: The post office address of the principal office of the
Corporation within the State of Maryland is 32 South Street, Baltimore,
Maryland 21202 in care of The Corporation Trust, Incorporated. The resident
agent of the Corporation in the State of Maryland is The Corporation Trust,
Incorporated, 32 South Street, Baltimore, Maryland 21202, a Maryland
Corporation.
FIFTH: (1) The total number of shares of capital stock which the
Corporation shall have authority to issue is twelve billion
(12,000,000,000), all of which shall be Common Stock having a par value of
one-tenth of one cent ($.001) per share and an aggregate par value of
twelve million dollars ($12,000,000). Until such time as the Board of
Directors shall provide otherwise in accordance with paragraph (1)(d) of
Article SEVENTH hereof, three billion (3,000,000,000) of the authorized
shares of Common Stock of the Corporation are designated as Class A Common
Stock, three billion (3,000,000,000) of such shares are designated as Class
B Common Stock, three billion (3,000,000,000) of such shares are designated
as Class C Common Stock and three billion (3,000,000,000) of such shares
are designated as Advisor Class Common Stock.
(2) 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
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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)(d) of Article
SEVENTH hereof.
(3) All consideration received by the Corporation for the issue 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 attributable to the
Class A Common Stock, the assets attributable to the Class B Common Stock,
the assets attributable to the Class C Common Stock and the assets
attributable to Advisor Class Common Stock shall be invested in the same
investment portfolio of the Corporation.
(4) The allocation of investment income and capital gains and expenses
and liabilities of the Corporation among the Class A Common Stock, Class B
Common Stock, Class C Common Stock and Advisor Class Common 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 or capital gains,
expenses and liabilities (including accrued expenses and reserves) and
assets to a particular class or classes.
(5) 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 the
Class A Common Stock, Class B Common Stock, Class C Common Stock and
Advisor Class Common Stock may vary with respect to each such class to
reflect differing allocations of the expenses of the Corporation among the
holders of the four classes and any resultant differences between the net
asset values per share of the four 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.
(6) 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 or her 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 of the Class A Common Stock, Class B
Common Stock, Class C Common Stock and Advisor Class Common 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 only affects the class of
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Common 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 Common Stock, but not the class of which they are holders,
or with respect to any other matter that does not affect the class of
Common Stock of which they are holders.
(7) 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 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.
(8) (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 of the Corporation. 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 capital stock of the Corporation shall be reduced by
the amount of any 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 of the Corporation.
(c) A redemption fee of two percent (2%) of the then net asset value of
Class A Common Stock shares shall be imposed with respect to any Class A
Common Stock shares into which shares of the Common Stock of the
Corporation have been reclassified pursuant to Article SECOND of these
Articles of Amendment and Restatement that are redeemed or that are
exchanged for shares of another open-end investment company sponsored by
Alliance Capital Management L.P. on or before the one year anniversary date
of the date on which these Articles of Amendment and Restatement become
effective. 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
twenty-five thousand dollars ($25,000). 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.
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(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 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 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 of the Corporation.
(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.
(9) 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.
(10) 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) of the Corporation 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
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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.
(11) 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 the right, if any, to receive
a stock certificate representing fractional shares.
(12) No stockholder shall be entitled to any preemptive right other than
as the Board of Directors may establish.
SIXTH: The Corporation currently has seven directors. The number of
directors of the Corporation may be changed pursuant to the By-Laws of the
Corporation, but shall not be less than the number of directors under the
Maryland General Corporation law.
SEVENTH: The following provisions are inserted for the purpose of
defining, limiting and regulating the powers of the Corporation and of the
Board of Directors and stockholders.
(1) In addition to its other powers explicitly or implicitly granted
under these Articles of Incorporation, by law or otherwise, the Board
of Directors of the Corporation:
(a) is expressly authorized to make, alter, amend or repeal the
By-Laws of the Corporation;
(b) may from time to time determine whether, to what extent, at
what times and places, and under what conditions and regulations the
accounts and books of the Corporation, or any of them, shall be open
to the inspection of the stockholders, and no stockholder shall have
any right to inspect any account, book or document of the
Corporation except as conferred by statute or as authorized by the
Board of Directors of the Corporation;
(c) is empowered to authorize, without stockholder approval, the
issuance and sale from time to time of shares of stock of the
Corporation whether now or hereafter authorized and securities
convertible into shares of stock of the Corporation of any class or
classes, whether now or hereafter authorized, for such consideration
as the Board may deem advisable.
(d) is authorized 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 these Articles of Incorporation (including those in
Article FIFTH hereof) shall apply to each class of stock unless
otherwise provided by the Board of Directors prior to issuance of
any shares of that class; and
(e) is authorized to adopt procedures for determination of and to
maintain constant the net asset value of shares of any class of the
Corporation's stock.
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(2) Notwithstanding any provision of the Maryland General Corporation
Law requiring a greater proportion than a majority of the votes of all
classes or of any class of the Corporation's stock entitled to be cast
in order to take or authorize any action, any such action may be taken
or authorized upon the concurrence of a majority of the aggregate
number of votes entitled to be cast thereon 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.
(3) The presence in person or by proxy of the holders of shares
entitled to cast one-third of the votes entitled to be cast (without
regard to class) shall constitute a quorum at any meeting of the
stockholders, except with respect to any matter which, under applicable
statutes or regulatory requirements, requires approval by a separate
vote of one or more classes of stock, in which case the presence in
person or by proxy of the holders of shares entitled to cast one-third
of the votes entitled to be cast by each class entitled to vote as a
class on the matter shall constitute a quorum.
(4) Any determination made in good faith by or pursuant to the
direction of the Board of Directors, as to the amount of the assets,
debts, obligations, or liabilities of the Corporation as to the amount
of any reserves or charges set up and the propriety thereof, as to the
time of or purpose for creating such reserves or charges, as to the
use, alteration or cancellation of any reserves or charges (whether or
not any debt, obligation, or liability for which such reserves or
charges shall have been created shall be then or thereafter required to
be paid or discharged), as to the value of or the method of valuing any
investment owned or held by the Corporation, as to market value or fair
value of any investment or fair value of any other asset of the
Corporation, as to the allocation of any asset of the Corporation to a
particular class or classes of the Corporation's stock, as to the
charging of any liability of the Corporation to a particular class or
classes of the Corporation's stock, as to the number of shares of the
Corporation outstanding, as to the estimated expense to the Corporation
in connection with purchases of its shares, as to the ability to
liquidate investments in orderly fashion, or as to any other matters
relating to the issue, sale, redemption or other acquisition or
disposition of investments or shares of the Corporation, shall be final
and conclusive and shall be binding upon the Corporation and all
holders of its shares, past, present and future, and shares of the
Corporation are issued and sold on the condition and understanding that
any and all such determinations shall be binding as aforesaid.
EIGHTH: (1) To the full extent that limitations on the liability of
directors and officers are permitted by the Maryland General Corporation
Law, no director or officer of the Corporation shall have any liability to
the Corporation or its stockholders for money damages. This limitation on
liability applies to events occurring at the time a person serves as a
director or officer of the Corporation whether or not that person is a
director or officer at the time of any proceeding in which liability is
asserted.
(2) The Corporation shall indemnify and advance expenses to its currently
acting and its former directors to the full extent that indemnification of
directors is permitted by the Maryland General Corporation Law. The
Corporation shall indemnify and advance expenses to its officers to the
same extent as its directors and may do so to such further extent as is
consistent with law. The Board of Directors may by By-Law, resolution or
agreement make further provision for indemnification of directors,
officers, employees and agents to the full extent permitted by the Maryland
General Corporation Law.
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(3) No provision of this Article shall be effective to protect or purport
to protect any director or officer of the Corporation against any liability
to the Corporation or its stockholders to which he or she would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her
office.
(4) References to the Maryland General Corporation Law in this Article
are to that law as from time to time amended. No amendment to the Charter
of the Corporation shall affect any right of any person under this Article
based on any event, omission or proceeding prior to the amendment.
NINTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in its Charter in the manner now or
hereafter prescribed by the laws of the State of Maryland, including any
amendment which alters the contract rights, as expressly set forth in the
Charter, of any outstanding stock, and all rights conferred upon
stockholders herein are granted subject to this reservation.
SECOND: Each share (including for this purpose a fraction of a share) of
Common Stock issued and outstanding immediately prior to these Articles of
Amendment and Restatement becoming effective, shall, at such effective time,
be reclassified automatically, and without any action or choice on the part of
the holder, into a share (or the same fraction of a share) of Class A Common
Stock. Shares of Class A Common Stock resulting from the aforesaid
reclassification shall be subject, without limitation, to the redemption fee
provided for in Article FIFTH, paragraph 8(c) of the Charter of the
Corporation as set forth in Article FIRST of these Articles of Amendment and
Restatement, subject to the reduction and waiver provisions contained therein.
Outstanding certificates representing issued and outstanding shares of Common
Stock immediately prior to these Articles of Amendment and Restatement
becoming effective, shall upon these Articles of Amendment and Restatement
becoming effective be deemed to represent the same number of shares of Class A
Common Stock. Certificates representing shares of the Class A Common Stock
resulting from the aforesaid reclassification need not be issued until
certificates representing the shares of Common Stock so reclassified, if
issued, have been received by the Corporation or its agent duly endorsed for
transfer with the request that a new certificate be provided. The Class A
Common Stock, Class B Common Stock, Class C Common Stock and Advisor Class
Common Stock shall have the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms
and conditions of redemption as set forth in the charter of the Corporation as
herein amended and restated.
THIRD: The Corporation desires to amend and restate its Charter as currently
in effect. The provisions set forth in these Articles of Amendment and
Restatement are all the provisions of the Charter currently in effect as
herein amended. The current address of the principal office of the
Corporation, the name and address of the Corporation's current resident agent
are as set forth herein. The number of directors is currently set at seven and
their names are John D. Carifa, David H. Dievler, John H. Dobkin, W.H.
Henderson, Stig Host, Richard M. Lilly and Alan Stoga.
FOURTH: The amendment and restatement of the Charter of the Corporation as
hereinabove set forth has been duly advised by the Board of Directors and
approved by the stockholders.
FIFTH: The total number of shares of capital stock that the Corporation had
authority to issue immediately prior to these Articles of Amendment and
Restatement becoming effective was one hundred million (100,000,000) shares of
the par value of one cent ($.01) per share and of the aggregate par value of
One Million Dollars ($1,000,000) all of which shares were designated Common
Stock. The
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total number of shares of capital stock that the Corporation has authority to
issue upon these Articles of Amendment and Restatement becoming effective is
twelve billion (12,000,000,000) shares, all of the par value of one-tenth of
one cent ($.001) per share, and of the aggregate par value of twelve million
dollars ($12,000,000). Three billion (3,000,000,000) of the authorized shares
of Common Stock of the Corporation are designated as Class A Common Stock,
three billion (3,000,000,000) of such shares are designated as Class B Common
Stock, three billion (3,000,000,000) of such shares are designated as Class C
Common Stock and three billion (3,000,000,000) of such shares are designated
as Advisor Class Common Stock.
SIXTH: These Articles of Amendment and Restatement shall become effective on
[ ], 1997 at [ ] [p.m.] Eastern Time.
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EXHIBIT B
(REVISIONS PURSUANT TO PROPOSAL ONE ARE REFLECTED BY UNDERSCORING ADDITIONS AND
BRACKETING [DELETIONS])
[INVESTMENT MANAGEMENT AND ADMINISTRATION] ADVISORY AGREEMENT
Alliance Global Environment Fund, Inc.
1345 Avenue Of The Americas
New York, New York 10105
[July 22, 1992], 1997
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
Dear Sirs:
We, the undersigned Alliance Global Environment Fund, Inc.[,] herewith
confirm our agreement with you as follows:
1. We are [a closed] AN OPEN-end, non-diversified management investment
company registered under the Investment Company Act of 1940 [(the "Act"). We
propose to engage in the business of investing and reinvesting our assets in
securities ("the portfolio assets") of the type and in accordance with the
limitations specified in our Articles of Incorporation, By-Laws,], AS AMENDED
(THE "ACT"). WE ARE CURRENTLY AUTHORIZED TO ISSUE SEPARATE CLASSES OF SHARES
AND OUR DIRECTORS ARE AUTHORIZED TO RECLASSIFY AND ISSUE ANY UNISSUED SHARES TO
ANY NUMBER OF ADDITIONAL CLASSES OR SERIES (PORTFOLIOS) EACH HAVING ITS OWN
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS, ALL AS MORE FULLY DESCRIBED IN
THE PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION CONSTITUTING PARTS
OF THE Registration Statement filed [with the Securities and Exchange
Commission] ON OUR BEHALF under the Securities Act of 1933 [and the Act], AS
AMENDED, AND THE ACT. WE PROPOSE TO ENGAGE IN THE BUSINESS OF INVESTING AND
REINVESTING THE ASSETS OF EACH OF OUR PORTFOLIOS IN SECURITIES ("THE PORTFOLIO
ASSETS") OF THE TYPE AND IN ACCORDANCE WITH THE LIMITATIONS SPECIFIED IN OUR
CHARTER, BY-LAWS, REGISTRATION STATEMENT ON FORM N-1A FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933 AND THE ACT
("REGISTRATION STATEMENT"), and any representations made in our prospectus AND
STATEMENT OF ADDITIONAL information, all in such manner and to such extent as
may from time to time be authorized by our Board of Directors. We enclose
copies of the documents listed above and will from time to time furnish you
with any amendments thereof.
2.(a) We hereby employ you to manage the investment and reinvestment of the
portfolio assets as above specified [, to act as our administrator] and,
without limiting the generality of the foregoing, to provide management and
other services specified below.
(b) You will make decisions with respect to all purchases and sales of the
portfolio assets. To carry out such decisions, you are hereby authorized, as
our agent and attorney-in-fact, for our account and at our risk and in our
name, to place orders for the investment and reinvestment of the portfolio
assets. In all purchases, sales [or] AND other transactions in the portfolio
assets you are authorized to
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exercise full discretion and act for us in the same manner and with the same
force and effect as we might or could do with respect to such purchases, sales
or other transactions, as well as with respect to all other things necessary
or incidental to the furtherance or conduct of such purchases, sales or other
transactions.
(c) [You will (i) at our request provide us persons satisfactory to our
Board of Directors (who may be employees of you or your affiliates) to serve
as our officers; (ii) provide us with the services of persons competent to
perform such administrative and clerical functions as are necessary to provide
effective administration of our corporation, including maintaining certain
books and records, such as journals, ledger accounts and other records
described in Rule 31a-1 under the Act, initiating all money transfers from us
to our custodian and from our account to appropriate customer accounts, and
reconciling account information and balances between our custodian and
registrar, transfer and dividend disbursing agent; (iii) oversee the
performance of administrative services rendered to us by others, including our
custodian and registrar, transfer and dividend disbursing agent; (iv) provide
us with adequate office space and facilities; (v) prepare financial
information for the periodic updating of our Registration Statement and for
our proxy statements; (vi) prepare our tax returns, reports to our
shareholders, and periodic reports to the Securities and Exchange Commission;
(vii) supervise the calculation of the net assets value of our shares of
common stock; and (viii) perform such other administrative services for us as
may be reasonably requested by us.
(d).] You will report to our Board of Directors at each meeting thereof all
changes in the portfolio assets since the prior report, and will also keep us
in touch with important developments affecting the portfolio assets and on
your own initiative will furnish us from time to time with such information as
you may believe appropriate for this purpose, whether concerning the
individual issuers whose securities are included in [our] THE portfolio
ASSETS, the industries in which they engage, or the conditions prevailing in
the economy generally. You will also furnish us with such statistical and
analytical information with respect to the portfolio assets as you may believe
appropriate or as we reasonably may request. In making such purchases and
sales of the portfolio assets, you will bear in mind the policies set from
time to time by our Board of Directors as well as the limitations imposed by
our [Articles of Incorporation] CHARTER and in our Registration Statement
[under the Act and the Securities Act of 1933], the limitations in the Act and
of the Internal Revenue Code of 1986, AS AMENDED, in respect of regulated
investment companies AND THE INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
APPLICABLE TO EACH OF OUR PORTFOLIOS.
(D)[.(e)] It is understood that you will from time to time employ or
associate with yourselves such persons as you believe to be particularly
fitted to assist you in the execution of your duties hereunder, the cost of
performance of such duties to be borne and paid by you. No obligation may be
incurred on our behalf in any such respect. DURING THE CONTINUANCE OF THIS
AGREEMENT AND AT OUR REQUEST YOU WILL PROVIDE TO US PERSONS SATISFACTORY TO
OUR BOARD OF DIRECTORS TO SERVE AS OUR OFFICERS. YOU OR YOUR AFFILIATES WILL
ALSO PROVIDE PERSONS, WHO MAY BE OUR OFFICERS, TO RENDER SUCH CLERICAL,
ACCOUNTING AND OTHER SERVICES TO US AS WE MAY FROM TIME TO TIME REQUEST OF
YOU. SUCH PERSONNEL MAY BE EMPLOYEES OF YOU OR YOUR AFFILIATES. We will pay to
you or your affiliates the cost of [personnel rendering the services set forth
in paragraph 2(c) above, at such rates as shall from time to time be agreed
upon between] SUCH PERSONNEL FOR RENDERING SUCH SERVICES TO us, provided that
all time devoted to the investment or reinvestment of the portfolio assets
shall be for your account. Nothing contained herein shall be construed to
restrict our right to hire our own employees or to contract for services to be
performed by third parties.
B-2
<PAGE>
FURTHERMORE, YOU OR YOUR AFFILIATES SHALL FURNISH US WITHOUT CHARGE WITH SUCH
MANAGEMENT SUPERVISION AND ASSISTANCE AND SUCH OFFICE FACILITIES AS YOU MAY
BELIEVE APPROPRIATE OR AS WE MAY REASONABLY REQUEST SUBJECT TO THE
REQUIREMENTS OF ANY REGULATORY AUTHORITY TO WHICH YOU MAY BE SUBJECT. YOU OR
YOUR AFFILIATES SHALL ALSO BE RESPONSIBLE FOR THE PAYMENT OF ANY EXPENSES
INCURRED IN PROMOTING THE SALE OF OUR SHARES (OTHER THAN THE PORTION OF THE
PROMOTIONAL EXPENSES TO BE BORNE BY US IN ACCORDANCE WITH AN EFFECTIVE PLAN
PURSUANT TO RULE 12B-1 UNDER THE ACT AND THE COSTS OF PRINTING OUR
PROSPECTUSES AND OTHER REPORTS TO SHAREHOLDERS AND FEES RELATED TO
REGISTRATION WITH THE SECURITIES AND EXCHANGE COMMISSION AND WITH STATE
REGULATORY AUTHORITIES).
3. We hereby confirm that[, subject to the foregoing,] we shall be
responsible and hereby assume the obligation for payment OF all of our [other]
expenses, including: (a) payment of the fee payable to you under paragraph 5
hereof; (b) [brokerage and commission expenses; (c) Federal, state, local and
foreign taxes, including issue and transfer taxes, incurred by or levied on
us; (d) interest charges on borrowings; (e) our organizational and offering
expenses, whether or not advanced by you] CUSTODY, TRANSFER AND DIVIDEND
DISBURSING EXPENSES; (C) FEES OF DIRECTORS WHO ARE NOT YOUR AFFILIATED
PERSONS; (D) LEGAL AND AUDITING EXPENSES; (E) CLERICAL, ACCOUNTING AND OTHER
OFFICE COSTS; (f) the cost of personnel providing services to us, as provided
in [paragraph 2(c) above; (g) fees and expenses of registering our shares
under the appropriate Federal securities laws and of qualifying our shares
under applicable state securities laws; (h) fees and expenses of listing and
maintaining the listing of our shares on any securities exchange; (i) expenses
of printing and distributing reports to shareholders; (j) costs of proxy
solicitation; (k) charges and expenses of our custodian and registrar,
transfer and dividend disbursing agent; (l) the cost of calculating the net
asset value of our shares of common stock; (m) compensation of our officers,
Directors and employees who do not devote any part of their time to your
affairs or the affairs of your affiliates other than us; (n) legal and
auditing expenses; (o) the cost of stock certificates representing shares of
our common stock; and (p)] SUBPARAGRAPH (D) OF PARAGRAPH 2 ABOVE; (G) COSTS OF
PRINTING OUR PROSPECTUSES AND SHAREHOLDER REPORTS; (H) COST OF MAINTENANCE OF
OUR CORPORATE EXISTENCE; (I) INTEREST CHARGES, TAXES, BROKERAGE FEES AND
COMMISSIONS; (j) costs of stationery and supplies; (K) EXPENSES AND FEES
RELATED TO REGISTRATION AND FILING WITH THE SECURITIES AND EXCHANGE COMMISSION
AND WITH STATE REGULATORY AUTHORITIES; AND (L) SUCH PROMOTIONAL SHAREHOLDER
SERVICING AND OTHER EXPENSES AS MAY BE CONTEMPLATED BY AN EFFECTIVE PLAN
PURSUANT TO RULE 12B-1 UNDER THE ACT, PROVIDED, HOWEVER, THAT OUR PAYMENT OF
SUCH PROMOTIONAL EXPENSES SHALL BE IN THE AMOUNTS, AND IN ACCORDANCE WITH THE
PROCEDURES, SET FORTH IN SUCH PLAN.
4. We shall expect of you, and you will give us the benefit of, your best
judgment and efforts in rendering these services to us, and we agree as an
inducement to your undertaking these services that you shall not be liable
hereunder for any mistake of judgment or in any event whatsoever, except for
lack of good faith, provided that nothing herein shall be deemed to protect,
or purport to protect, you against any liability to us or to our security
holders to which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of your duties
hereunder, or by reason of your reckless disregard of your obligations and
duties hereunder.
5. In consideration of the foregoing, we will pay you a monthly fee at an
annualized rate of 1.10% of our average [weekly] DAILY net assets up to
$100,000,000, .95% of our next $100 million in average [weekly] DAILY net
assets and .80% of our average [weekly] DAILY assets in excess of
$200,000,000. [For purposes of the calculation of such fee, average weekly net
assets shall be determined on the basis of the average net assets of the Fund
for each weekly period (ending on Friday) ending during the month.
B-3
<PAGE>
The net assets for each weekly period are determined by averaging the net
assets on the Friday of such weekly period with the net assets on the Friday
of the immediately preceding weekly period. When a Friday is not a business
day for us, then the calculation will be based on our net assets on the
business day immediately preceding such Friday.] Such fee shall be payable in
arrears on the last day of each calendar month for services performed
hereunder during such month. If [this agreement becomes effective after the
beginning of a month or] this agreement terminates prior to the end of a
month, such fee shall be prorated according to the proportion which such
portion of the month bears to the full month.
6. This agreement shall become effective on the date hereof and shall
[continue] REMAIN in effect until [December 31, 1992] DECEMBER 31, 1997 and
may be continued for successive twelve-month periods (computed from each
[January 1)] JANUARY 1 THEREAFTER) WITH RESPECT TO EACH PORTFOLIO provided
that such continuance is specifically approved at least annually by [our] THE
Board of Directors or by [majority] THE vote of [the holders of our] A
MAJORITY OF THE outstanding voting securities OF SUCH PORTFOLIO (as defined in
the Act), and, in either case, by a majority of [our] THE Board of Directors
who are not PARTIES TO THIS AGREEMENT OR interested persons, as defined in the
Act, of any party to this agreement (other than as Directors of our
corporation), provided further, however, that if the continuation of this
agreement is not approved AS TO A PORTFOLIO, you may continue to render TO
SUCH PORTFOLIO the services described herein in the manner and to the extent
permitted by the Act and the rules and regulations thereunder. Upon the
effectiveness of this agreement, it shall supersede all previous agreements
between us covering the subject matter hereof. This agreement may be
terminated WITH RESPECT TO ANY PORTFOLIO at any time, without the payment of
any penalty, by vote of a majority of [our] THE outstanding voting securities
(as so defined) OF SUCH PORTFOLIO, or by a vote of [our] THE Board of
Directors on 60 [days] DAYS' written notice to you, or by you [on 60 days]
WITH RESPECT TO ANY PORTFOLIO ON 60 DAYS' written notice to us.
7. This agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged by you and this agreement shall terminate
automatically in the event of any such transfer, assignment, sale,
hypothecation or pledge by you. The [term] TERMS "transfer", "assignment" and
"sale" as used in this paragraph shall have the meanings ascribed [hereto]
THERETO by governing law and any interpretation thereof contained in rules or
regulations promulgated by the Securities and Exchange Commission thereunder.
8. (a) Except to the extent necessary to perform your obligations hereunder,
nothing herein shall be deemed to limit or restrict your right, or the right
of any of your employees, or any of the officers or directors of Alliance
Capital Management Corporation, your general partner, who may also be a
Director, officer or employee of ours, or persons otherwise affiliated with us
(within the meaning of the Act) to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render [service] SERVICES of
any kind to any other trust, corporation, firm, individual or association.
(b) You will notify us of any change in the general [partner] PARTNERS of
your partnership within a reasonable time after such change.
9. If you cease to act as our investment adviser, or, in any event, if you
so request in writing, we agree to take all necessary action to change our
name to a name not including the term "Alliance["]."
B-4
<PAGE>
You may from time to time make available without charge to us for our use such
marks or symbols owned by you, including marks or symbols containing the term
"Alliance" or any variation thereof, as you may consider appropriate. Any such
marks or symbols so made available will remain your property and you shall have
the right, upon notice in writing, to require us to cease the use of such mark
or symbol at any time.
10. This Agreement shall be construed in accordance with the laws of the
State of New York, provided, however, that nothing herein shall be construed as
being inconsistent with the Act.
If the foregoing is in accordance with your understanding, will you kindly so
indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
ALLIANCE GLOBAL ENVIRONMENT FUND,
INC.
By __________________________________
[Name:]
[Title:]
Agreed to and accepted
as of the date first set forth above
ALLIANCE CAPITAL MANAGEMENT L.P.
By ALLIANCE CAPITAL MANAGEMENT
CORPORATION, its [General
Partner] GENERAL PARTNER
By __________________________________
[Name:]
[Title:]
B-5
<PAGE>
EXHIBIT C
PROVISIONS OF THE FUND'S DISTRIBUTION SERVICES AGREEMENT
COMPRISING THE FUND'S DISTRIBUTION PLAN
Section 5. Plan of Distribution.
(a) It is understood that Sections 5, 12, and 16 hereof together constitute a
plan of distribution (the "Plan") within the meaning of Rule 12b-1 adopted by
the Securities and Exchange Commission under the Investment Company Act ("Rule
12b-1") .
(b) Except as may be required by NASD rules and interpretations, the Fund
will pay to the Underwriter each month a distribution services fee with respect
to each portfolio of the Fund ("Portfolio") that will not exceed, on an
annualized basis, .30% of the aggregate average daily net assets of the Fund
attributable to the Class A shares, 1.00% of the aggregate average daily net
assets of the Fund attributable to the Class B shares and 1.00% of the
aggregate average daily net assets of the Fund attributable to the Class C
shares. With respect to each Portfolio, the distribution services fee will be
used in its entirety by the Underwriter to make payments (i) to compensate
broker-dealers or other persons for providing distribution assistance, (ii) to
otherwise promote the sale of shares of each Portfolio, including payment for
the preparation, printing and distribution of prospectuses and sales literature
or other promotional activities, and (iii) to compensate broker-dealers,
depository institutions and other financial intermediaries for providing
administrative, accounting and other services with respect to each Portfolio's
shareholders. A portion of the distribution services fee that will not exceed,
on an annualized basis, .25% of the aggregate average daily net assets of the
Fund attributable to each of the Class A shares, Class B shares and Class C
shares will constitute a service fee that will be used by the Underwriter for
personal service and/or the maintenance of shareholder accounts within the
meaning of NASD rules and interpretations.
(c) Alliance Capital Management L.P., the Fund's investment adviser (the
"Adviser"), may make payments from time to time from its own resources for the
purposes described in Section 5(b) hereof.
(d) Payments to broker-dealers, depository institutions and other financial
intermediaries for the purposes set forth in Section 5(b) are subject to the
terms and conditions of the written agreements between the Underwriter and each
broker-dealer, depository institution or other financial intermediary. Such
agreements will be in a form satisfactory to the Directors of the Fund.
(e) The Treasurer of the Fund will prepare and furnish to the Fund's
Directors, and the Directors will review, at least quarterly, a written report
complying with the requirements of Rule 12b-1 setting forth all amounts
expended hereunder and the purposes for which such expenditures were made.
(f) The Fund is not obligated to pay any distribution expense in excess of
the distribution services fee described above in Section 5(b) hereof. Any
expenses of distribution of the Fund's Class A shares accrued by the
Underwriter in one fiscal year of the Fund may not be paid from distribution
services fees received from the Fund in respect of Class A shares in another
fiscal year. Any expenses of distribution of the Fund's Class B shares or Class
C shares accrued by the Underwriter in one fiscal year of the Fund may be
carried forward and paid from distribution services fees received from the Fund
in respect of such class of shares in another fiscal year. No portion of the
distribution services fees received from the Fund in respect of Class A shares
may be used to pay any interest expense, carrying charges or
C-1
<PAGE>
other financing costs or allocation of overhead of the Underwriter. The
distribution services fees received from the Fund in respect of Class B shares
and Class C shares may be used to pay interest expenses, carrying charges and
other financing costs or allocation of overhead of the Underwriter to the
extent permitted by Securities and Exchange Commission rules, regulations or
Securities and Exchange Commission staff no-action or interpretative positions
in effect from time to time. In the event this Agreement is terminated by
either party or is not continued with respect to a class as provided in
Section 12 below: (i) no distribution services fees (other than current
amounts accrued but not yet paid) will be owed by the Fund to the Underwriter
with respect to that class, and (ii) the Fund will not be obligated to pay the
Underwriter for any amounts expended hereunder not previously reimbursed by
the Fund from distribution services fees in respect of shares of such class or
recovered through deferred sales charges. The distribution services fee of a
particular class may not be used to subsidize the sale of shares of any other
class.
* * * * *
Section 12. Term of Agreement.
(a) This Agreement shall become effective on the date hereof and shall
continue in effect until December 31, 1997, and thereafter for successive
twelve-month periods (computed from each January 1) with respect to each
class; provided, however, that such continuance is specifically approved at
least annually by the Directors of the Fund or by vote of the holders of a
majority of the outstanding voting securities (as defined in the Investment
Company Act) of that class, and, in either case, by a majority of the
Directors of the Fund who are not parties to this Agreement or interested
persons, as defined in the Investment Company Act, of any such party (other
than as directors of the Fund) and who have no direct or indirect financial
interest in the operation of the Plan or any agreement related thereto;
provided further, however, that if the continuation of this Agreement is not
approved as to a class or a Portfolio, the Underwriter may continue to render
to such class or Portfolio the services described herein in the manner and to
the extent permitted by the Act and the rules and regulations thereunder. Upon
effectiveness of this Agreement, it shall supersede all previous agreements
between the parties hereto covering the subject matter hereof. This Agreement
may be terminated (i) by the Fund with respect to any class or Portfolio at
any time, without the payment of any penalty, by the vote of a majority of the
outstanding voting securities (as so defined) of such class or Portfolio, or
by a vote of a majority of the Directors of the Fund who are not interested
persons, as defined in the Investment Company Act, of the Fund (other than as
directors of the Fund) and have no direct and indirect financial interest in
the operation of the Plan or any agreement related thereto, in any such event
on sixty days' written notice to the Underwriter; provided, however, that no
such notice shall be required if such termination is stated by the Fund to
relate only to Sections 5 and 16 hereof (in which event Sections 5 and 16
shall be deemed to have been severed herefrom and all other provisions of this
Agreement shall continue in full force and effect), or (ii) by the Underwriter
with respect to any Portfolio on sixty days' written notice to the Fund.
(b) This Agreement may be amended at any time with the approval of the
Directors of the Fund, provided that (i) any material amendments of the terms
hereof will become effective only upon approval as provided in the first
proviso of the first sentence of Section 12(a) hereof, and (ii) any amendment
to increase materially the amount to be expended for distribution services
fees pursuant to Section 5(b) hereof will be effective only upon the
additional approval by a vote of a majority of the outstanding voting
securities as defined in the Investment Company Act of class or Portfolio
affected.
* * * * *
C-2
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
- -------------------------------------------------------------------------------
<S> <C>
Introduction.............................................................. 1
Proposal One: Conversion of the Fund from a Closed-End Investment Company
to an Open-End Investment Company and Related Matters.................... 2
Background of the Proposal.............................................. 3
Differences Between Open-End and Closed-End Investment Companies........ 6
Conversion to Open-End Form............................................. 10
Amendment and Restatement of Articles of Incorporation.................. 10
Modification of Investment Restriction.................................. 12
Approval of Advisory Agreement.......................................... 12
Establishment of Multiple Distribution System........................... 14
Proposal Two: Election of Directors....................................... 19
Proposal Three: Ratification of Selection of Independent Auditors......... 22
Information as to the Fund's Principal Officers and the Adviser........... 23
Submission of Proposals for Meetings of Stockholders...................... 25
Other Matters............................................................. 25
Reports to Stockholders................................................... 26
Exhibit A (Articles of Amendment and Restatement)......................... A-1
Exhibit B (Advisory Agreement)............................................ B-1
Exhibit C (Rule 12b-1 Distribution Plan).................................. C-1
</TABLE>
PROPOSED CONVERSION OF
ALLIANCE GLOBAL ENVIRONMENT FUND, INC.
TO AN OPEN-END INVESTMENT COMPANY
- -------------------------------------------------------------------------------
[LOGO OF ALLIANCE CAPITAL APPEARS HERE]
Alliance Capital Management L.P.
- -------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS AND
PROXY STATEMENT
JULY 17, 1997
<PAGE>
APPENDIX
PROXY PROXY
ALLIANCE GLOBAL ENVIRONMENT FUND, INC.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
JULY 17, 1997.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE FUND.
The undersigned hereby appoints each of Domenick Pugliese and
Carol H. Rappa as proxies, each with the power to appoint his or
her substitute, and authorizes them to represent and to vote, as
designated on the reverse hereof, all the Common Stock of
Alliance Global Environment Fund, Inc. (the "Fund") held of
record by the undersigned on May 16, 1997 at the Annual Meeting
of Stockholders of the Fund to be held at 4:00 p.m., Eastern
Time, on July 17, 1997, at the offices of the Fund, 1345 Avenue
of the Americas, 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 on the reverse hereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE
ENCLOSED ENVELOPE.
Please sign this proxy exactly as your name(s) appear(s) on the
books of the Fund. 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.
Has Your Address Changed? Do You Have Any Comments?
<PAGE>
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE
1. Approval of the conversion of the Fund from a closed-end
investment company to an open-end investment company,
including in connection therewith:
(a) Changing the subclassification of the Fund from that of
a closed-end investment company to that of an open-end
investment company;
(b) Amending the Articles of Incorporation of the Fund to
provide for the conversion, eliminate certain
"anti-takeover" provisions and reclassify the
outstanding shares of the Fund as Class A shares;
(c) Modifying of an Investment Restriction of the Fund;
(d) Approving an Advisory Agreement to replace the Fund's
existing Investment Management and Administration
Agreement; and
(e) Establishing a Multiple Distribution System, including
in connection therewith, adopting a Rule 12b-1
distribution plan.
For Against Abstain
/ / / / / /
2. Election of Directors. For Withhold For All
If Proposal No. 1 is Except
approved, to elect the / / / / / /
following seven Directors:
John D. Carifa
David H. Dievler
John H. Dobkin
W.H. Henderson
Stig Host
Richard M. Lilly
Alan Stoga
If Proposal No. 1 is not For Withhold For All
approved, to elect the Except
following Class Two / / / / / /
Directors, Term Expiring
in 2000.
John H. Dobkin
W.H. Henderson
Stig Host
2
<PAGE>
If you do not wish your shares voted "For" any particular
nominee, mark the "For All Except" box and strike a line through
that nominee's name. Your shares shall be voted for the
remaining nominee(s).
3. Ratification of the For Against Abstain
selection of Ernst & / / / / / /
Young LLP as independent
auditors of the Fund for
its fiscal year ending
October 31, 1997.
4. In their discretion, on all such other matters that may
properly come before the Meeting or any adjournments
thereof.
Please be sure to sign and date this Proxy. Date
Stockholder sign here Co-owner sign Here
Mark box at right if address change or comment / /
has been noted on the reverse side of this card.
RECORD DATE SHARES:
3
00250070.AP2
