<PAGE>
As filed with the Securities and Exchange Commission
on May 5, 1999
1933 Act File No. 333-
1940 Act File No. 811-08702
___________________________________________________________
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM N-2
(Check appropriate box or boxes)
/X/ REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
/ / Pre-Effective Amendment No.
/ / Post-Effective Amendment No.
and/or
/ / REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940
/X/ Amendment No. 3
Exact Name of Registrant as Specified in Charter:
Alliance All-Market Advantage Fund, Inc.
Address of Principal Executive Offices
(Number, Street, City, State, Zip Code):
1345 Avenue of the Americas
New York, New York 10105
Registrant's Telephone Number, including Area Code:
(212) 969-1000
Name and Address (Number, Street, City, State, Zip Code) of Agent
for Service:
Edmund P. Bergan, Jr.
Senior Vice President and General Counsel
Alliance Fund Distributors, Inc.
1345 Avenue of the Americas
New York, New York 10105
with copies to:
Patricia A. Poglinco Leonard B. Mackey, Jr.
Seward & Kissel LLP Rogers & Wells LLP
One Battery Park Plaza 200 Park Avenue
New York, New York 10004 New York, New York 10166
<PAGE>
Approximate Date of Proposed Public Offering:
As soon as practicable after the effective date of
this Registration Statement.
If any securities being registered on this form will be offered
on a delayed or continuous basis in reliance on Rule 415 under
the Securities Act of 1933, other than securities offered in
connection with a dividend reinvestment plan, check the following
box. /X/
It is proposed that this filing will become effective (check
appropriate box):
/X/ when declared effective pursuant to Section 8(c)
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
Maximum
Title of Proposed Proposed Aggregate
Securities Amount Maximum Amount of
Being Being Offering Price Offering Registration
Registered Registered Per Unit (1) Price Fee
- ----------- --------- ------------- ---------- ------------
Common Stock,
$.01 par
value 1,048,230 $47.0625 $49,332,325 $13,714.39
The registrant hereby amends this Registration Statement under
the Securities Act of 1933 on such date or dates as may be
necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or
until the Registration Statement shall become effective on such
date as the Commission, acting pursuant to Section 8(a), may
determine.
___________________
(1) Estimated pursuant to Rule 457(c) under the Securities Act
of 1933 on the basis of market price per share on May 3, 1999.
2
<PAGE>
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
838,584 Shares of Common Stock
Issuable upon Exercise of
Rights to Subscribe for These Shares
_____________________________
Alliance All-Market Advantage Fund, Inc., referred to in this
Prospectus as the Fund, is issuing non-transferable rights to its
stockholders. You will receive one right for each share you own
at the close of business on the record date, [________], 1999.
These rights will entitle you to subscribe for one new share of
the Fund's common stock for every three rights you receive.
Record date stockholders who receive less than three rights will
be entitled to purchase one share. Record date stockholders who
exercise all their rights may purchase shares not acquired by
other record date stockholders in this rights offering subject to
limitations described in this Prospectus. The Fund may increase
the number of shares that may be subscribed for in this offering
by up to 25% of the primary subscription (as defined in this
Prospectus), or an additional 209,646 shares, for a total of
1,048,230 shares, to honor record date stockholder requests to
purchase more shares. Unless extended as described in this
Prospectus, this offer will expire at 5:00 P.M., New York City
time, on [________], 1999.
The rights are non-transferable and therefore may not be
purchased or sold. The rights will not be admitted for trading
on the New York Stock Exchange, known as the NYSE, or any other
exchange. The Fund's outstanding shares are listed, and the
shares issued in this offer will be listed, on the NYSE under the
symbol "AMO." On [________], 1999, the net asset value per Fund
share, or NAV, was $[____], and the last reported sales price of
a share on the NYSE was $[____].
The purchase price per share referred to in this Prospectus
as the Subscription Price will be[__]% of the lower of (1) the
average of the last reported sales price per share on the NYSE
for the five trading days ending with the day the offer expires
and (2) the NAV as of the close of trading on the NYSE on that
day.
Per Share Total
Estimated Subscription Price
Sales Load
Proceeds to the Fund
The estimated subscription price is based on [__]% of
the [NAV] [last reported sales price per share on the
NYSE] on [________], 1999. The proceeds to the Fund
<PAGE>
assumes all [________] shares are purchased at this
estimated price. If the Fund increases the number of
shares subject to subscription by up to [________] as
described above, the proceeds to the Fund would be
$[________].
The Fund is a non-diversified, closed-end management
investment company. The Fund's investment objective is to
provide long-term growth of capital through all market
conditions. In seeking to achieve its objective, the Fund
invests primarily in the equity securities of a limited number of
large, carefully selected, high-quality companies that are judged
likely to achieve superior earnings growth. Alliance Capital
Management L.P. has served as the Fund's investment adviser since
the Fund's inception in 1994.
The value of an investment in the Fund changes with changes
in the values of the Fund's investments. Many factors can affect
those values. An investment in the Fund involves certain risks.
Among the principal risks of investing in the Fund is market
risk. Because the Fund uses derivatives strategies and other
leveraging techniques speculatively to enhance returns, it is
subject to greater risk and its returns may be more volatile than
other funds, particularly in periods of market declines. See
"Risk Factors and Special Considerations" beginning on page [__]
or page [__] of this Prospectus.
If you do not exercise your rights, you will, upon the
completion of the offer, own a smaller proportional interest in
the Fund than you do now. Because the subscription price per
share will be less than the NAV on the expiration date and
because the Fund will incur expenses related to the offering,
record date stockholders will also experience an immediate
dilution, which could be substantial, of the aggregate NAV of
their shares. This dilution will disproportionately affect
record date stockholders who do not exercise their rights in
full. The Fund cannot state precisely the extent of this
dilution because the Fund does not know what the NAV will be when
the offer expires, how many rights will be exercised or the exact
expenses of the offer.
_____________________________
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
Prospectus. Any representation to the contrary is a criminal
offense.
_____________________________
2
<PAGE>
This Prospectus sets forth concisely the information about
the Fund that a prospective investor ought to know before
investing. Investors are advised to read and retain it for
future reference.
PaineWebber Incorporated
The date of this Prospectus is [_________], 1999.
3
<PAGE>
PROSPECTUS SUMMARY
This portion of the Prospectus summarizes information
contained elsewhere in the Prospectus. The summary is not
complete and does not contain all of the information that you
should consider before purchasing Fund shares. You should read
the entire Prospectus carefully, especially the risks of
investing in the shares discussed under "Risk Factors and Special
Considerations."
Purposes of the Offer
The Board of Directors of the Fund has determined that it is
in the best interests of the Fund and its existing stockholders
to increase the assets of the Fund available for investment,
thereby allowing the Fund to more fully take advantage of
available investment opportunities, reduce the relative
significance of certain large positions in its portfolio and
improve the portfolio's tax efficiency. In reaching its
decision, the Board of Directors was advised by Alliance Capital
Management L.P., the Fund's investment adviser, referred to in
this Prospectus as Alliance, or the Adviser, that the
availability of new assets would give the Fund additional
investment flexibility to take advantage of what Alliance
believes to be attractive investment opportunities without being
required to sell current portfolio positions that it desires to
retain and which, if sold, could cause the realization of
significant capital gains by the Fund and its stockholders. The
Board of Directors also took into account that a well-subscribed
rights offering would likely reduce the Fund's expense ratio,
which would be of long-term benefit to stockholders. In
addition, the Board of Directors considered that this rights
offering could result in an improvement in the liquidity of the
trading market for the Fund's shares on the NYSE. The Board also
considered that this rights offering would give record date
stockholders the opportunity to purchase shares at a price below
market value per share and/or NAV, and might increase the level
of market interest in the Fund. The Board also considered the
proposed terms of the offer, the expenses of the offer, and its
dilutive effect, on exercising and non-exercising record date
stockholders.
Alliance, as well as PaineWebber Incorporated, the Dealer
Manager for the offer who also serves as the shareholder
servicing agent for the Fund, will benefit from the offer because
they receive fees based in part on the average net assets of the
Fund, which will increase as a result of the offer. In addition,
PaineWebber Incorporated will receive a dealer manager fee and
soliciting dealer fees as described below.
4
<PAGE>
Important Terms of the Offer
Aggregate number of shares
offered................... 838,584 (not including up to 209,646
additional shares the Fund may issue
to cover over-subscription requests)
Number of non-transferable
rights issued to each
record date stockholder... One right for each whole share owned
on the record date
Subscription ratio.......... One share for every three rights (1-
for -3); record date stockholders
issued fewer than three rights may
purchase one share
Subscription price per
share...................... [__]% of the lower of (1) the
average of the last reported sales
price of a Fund share on the NYSE
for the five trading days ending
with the day the offer expires and
(2) the NAV as of the close of
trading on the NYSE on that date
Expiration date............. 5:00 P.M., New York City time, on
[________], 1999, unless the offer
is extended to a date which can be
no later than [________], 1999
Over-Subscription Privilege
Record date stockholders who fully exercise all of the rights
issued to them may subscribe for shares that were not subscribed
for by other record date stockholders. If enough shares are
available, all of these requests will be honored in full. If
these requests for shares exceed the shares available, the Fund
may determine after the expiration of the offer, in the
discretion of the Board of Directors, to issue up to an
additional 25% of the shares available pursuant to the offer (up
to an additional 209,646 shares) in order to cover these
requests. Regardless of whether the Fund issues such additional
shares, to the extent shares are not available to honor all
requests, the available shares will be allocated pro rata among
those record date stockholders who over-subscribe based on the
number of rights originally issued to them by the Fund.
5
<PAGE>
Important Dates to Remember
Record Date................. [________], 1999
Subscription Period......... [________], 1999 - [_______], 1999*
Expiration Date and Pricing
Date...................... [________], 1999*
Subscription Certificates and
Payment for Shares Due**.. [________], 1999*
Notice of Guaranteed Delivery
Due....................... [________], 1999*
Subscription Certificates and
Payment for Guarantees of
Delivery Due.............. [________], 1999*
Confirmation Mailed to
Participants.............. [________], 1999*
Final Payment for Shares***. [________], 1999*
* Unless the offer is extended to a date not later than
[________], 1999.
** A record date stockholder exercising rights must deliver by
the expiration date either (i) a Subscription Certificate and
payment for shares or (ii) a Notice of Guaranteed Delivery.
*** Additional amount due (in the event the subscription price
exceeds the estimated subscription price).
Non-Transferability of Rights
The rights are non-transferable and, therefore, may not be
purchased or sold. Rights not exercised will expire without
residual value when the offer expires. The rights will not be
listed for trading on the NYSE or any other securities exchange.
The shares to be issued pursuant to the offer will be listed for
trading on the NYSE, subject to notice of issuance.
Methods for Exercising Rights
The rights are evidenced by Subscription Certificates that
will be mailed to record date stockholders or their nominees,
except foreign record date stockholders and their nominees. If
you wish to exercise your rights, you may do so in the following
ways:
1. Complete and sign the Subscription Certificate. Mail it
in the envelope provided or deliver the completed and
signed Subscription Certificate with payment in full to
[________] at the address indicated on the Subscription
Certificate. Your completed and signed Subscription
Certificate and payment must be received by the
expiration of the offer (5:00 P.M., New York City time,
on [________], 1999, unless the offer is extended); or
6
<PAGE>
2. Contact your broker, banker or trust company which can
arrange, on your behalf, pursuant to a Notice of
Guaranteed Delivery, to guarantee delivery of payment
and delivery of a properly completed and executed
Subscription Certificate by the close of business on the
third business day after the expiration date of the
offer. A fee may be charged for this service. The
Notice of Guaranteed Delivery must be received on or
before the expiration of the offer.
Fractional shares will not be issued. After the exercise of
rights, record date stockholders who have remaining less than
three rights will not be able to purchase a share upon exercise
of these remaining rights, which will expire without any residual
value. Record date stockholders who receive less than three
rights may purchase one share. Record date stockholders,
however, may request additional shares under the over-
subscription privilege.
Offering Fees and Expenses
The Fund has agreed to pay the Dealer Manager a fee for its
financial advisory and marketing services equal to [__]% of the
aggregate subscription price for each share issued pursuant to
the offer. The Dealer Manager will reallow a part of its fees to
other broker-dealers which have assisted in soliciting the
exercise of rights as described in this Prospectus. Other
offering expenses incurred by the Fund are estimated at
$[________], which includes up to $[________] that may be paid to
the Dealer Manager as partial reimbursement for its expenses
relating to the offer.
Foreign Restrictions
The Fund will not mail Subscription Certificates to record
date stockholders whose record addresses are outside the United
States. Foreign record date stockholders or their nominees will
receive written notice of the offer. Their rights will be held
by The Bank of New York, the Subscription Agent, until
instructions are received to exercise the rights. If no
instructions are received prior to or on the expiration date, the
rights will expire.
Use of Proceeds
Based on the estimated subscription price of $[__] per share,
the estimated net proceeds of the offer are approximately
$[________]. This amount assumes that all [________] shares
offered in the primary subscription are sold and that the
offering expenses are $[________]. If, as described above, the
Fund increases the number of shares subject to subscription by
7
<PAGE>
25% in order to satisfy over-subscription requests, the
additional net proceeds will be approximately $[________].
The Fund's investment adviser anticipates that, under current
market conditions, the Fund will take up to [_] days to invest or
employ the offer proceeds consistent with the Fund's investment
objective and policies. This process will not take longer than
[_] months. Until invested, the proceeds of the offer will be
held in U.S. Government securities and other high-quality, short-
term money market instruments. These temporary investments will
not be consistent with the Fund's objective of long-term growth
of capital through all market conditions.
Information Agent
Please direct all questions or inquiries relating to the
offer to the Fund's Information Agent at:
Shareholder Communications Corporation
17 State Street
New York, New York 10004
Toll Free: [___________]
Brokers and banks please call (800) [___-____]
Stockholders may also contact their brokers or nominees for
information with respect to the offer.
Information Regarding the Fund
The Fund has been a non-diversified, closed-end management
investment company since its initial public offering in 1994.
The Fund's investment objective is long-term growth of capital
through all market conditions. In seeking to achieve its
objective, the Fund invests primarily in the equity securities of
a limited number of large, carefully selected, high-quality
companies that are judged likely to achieve superior earnings
growth. To take advantage of investment opportunities in both
rising and falling markets and in an effort to enhance returns,
the Fund may make substantial use of short-selling and other
investment practices, such as options, futures, forwards and
leverage. In contrast to most equity funds, the Fund focuses on
a relatively small number of intensively researched companies.
The Adviser selects the Fund's investments from a research
universe of more than 600 companies that are considered by
Alliance to have strong management, superior industry positions,
excellent balance sheets and superior earnings growth prospects.
Normally, the Fund invests in about 40-50 companies, with the
25 most highly regarded of these companies usually constituting
substantially all of the Fund's net assets. The Fund seeks to
take advantage of what the Adviser believes are opportunities
8
<PAGE>
presented by unwarranted fluctuations in the prices of
securities, both to purchase or increase positions on weakness
and to sell or reduce overpriced holdings. The Fund may invest
up to 35% of its total assets in foreign securities and up to 20%
of its total assets in convertible securities.
The Fund has implemented a quarterly distribution policy
pursuant to which it makes quarterly distributions of 2.5% of the
Fund's NAV as of the beginning of each of the first three
calendar quarters each year and of at least 2.5% of the Fund's
NAV as of the beginning of the fourth calendar quarter. If
distributions for any quarter exceed the Fund's net investment
income and net realized short-term capital gains, the difference
would be treated as distributions of the Fund's net realized
long-term capital gains and, to the extent of the amount of any
distributions in excess of such gains, as a return of the
stockholder's capital.
Information Regarding the Adviser
The Fund's investment adviser is Alliance Capital Management
L.P., a leading international investment adviser supervising
client accounts with assets as of March 31, 1999 totaling more
than $301 billion (of which approximately $[__] billion
represented assets of investment companies). The Adviser's
clients are primarily major corporate employee benefit plans,
public employee retirement systems, investment companies,
foundations, and endowment funds. The [__] registered investment
companies, with more than [__] separate portfolios, managed by
the Adviser currently have over [__] million stockholder
accounts. As of March 31, 1999, the Adviser was retained as
investment manager for over 30 of the FORTUNE 100 companies.
The persons primarily responsible for the day-to-day
management of the Fund are Alfred Harrison, Vice Chairman of
Alliance Capital Management Corporation, the Adviser's general
partner, and Michael J. Reilly, Senior Vice President of Alliance
Capital Management Corporation. Both Messrs. Harrison and Reilly
are members of Alliance's Large Cap Growth Group and have been
associated with Alliance since prior to 1994.
Risk Factors and Special Considerations
You should consider the following factors, as well as the
other information in this Prospectus, before making an investment
in the Fund under this offer.
The offer will result in dilution.
Upon completion of the offer, stockholders who do not fully
exercise their rights will own a smaller proportional interest in
9
<PAGE>
the Fund than would be the case if the offer had not been made.
Furthermore the subscription price per share for the offer will
be lower than the Fund's NAV. Any rights offering priced at a
discount to the Fund's NAV and involving payment of expenses by
the Fund entails some dilution in the NAV. Dilution is the
decrease in NAV that results from the Fund's issuance of new
shares at a discount to NAV when the rights are exercised and
from the Fund's payment of the expenses of the offer. The offer
will result in a dilution of NAV for all stockholders, which will
disproportionately affect stockholders who do not exercise their
rights. Although it is not possible to state precisely the
amount of the decrease in NAV because it is not known at the date
of this Prospectus how many shares will be subscribed for, or
what the subscription price will be, the dilution might be
substantial.
Principal risks.
In this Summary, we describe the principal risks that may
affect the Fund's portfolio as a whole. The Fund could be
subject to additional principal risks because the types of
investments made by the Fund can change over time. This
Prospectus has additional descriptions of investments that appear
in bold type in the discussions under "Certain Investment
Practices" or "Risk Factors and Special Considerations." These
sections also include more information about the Fund, its
investments and related risks.
Other important things for you to note: You may lose money
by investing in the Fund.
An investment in the Fund is not a deposit in a bank and is
not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
Among the principal risks of investing in the Fund is market
risk, which is the risk that the value of your investment may
fluctuate as stock markets fluctuate. Because the Fund uses
derivatives strategies and other leveraging techniques
speculatively to enhance returns, it is subject to greater risk
and its returns may be more volatile than other funds,
particularly in periods of market declines. The Fund is "non-
diversified", which means that it invests in a smaller number of
securities than many other equity funds. As a result, changes in
the value of a single security may have a more significant
effect, either negative or positive, on the Fund's NAV. The
Fund's investments in foreign securities have foreign risk and
currency risk. The Fund's investments in fixed-income securities
have interest rate risk.
10
<PAGE>
The Fund's shares may trade at a discount to NAV.
Shares of closed-end management investment companies
frequently trade at a discount from their NAV (the market price
per share is less than the value per share of the net assets).
This characteristic is a risk separate and distinct from the risk
that the Fund's NAV will decrease as a result of its investment
activities and may be greater for investors expecting to sell
their shares relatively soon after completion of this offering.
It should be noted, however, that shares of some closed-end
management investment companies, including the Fund, have traded
at premiums to NAV. The Fund cannot predict whether its shares
will trade at, above or below NAV in the future.
An alternative investment option is the Alliance Select
Investor Series, Premier Portfolio, a portfolio of an open-end
management investment company with substantially the same
investment objective and policies as the Fund. Because the
Premier Portfolio is a portfolio of an open-end investment
company, you may invest in it at the Premier Portfolio's NAV
without the risk of the market price trading at a discount to the
Premier Portfolio's NAV. An investment in the Premier Portfolio
may be redeemed at any time at the Premier Portfolio's NAV. The
Premier Portfolio, however, has a minimum initial investment
amount of $50,000. It is not possible to invest in the Premier
Portfolio at a discount to its NAV.
There is no guarantee that the Fund will be able to maintain its
current level of dividends and distributions.
The Fund has implemented a quarterly distribution policy
pursuant to which it makes quarterly distributions of 2.5% of the
Fund's NAV as of the beginning of each of the first three
calendar quarters each year and of at least 2.5% of the Fund's
NAV as of the beginning of the fourth calendar quarter. If
distributions for any quarter exceed the Fund's net investment
income and net realized short-term capital gains, the difference
would be treated as distributions of the Fund's net realized
long-term capital gains and, to the extent of the amount of any
distributions in excess of such gains, as a return of the
stockholder's capital. Based on information provided by the
Adviser, the Board of Directors believes that the offer will not
result in a change in the Fund's current level of dividends per
share for the foreseeable future. There can be no assurance,
however, that the Fund will be able to maintain its current level
of dividends per share, and the Board of Directors may, at its
sole discretion, change the Fund's current dividend policy or its
current level of dividends per share in response to market or
other conditions.
11
<PAGE>
Fee Table
The following tables are intended to assist investors in
understanding the various costs and expenses that an investor in
this offer will bear, directly or indirectly.
Stockholder Transaction Expenses
Sales Load (as a percentage of subscription
price paid directly from your investment)* [__]%
Annual Expenses (expenses that are deducted from Fund assets)**
Management Fees*** [__]%
Administration Fees**** [__]%
Other Expenses***** [__]%
Total Annual Expenses [__]%
____________________
* The Fund has agreed to pay PaineWebber Incorporated, the
Dealer Manager, a fee for its financial advisory and
marketing services equal to [__]% of the aggregate
subscription price for each share issued pursuant to the
offer. The Dealer Manager will reallow to other broker-
dealers solicitation fees equal to [__]% of the
subscription price per share for each share issued
pursuant to the offer as a result of their soliciting
efforts. Other offering expenses to be incurred by the
Fund are estimated at $[________], which includes up to
$[________] that may be paid to the Dealer Manager as
partial reimbursement for its expenses relating to the
offer. These fees and expenses will be borne by the Fund
and indirectly by all of the Fund's stockholders,
including those stockholders who do not exercise their
rights.
** Amounts are estimated for the Fund's current fiscal year
after giving effect to anticipated net proceeds of the
offer assuming that all of the rights are exercised, that
the maximum number of over-subscription shares are issued
and that the Fund incurs estimated offering expenses of
$[________].
*** The Adviser receives a monthly basic fee at an annualized
rate of 1.50% of the Fund's average net assets and an
adjustment to the basic fee based on the investment
performance of the Fund in relation to the investment
record of the Russell 1000 Growth Index for certain
prescribed periods. The adjustment can cause the
Adviser's management fee to range from 1.20% to 1.80% of
the Fund's average net assets.
12
<PAGE>
**** Alliance also receives a monthly fee at the annual rate of
.25% of the Fund's average weekly net assets for acting as
the Fund's Administrator.
***** Includes interest paid by the Fund in connection with
short sales.
13
<PAGE>
Example
The following Example demonstrates the projected dollar
amount of total cumulative expenses that would be incurred over
various periods with respect to a hypothetical investment in the
Fund through this offering. The amounts are based upon payment
by the Fund of operating expenses at the levels set forth in the
above table.
1 Year 3 Years 5 Years 10 Years
An investor would directly or
indirectly pay the following
expenses on a $1,000 investment
in the Fund, assuming a 5% annual
return throughout the relevant $[___] $[___] $[___] $[___]
period and reinvestment of all
dividends and other distributions
at NAV:
The foregoing fee table and example are intended to assist
investors in understanding the costs and expenses that an
investor in the Fund will bear directly or indirectly.
The Example set forth above assumes reinvestment of all
dividends and other distributions at NAV, payment of a [____]%
sales load and annual expense ratio of [____]%. The table above
and the assumption in the Example of a 5% annual return are
required by SEC regulations applicable to all management
investment companies. Your annual return may be more or less
than the 5% used in this Example. In addition, while the Example
assumes reinvestment of all dividends and other distributions at
NAV, participants in the Dividend Reinvestment Plan may receive
shares purchased or issued at a price or value different from
NAV.
The Example should not be considered a representation of
future expenses, and the Fund's actual expenses may be more or
less than those shown.
14
<PAGE>
FINANCIAL HIGHLIGHTS
The table below sets forth certain specified information for a
share outstanding throughout each period presented. Except for
the period from October 1, 1998 through March 31, 1999, the
financial highlights for each period presented have been audited
by PricewaterhouseCoopers LLP, the Fund's independent
accountants, whose unqualified report is included in the Fund's
September 30, 1998 Annual Report and is incorporated into this
Prospectus by reference. The financial highlights should be read
in conjunction with the financial statements and notes thereto,
which are incorporated into this Prospectus by reference,
included in the Fund's September 30, 1998 Annual Report and
March 31, 1999 Semi-Annual Report, which is available without
charge by calling the Fund at (800) [___-____] or by contacting
the Fund at 1345 Avenue of the Americas, New York, New York
10105.
[To be filed by subsequent amendment]
15
<PAGE>
CAPITALIZATION AT [________], 1999
AMOUNT OUTSTANDING
EXCLUSIVE OF AMOUNT AMOUNT HELD
AMOUNT HELD BY FUND FOR BY FUND FOR
TITLE OF CLASS AUTHORIZED ITS OWN ACCOUNT ITS OWN ACCOUNT
______________ __________ ___________________ _______________
Common stock,
$0.01 par value [________] [________] [________]
TRADING AND NAV INFORMATION
In the past, the Fund's shares have traded both at a premium
and at a discount in relation to NAV. Although the Fund's shares
recently have been trading at a premium to NAV, there can be no
assurance that this premium will continue after the offer or that
the shares will not again trade at a discount. As discussed
above, shares of other closed-end investment companies frequently
trade at a discount from NAV.
The shares are listed and traded on the NYSE under the ticker
symbol "AMO." The rights will not be admitted for trading on the
NYSE or any other stock exchange. The following table shows the
high and low sales prices of the Fund's shares on the NYSE, the
high and low NAV per share, and the high and low premium or
discount at which the Fund's shares were trading for each fiscal
quarter during its two most recent fiscal years and since the
beginning of the current fiscal year.
Premium/(Discount)
Market Price* NAV to NAV
Quarter Ended High Low High Low High Low
____ ____ ____ ____ ____ ____
December 31, 1996
March 31, 1997
June 30, 1997
September 30, 1997
December 31, 1997
March 31, 1998
June 30, 1998
September 30, 1998
December 31, 1998
March 31, 1999
___________________
Source:
* NYSE
The Fund's NAV at the close of business on [________], 1999
(the last trading date on which the Fund publicly reported its
16
<PAGE>
NAV prior to the announcement of the offer) and on [________],
1999 (the last trading date on which the Fund publicly reported
its NAV prior to the date of this Prospectus) was $[____] and
$[____], respectively. The last reported sales price of the
Fund's shares on the NYSE on those dates was $[____] and $[____],
respectively.
17
<PAGE>
THE FUND
The Fund's investment objective is to seek long-term growth
of capital through all market conditions.
How the Fund Pursues Its Objective
Consistent with the investment style of Alliance's Large Cap
Growth Group, the Fund will invest in a "Core Portfolio" of
equity securities of large, intensively researched, high-quality
companies that are judged likely to achieve superior earnings
growth. As a matter of fundamental policy, the Fund invests at
least 65% of its total assets in these type of companies. In the
Adviser's view, high-quality companies are larger capitalization
companies (companies with market capitalizations generally
expected to exceed $5 billion) that possess, among other things,
relatively long operating histories, strong management, superior
industry positions and excellent balance sheets. The Fund will
seek to take advantage of what the Adviser believes are
opportunities presented by unwarranted fluctuations in the prices
of securities, both to purchase or increase positions on weakness
and to sell or reduce overpriced holdings. To take advantage of
investment opportunities in both rising and declining markets,
the Fund may engage in short selling and may use certain other
investment practices, including options, futures and forward
contracts, and leverage.
The Fund's Core Portfolio, which will constitute at least the
majority of, and at times may constitute substantially all of,
its total assets, will consist of the equity securities of the 25
companies that are most highly regarded by Alliance's Large Cap
Growth Group at any point in time. These Core Portfolio
companies will be predominantly U.S. companies. The balance of
the Fund's portfolio will be invested in equity securities of
other U.S. and non-U.S. companies that the Adviser considers to
have exceptional growth potential.
Normally, about 40-50 companies will be represented in the
Fund's portfolio. The Fund thus differs from more typical equity
investment companies because it invests most of its assets in a
relatively small number of intensively researched companies. The
Fund may invest up to 35% of its total assets in equity
securities of non-U.S. companies. Equity securities of non-U.S.
companies will be selected by the Adviser for investment by the
Fund on the basis of the same growth potential and other
characteristics as equity securities of U.S. companies.
The Fund's investment objective is "fundamental" and cannot
be changed without a stockholder vote. Except as noted, the
Fund's investment policies are not fundamental and thus can be
changed without a stockholder vote. The Fund will not change
18
<PAGE>
these policies without notifying its stockholders. There is no
guarantee that the Fund will achieve its investment objective.
The Fund is a closed-end management investment company.
These companies differ from open-end management investment
companies or mutual funds because closed-end investment companies
have a fixed capital base and do not redeem shares at NAV. Many
closed-end funds trade on the NYSE. Mutual funds issue
securities redeemable at NAV at any time at the option of the
stockholder and typically engage in a continuous offering of
their shares. For these reasons, mutual funds are subject to
periodic asset in-flows and out-flows that can complicate
portfolio management. Closed-end investment companies do not
face the prospect of having to liquidate portfolio holdings to
satisfy redemptions at the option of stockholders or to maintain
cash positions to meet the possibility of redemptions and can
therefore remain fully invested.
The Fund was organized as a corporation under the laws of
Maryland on August 16, 1994 and has registered with the
Securities and Exchange Commission, or the SEC, under the
Investment Company Act of 1940, as amended, known as the 1940
Act, as an investment company. The Fund's principal office is
located at 1345 Avenue of the Americas, New York, NY 10105. The
Adviser is registered with the SEC under the Investment Advisers
Act of 1940, as amended.
THE OFFER
Purposes of the Offer
The Board of Directors of the Fund has determined that it is
in the best interests of the Fund and its existing stockholders
to increase the assets of the Fund available for investment,
thereby allowing the Fund to more fully take advantage of
available investment opportunities, reduce the relative
significance of certain large positions in its portfolio and
improve the portfolio's tax efficiency. In reaching its
decision, the Board of Directors was advised by the Adviser that
the availability of new assets would give the Fund additional
investment flexibility to take advantage of what the Adviser
believes to be attractive investment opportunities without being
required to sell current portfolio positions that it desires to
retain, and which, if sold, could cause the realization of
significant capital gains by the Fund and its stockholders. The
Board of Directors also took into account that a well-subscribed
rights offering would likely reduce the Fund's expense ratio,
which would be of long-term benefit to stockholders. In
addition, the Board of Directors considered that this rights
offering could result in an improvement in the liquidity of the
trading market for the Fund's shares on the NYSE. The Board also
19
<PAGE>
considered that this rights offering would give record date
stockholders the opportunity to purchase shares at a price below
market value per share and/or NAV, and might increase the level
of market interest in the Fund. The Board also considered the
proposed terms of the offer, the expenses of the offer, and its
dilutive effect on exercising and non-exercising record date
stockholders.
The Fund may, in the future and at its discretion, choose to
make additional rights offerings of shares from time to time for
a number of shares and on terms that may or may not be similar to
this offer. Any such future offering will be made in accordance
with the 1940 Act.
Terms of the Offer
The Fund is issuing to its stockholders of record as of the
close of business on [________], 1999, non-transferable rights
entitling the holders to subscribe for an aggregate of 838,584
shares of the Fund's common stock 1,048,230 shares if the Fund
increases the number of shares available by up to 25% in
connection with the over-subscription privilege described below).
The Fund is issuing to each record date stockholder one right for
each whole share owned as of the record date. Only record date
stockholders will be issued rights and will be entitled to
participate in the offer. Three rights entitle the holder to
subscribe for one Fund share (1-for-3). A record date
stockholder's right to acquire, during the subscription period at
the subscription price, one share for every three rights held is
referred to in this Prospectus as the primary subscription.
The rights may be exercised at any time during the
subscription period, which commences on [________], 1999 and ends
at 5:00 P.M., New York City time, on [________], 1999, unless the
subscription period is extended. The rights are evidenced by
Subscription Certificates that will be mailed to record date
stockholders, except foreign record date stockholders.
Unsubscribed shares will be offered, by means of an over-
subscription privilege, to those record date stockholders who
have exercised all rights issued to them and who wish to acquire
more than the number of shares they are otherwise entitled to
purchase pursuant to the primary subscription. Over-subscription
shares will be allotted as more fully discussed below.
The first regular quarterly dividend to be paid on shares
acquired upon exercise of rights will be the third quarterly
dividend, the record date for which occurs after the issuance of
the shares. The Fund's present policy is to pay dividends on the
last business day, generally any day the NYSE is open, of each
quarter to stockholders of record [__] days prior to the payment
20
<PAGE>
date. Assuming that the subscription period is not extended, it
is expected that the first dividend received by stockholders with
respect to shares acquired in the offer will be paid on the last
business day of [________], 1999.
Fractional shares will not be issued on the exercise of
fractional rights. Accordingly, shares may be purchased in the
primary subscription only pursuant to the exercise of whole
rights. For example, if a record date stockholder owns [___]
shares, that record date stockholder will receive [___] rights,
but may only exercise [___] rights for the purchase of [___]
shares, with the unexercised fractional rights expiring.
However, record date stockholders holding fewer than three shares
will be entitled to subscribe for one share pursuant to the
primary subscription.
There is no minimum number of rights that must be exercised
in order for the offer to close.
Over-Subscription Privilege
If record date stockholders do not exercise all the rights
issued to them, any shares represented by unexercised rights will
be offered by means of the over-subscription privilege to the
record date stockholders who have exercised all the rights issued
to them and who wish to subscribe for additional shares. Only
record date stockholders who exercise all the rights issued to
them may indicate on the Subscription Certificate, which they or
their nominees submit with respect to the exercise of the rights
issued to them, how many shares they desire to purchase pursuant
to the over-subscription privilege. If sufficient shares remain
after completion of the primary subscription, all over-
subscription requests will be honored in full. If sufficient
shares are not available after completion of the primary
subscription to honor all over-subscription requests, the Fund
may determine after the expiration of the offer, in the
discretion of the Board of Directors, to issue up to an
additional 25% of the shares available pursuant to the offer (up
to an additional 209,646 shares) in order to cover the over-
subscription requests. Regardless of whether the Fund issues
such additional shares, and to the extent shares are not
available to honor all over-subscription requests, the available
shares will be allocated among those who over-subscribe so that
the number of shares issued to participating record date
stockholders will generally be in proportion to the number of
shares owned by such stockholders on the record date. The
allocation process may involve a series of allocations in order
to assure that the total number of shares available for over-
subscription is distributed on a pro rata basis.
21
<PAGE>
Banks, brokers, trustees and other nominee holders of rights
will be required to certify to the subscription agent, before any
over-subscription privilege may be exercised with respect to any
particular beneficial owner, as to the aggregate number of rights
exercised pursuant to the primary subscription and the number of
shares subscribed for pursuant to the over-subscription privilege
by such beneficial owner and that such beneficial owner's primary
subscription was exercised in full. Nominee Holder Over-
Subscription Forms and Beneficial Owner Certification Forms will
be distributed to banks, brokers, trustees and other nominee
holders of rights with the Subscription Certificates.
The Fund will not offer or sell any shares that are not
subscribed for pursuant to the primary subscription or the over-
subscription privilege.
Subscription Price
The subscription price for each share to be issued pursuant
to the offer will be [__]% of the lower of (1) the average of the
last reported sales price of a Fund share on the NYSE for the
five trading days ending with the day the offer expires and
(2) the NAV as of the close of trading on the NYSE on that day.
For example, if the average of the last reported sales price per
share on the NYSE on the expiration date and on the four
preceding business days is $[____], and the closing NAV per share
on the expiration date is $[____], the subscription price will be
$[____] ([__]% of $[____]). If, however, the average of the last
reported sales price per share on the NYSE on the expiration date
and on the four preceding business days is $[____], and the
closing NAV per share on the expiration date is $[____], the
subscription price will be $[____] ([__]% of $[____]).
The Fund announced the offer on April 15, 1999. The Fund's
NAV at the close of business on [________],1999 (the last trading
date on which the Fund publicly reported its NAV prior to the
announcement) and on [________],1999 (the last trading date on
which the Fund publicly reported its NAV prior to the date of
this Prospectus) was $[____] and $[____], respectively. The last
reported sales price of the Fund's shares on these dates was
$[____] and $[____], respectively.
Non-Transferability of Rights
The rights are non-transferable and, therefore, may not be
purchased or sold. Rights not exercised will expire without
residual value when the offer expires. The rights will not be
listed for trading on the NYSE or any other securities exchange.
However, the shares to be issued pursuant to the offer will be
listed for trading on the NYSE, subject to notice of issuance.
22
<PAGE>
Expiration of the Offer
The offer will expire at 5:00 P.M., New York City time, on
[________], 1999, unless the offer is extended by the Fund until
5:00 P.M., New York City time, to a date not later than
[________], 1999. The rights will expire on the expiration date.
Because the offer expires and the shares will be priced on the
same date, record date stockholders who decide to acquire shares
in the primary subscription or pursuant to the over-subscription
privilege will not know the subscription price of the shares when
they make their decision. Any extension of the offer will be
followed as promptly as practicable by an announcement of that
fact. The announcement will be issued no later than 9:00 A.M.,
New York City time, on the next business day following the
expiration date. The Fund may make any announcement regarding
the extension of the offer by a release to the Dow Jones News
Service or other means as the Fund deems appropriate.
Subscription Agent
The Subscription Agent is The Bank of New York. The
Subscription Agent will receive for its administrative,
processing, invoicing and other services as Subscription Agent, a
fee estimated to be approximately $[________], plus reimbursement
for its out-of-pocket expenses related to the offer estimated to
be approximately $[________]. The Subscription Agent is also the
Fund's transfer agent, dividend-paying agent and registrar for
the shares. Questions regarding the Subscription Certificates
should be directed to [(___)___-____ [(toll free)]; stockholders
may also consult their brokers or nominees.
Completed Subscription Certificates must be sent together
with proper payment of the subscription price for all shares
subscribed for in the primary subscription and pursuant to the
over-subscription privilege (for record date stockholders) to the
Subscription Agent by one of the methods described below.
Alternatively, Notice of Guaranteed Delivery may be sent by
facsimile to (212) 815-9357 to be received by the Subscription
Agent prior to 5:00 P.M., New York City time, on the expiration
date. Facsimiles should be confirmed by telephone at
[(___)___-____]. The Fund will accept only properly completed
and executed Subscription Certificates actually received at any
of the addresses listed below, prior to 5:00 P.M., New York City
time, on the expiration date or by the close of business on the
third business day after the expiration date following timely
receipt of a Notice of Guaranteed Delivery.
23
<PAGE>
BY FIRST CLASS MAIL: BY OVERNIGHT COURIER: BY HAND:
The Bank of New York The Bank of New York The Bank of New York
P.O. Box 11248 101 Barclay Street 101 Barclay Street
Church Street Station Receive & Delivery Window Receive & Delivery
New York, NY 10286-1248 New York, NY 10286 Window
New York, NY 10286
Delivery to an address other than one of the addresses listed
above will not constitute valid delivery.
Method for Exercising Rights
Rights are evidenced by Subscription Certificates that,
except as described below under "Foreign Restrictions," will be
mailed to record date stockholders or, if a record date
stockholder's shares are held by Cede or any other depository or
nominee on their behalf, to Cede or such depository or nominee.
Rights may be exercised by completing and signing the
Subscription Certificate that accompanies this Prospectus and
mailing it in the envelope provided, or otherwise delivering the
completed and signed Subscription Certificate to the Subscription
Agent, together with payment in full for the shares at the
estimated subscription price by the expiration date. Rights may
also be exercised by contacting your broker, banker or trust
company, which can arrange, on your behalf, to guarantee payment
and delivery of a properly completed and executed Subscription
Certificate pursuant to a Notice of Guaranteed Delivery by the
close of business on the third business day after the expiration
date. A fee may be charged for this service. Because fractional
shares will not be issued, record date stockholders who have
remaining, after exercising rights, less than three rights, will
be unable to purchase a share upon the exercise of these
remaining rights. These remaining rights will expire without
residual value and stockholders will not be entitled to receive
any cash in lieu thereof. For example, if a record date
stockholder owns [___] shares, that record date stockholder will
receive [___] rights, but may only exercise [___] rights for the
purchase of [___] shares, with the unexercised remaining rights
expiring. However, record date stockholders who receive fewer
than three shares will be entitled to subscribe for one share
pursuant to the primary subscription. Record date stockholders
who fully exercise their rights may request additional rights
pursuant to the over-subscription privilege. Completed
Subscription Certificates must be received by the Subscription
Agent prior to 5:00 P.M., New York City time, on the expiration
date at one of the addresses set forth above (unless the
guaranteed delivery procedures are complied with as described
below under "Payment for Shares").
24
<PAGE>
Stockholders Who are Record Owners. To exercise their rights,
record date stockholders may choose between either option to
exercise their rights set forth under "Payment for Shares" below.
If time is of the essence, option (2) under "Payment for Shares"
below will permit delivery of the Subscription Certificate and
payment after the expiration date.
Stockholders Whose Shares are Held By a Nominee. Record date
stockholders whose shares are held by a nominee such as a bank,
broker or trustee must contact that nominee to exercise their
rights. In that case, the nominee will complete the Subscription
Certificate on behalf of the record date stockholder and arrange
for proper payment by one of the methods set forth under "Payment
for Shares" below.
Nominees. Nominees who hold shares for the account of others
should notify the respective beneficial owners of such shares as
soon as possible to ascertain the beneficial owners' intentions
and to obtain instructions with respect to the rights. If the
beneficial owner so instructs, the nominee should complete the
Subscription Certificate and submit it to the Subscription Agent
with the proper payment as described under "Payment for Shares"
below.
Information Agent
Any questions or requests for assistance concerning the
method of subscribing for shares or for additional copies of this
Prospectus or Subscription Certificates or Notices of Guaranteed
Delivery may be directed to the Information Agent at its
telephone number and address listed below:
Shareholder Communications Corporation
17 State Street
New York, NY 10004
[________]
Brokers and banks, please call
Record date stockholders may also contact their brokers or
nominees for information with respect to the offer. The
Information Agent will receive a fee estimated to be $[________],
plus reimbursement for its out-of-pocket expenses related to the
offer, estimated to be a maximum of $[________].
Payment for Shares
Record date stockholders who wish to acquire shares in the
primary subscription and pursuant to the over-subscription
privilege may choose between the following methods of payment:
25
<PAGE>
(1) A record date stockholder may send the Subscription
Certificate together with payment for the shares
acquired in the primary subscription and any additional
shares subscribed for pursuant to the over-subscription
privilege to the subscription agent. Payment should be
calculated on the basis of the estimated subscription
price of $[____] per share for all shares subscribed. A
subscription will be accepted when payment, together
with a properly completed and executed Subscription
Certificate, is received by the Subscription Agent's
office at one of the addresses set forth above no later
than 5:00 P.M., New York City time, on the expiration
date. The Subscription Agent will deposit all checks
and money orders received by it for the purchase of
shares into a segregated interest-bearing account (the
interest from which will inure to the benefit of the
Fund) pending proration and distribution of shares. A
PAYMENT PURSUANT TO THIS METHOD MUST BE IN U.S. DOLLARS
BY MONEY ORDER OR CHECK DRAWN ON A BANK OR BRANCH
LOCATED IN THE UNITED STATES, MUST BE PAYABLE TO
"ALLIANCE ALL-MARKET ADVANTAGE FUND" AND MUST ACCOMPANY
A PROPERLY COMPLETED AND EXECUTED SUBSCRIPTION
CERTIFICATE FOR SUCH PAYMENT TO BE ACCEPTED. EXERCISE
BY THIS METHOD IS SUBJECT TO ACTUAL COLLECTION OF CHECKS
BY 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION
DATE. BECAUSE UNCERTIFIED PERSONAL CHECKS MAY TAKE AT
LEAST FIVE BUSINESS DAYS TO CLEAR, STOCKHOLDERS ARE
STRONGLY URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS
OF A CERTIFIED OR CASHIER'S CHECK OR MONEY ORDER.
(2) Alternatively, a bank, a trust company or a NYSE member
subscription will be accepted by the Subscription Agent
if, prior to 5:00 P.M., New York City time, on the
expiration date, the Subscription Agent has received a
Notice of Guaranteed Delivery by facsimile or otherwise
from a bank, a trust company or a NYSE member,
guaranteeing delivery of (i) payment of the estimated
subscription price of $[____] per share for the shares
subscribed for in the primary subscription and any
additional shares requested pursuant to the over-
subscription privilege, and (ii) a properly completed
and executed Subscription Certificate. The Subscription
Agent will not honor a Notice of Guaranteed Delivery
unless a properly completed and executed Subscription
Certificate and full payment for the shares is received
by the Subscription Agent by the close of business on
the [third] business day after the expiration date
([_________], 1999, unless the offer is extended).
Within eight business days after the expiration date,
([________], 1999, unless the offer is extended), the
26
<PAGE>
confirmation date, a confirmation will be sent by the
Subscription Agent to each subscribing record date stockholder
(or, if the stockholder's shares are held by Cede or any other
depository or nominee on such record date stockholder's behalf,
to Cede or such depository or nominee), showing (i) the number of
shares acquired in the primary subscription, (ii) the number of
shares, if any, acquired pursuant to the over-subscription
privilege, (iii) the subscription price per share and total
purchase price of the shares, and (iv) any additional amount
payable by such record date stockholder to the Fund or any excess
to be refunded by the Fund to such stockholder, in each case
based on the subscription price. If any record date stockholder
exercises his or her right to acquire shares pursuant to the
over-subscription privilege, any such excess payment that would
otherwise be refunded to the record date stockholder will be
applied by the Fund toward payment for shares acquired pursuant
to the exercise of the over-subscription privilege. Any
additional payment required from a record date stockholder must
be received by the subscription agent within ten business days
after the confirmation date ([________], 1999, unless the offer
is extended). Any excess payment to be refunded by the Fund to a
record date stockholder will be mailed by the Subscription Agent
to such record date stockholder as promptly as possible. All
payments by a record date stockholder must be in U.S. dollars by
money order or check drawn on a bank or branch located in the
United States and payable to "ALLIANCE ALL-MARKET ADVANTAGE
FUND."
The Subscription Agent will deposit all checks received by it
prior to the final payment date into a segregated interest-
bearing account (which interest will inure to the benefit of the
Fund) pending proration and distribution of the shares.
Whichever of the two methods described above is used,
issuance and delivery of certificates for the shares purchased
are subject to collection of checks and actual payment pursuant
to any Notice of Guaranteed Delivery.
If a record date stockholder who acquires shares pursuant to
the primary subscription or the over-subscription privilege does
not make payment of any additional amounts due by the tenth
business day after the confirmation date, the Fund reserves the
right to take any or all of the following actions: (i) sell such
subscribed and unpaid-for shares to other record date
stockholders, (ii) apply any payment actually received toward the
purchase of the greatest whole number of shares that could be
acquired by such record date stockholder upon the exercise of the
primary subscription and/or over-subscription privilege, and/or
(iii) exercise any and all other rights or remedies to which the
Fund may be entitled.
27
<PAGE>
THE METHOD OF DELIVERY TO THE FUND OF SUBSCRIPTION CERTIFICATES
AND PAYMENT OF THE SUBSCRIPTION PRICE WILL BE AT THE ELECTION AND
RISK OF THE EXERCISING RIGHTS HOLDERS, BUT IF SENT BY MAIL IT IS
RECOMMENDED THAT SUCH CERTIFICATES AND PAYMENTS BE SENT BY
REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED,
AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO ENSURE
DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT PRIOR
TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
BECAUSE UNCERTIFIED PERSONAL CHECKS MAY TAKE AT LEAST FIVE
BUSINESS DAYS TO CLEAR, YOU ARE STRONGLY URGED TO PAY, OR ARRANGE
FOR PAYMENT, BY MEANS OF CERTIFIED OR CASHIER'S CHECK OR MONEY
ORDER.
All questions concerning the timeliness, validity, form and
eligibility of any exercise of rights will be determined by the
Fund, whose determinations will be final and binding. The Fund
in its sole discretion may waive any defect or irregularity, or
permit a defect or irregularity to be corrected within such time
as it may determine, or reject the purported exercise of any
right. Subscriptions will not be deemed to have been received or
accepted until all irregularities have been waived or cured
within such time as the Subscription Agent determines in its sole
discretion. The Subscription Agent will not be under any duty to
give notification of any defect or irregularity in connection
with the submission of Subscription Certificates or incur any
liability for failure to give such notification.
EXERCISING RIGHTS HOLDERS WILL HAVE NO RIGHT TO RESCIND THEIR
SUBSCRIPTION AFTER RECEIPT OF THEIR PAYMENT FOR SHARES BY THE
SUBSCRIPTION AGENT, EXCEPT AS PROVIDED BELOW UNDER "NOTICE OF NET
ASSET VALUE DECLINE."
Delivery of Share Certificates
Certificates representing shares acquired in the primary
subscription will be mailed promptly after the expiration of the
offer once full payment for such shares has been received and
cleared. Certificates representing shares acquired pursuant to
the over-subscription privilege will be mailed as soon as
practicable after full payment for such shares has been received
and cleared and all allocations have been completed.
[Participants in the Dividend Reinvestment Plan will have any
shares acquired in the primary subscription and pursuant to the
over-subscription privilege credited to their accounts under the
Dividend Reinvestment Plan. Participants in the Dividend
Reinvestment Plan wishing to exercise rights issued with respect
to the shares held in their accounts under the Dividend
Reinvestment Plan must exercise such rights in accordance with
the procedures set forth above. Record date stockholders whose
shares are held of record by Cede or by any other depository or
nominee on their behalf or their broker-dealer's behalf will have
28
<PAGE>
any shares acquired in the primary subscription credited to the
account of Cede or such other depository or nominee. Shares
acquired pursuant to the over-subscription privilege will be
certificated, and certificates representing such shares will be
sent directly to Cede or such other depository or nominee. Share
certificates will not be issued for shares credited to Dividend
Reinvestment Plan accounts.
Foreign Restrictions
Subscription Certificates will not be mailed to record date
stockholders whose record addresses are outside the United
States. Foreign record date stockholders or their nominees will
receive written notice of the offer. The rights issued to
foreign record date stockholders will be held by the Subscription
Agent for their accounts until instructions are received to
exercise the rights. Rights issued to foreign record date
stockholders will expire unexercised if instructions are not
submitted to the Subscription Agent prior to or on the expiration
date.
Federal Income Tax Consequences of the Offer
The following is a general summary of the material federal
income tax consequences of the offer under the provisions of the
U.S. Internal Revenue Code of 1986, as amended, referred to below
as the Code, and the regulations thereunder as now in effect that
are generally applicable to record date stockholders that are
United States persons within the meaning of the Code, and does
not cover foreign, state or local taxes. The Code and
regulations are subject to change by legislative or
administrative action, which may be retroactive. Exercising
rights holders should consult their tax advisers regarding
specific questions as to foreign, federal, state or local taxes.
Stockholders will not recognize any taxable income either
upon the receipt or the exercise of the rights. If the fair
market value of the rights on the date of distribution is less
than 15% of the fair market of the stockholder's shares of the
Fund's common stock to which the rights relate and the
stockholder does not make the election described below, the
stockholder's basis in the rights is zero. A stockholder may,
however, irrevocably elect to allocate its existing basis in the
related shares between such shares and the rights based upon the
relative fair market values of such shares and the rights as of
the date of their issuance. The stockholder's basis in the
shares would then be reduced by an amount equal to the basis
allocated to the rights. This election must be made in a
statement attached to the stockholder's federal income tax return
for the year in which the rights are received. If the fair
market value of the rights on the date of distribution is equal
29
<PAGE>
to at least 15% of the stockholder's shares to which they relate,
the stockholder will be required to allocate its existing basis
in those shares between such shares and the rights based upon the
relative fair market values of such shares and the rights as of
the date of their issuance. As with respect to the election
described above, the stockholder's basis in the shares would then
be reduced by an amount equal to the basis allocated to the
rights. The basis of any shares acquired by a stockholder's
exercise of its rights will be equal to the sum of the
subscription price of the shares, the basis of the rights and any
servicing fee charged to the stockholder by the stockholder's
broker, bank or trust company. The gain or loss recognized by a
stockholder upon the sale of a share acquired by the exercise of
a right will be capital gain or loss (assuming the share is held
as a capital asset at the time of sale). This gain or loss will
be long-term capital gain or loss if the share has been held for
more than one year at the time of sale. A stockholder's holding
period for a share acquired upon the exercise of a right begins
with the date of exercise. No loss will be realized if rights
which have a tax basis expire without exercise. In such event,
the basis in the unexercised rights will be added back to the
stockholder's basis in the related shares.
Notice of NAV Decline
The Fund has undertaken to suspend the offer until it amends
this Prospectus if, subsequent to [________], 1999 (the effective
date of the Fund's registration statement), the Fund's NAV
declines more than 10% from its NAV as of that date. In such
event, the Fund would extend the expiration date and notify
record date stockholders that the NAV has declined more than 10%,
that the offer is suspended and that exercising rights holders
may cancel their exercise of rights.
Employee Benefit Plan Considerations
Stockholders who are employee benefit plans subject to the
Employee Retirement Income Security Act of 1974, as amended,
(including corporate savings and 401(k) plans), Keogh or H.R. 10
plans of self-employed individuals and individual retirement
accounts, collectively, retirement plans, should be aware that
additions to the retirement plan (other than rollovers or
trustee-to-trustee transfers from another retirement plans) in
order to exercise rights would be treated as contributions to the
retirement plan and, when taken together with contributions
previously made, may result in, among other things, excise taxes
for excess or nondeductible contributions. In the case of
retirement plans qualified under section 401(a) of the Code and
certain other retirement plans, additional cash contributions
could cause the maximum contribution limitations of section 415
of the Code or other qualification rules to be violated. They
30
<PAGE>
may also be a reportable distribution and there may be other
adverse tax and ERISA consequences if rights are sold or
transferred by a retirement plan.
Retirement plans and other tax exempt entities, should also
be aware that if they borrow in order to finance their exercise
of rights, they may become subject to the tax on unrelated
business taxable income under section 511 of the Code.
ERISA contains fiduciary responsibility requirements, and
ERISA and the Code contain prohibited transaction rules, that may
bear upon the exercise of rights. Due to the complexity of these
rules and the penalties for noncompliance, retirement plans
should consult with their counsel and other advisors regarding
the consequences under ERISA and the Code of their exercise of
rights.
Distribution Arrangements
PaineWebber Incorporated, 1285 Avenue of the Americas, New
York, New York, a broker-dealer and member of the National
Association of Securities Dealers, Inc., will act as the Dealer
Manager for the offer. Under the terms and subject to the
conditions contained in the Dealer Manager Agreement dated the
date hereof, the Dealer Manager will provide financial advisory
and marketing services in connection with the offer and will
solicit the exercise of rights and participation in the
over-subscription privilege by record date stockholders. The
offer is not contingent upon any number of rights being
exercised. The Fund has agreed to pay the Dealer Manager a fee
for financial advisory and marketing services equal to [__]% of
the aggregate subscription price for each share issued pursuant
to the offer. The Dealer Manager will reallow to other broker-
dealers solicitation fees equal to [__]% of the subscription
price per share for each share issued pursuant to the offer as a
result of their soliciting efforts.
In addition, the Fund has agreed to reimburse the Dealer
Manager up to an aggregate of $[________] for its reasonable
expenses incurred in connection with the offer. The Fund and the
Adviser have each agreed to indemnify the Dealer Manager or
contribute to losses arising out of certain liabilities including
liabilities under the Securities Act. The Dealer Manager
Agreement also provides that the Dealer Manager will not be
subject to any liability to the Fund in rendering the services
contemplated by such agreement except for any act of bad faith,
willful misconduct or gross negligence of the Dealer Manager or
reckless disregard by the Dealer Manager of its obligations and
duties under such agreement.
31
<PAGE>
The Fund has agreed not to offer or sell, or enter into any
agreement to sell, any equity or equity-related securities of the
Fund or securities convertible into such securities for a period
of 180 days after the date of the Dealer Manager Agreement,
except for the shares issued in reinvestment of dividends or
other distributions or other limited circumstances.
The Dealer Manager is also the Fund's Shareholder Servicing
Agent.
32
<PAGE>
USE OF PROCEEDS
If all the rights are exercised in full at the subscription
price of $[____] per share, the net proceeds of the offer to the
Fund assuming all [________] shares offered in the primary
subscription are sold are estimated to be approximately
$[________], after deducting offering expenses payable by the
Fund estimated at approximately $[________]. If the Fund
increases the number of shares subject to subscription by up to
25%, or [________] shares, in order to satisfy over-subscription
requests, the additional net proceeds will be approximately
$[________]. The Adviser anticipates that the Fund will take up
to [__] days from its receipt of the net proceeds of the offer to
invest or otherwise employ such proceeds, but in no event will
any such use of proceeds take longer than [_] months. Pending
the use of the proceeds of the offer, the proceeds will be held
in U.S. Government securities and other high-quality, short-term
money market instruments. These temporary investments will not
be consistent with the Fund's objective of long-term growth of
capital through all market conditions.
INVESTMENT OBJECTIVE AND POLICIES
Investment Objective and Strategy
The Fund's investment objective is to provide long-term
growth of capital through all market conditions. Consistent with
the investment style of Alliance's Large Cap Growth Group, the
Fund will invest in a "Core Portfolio" of equity securities
(common stocks, securities convertible into common stocks and
rights and warrants to subscribe for or purchase common stocks)
of large, intensively researched, high-quality companies that are
judged likely to achieve superior earnings growth. As a matter
of fundamental policy, the Fund invests at least 65% of its total
assets in the equity securities of these type of companies. In
the Adviser's view, high-quality companies are larger
capitalization companies (companies with market capitalizations
generally expected to exceed $5 billion) that possess, among
other things, relatively long operating histories, strong
management, superior industry positions and excellent balance
sheets. The term "high quality" does not reflect ratings from
any rating agency. The Fund will seek to take advantage of what
the Adviser believes are opportunities presented by unwarranted
fluctuations in the prices of securities, both to purchase or
increase positions on weakness and to sell or reduce overpriced
holdings. To take advantage of investment opportunities in both
rising and declining markets, the Fund may engage in short
selling and may use certain other investment practices, including
options, futures contracts and leverage.
33
<PAGE>
The Fund's Core Portfolio, which will constitute at least the
majority of, and at times may constitute substantially all of,
its total assets, will consist of the equity securities of the 25
companies that are most highly regarded by Alliance's Large Cap
Growth Group at any point in time. These Core Portfolio
companies will be predominantly U.S. companies. The balance of
the Fund's portfolio will be invested in equity securities of
other U.S. and non-U.S. companies that the Adviser considers to
have exceptional growth potential.
Normally, about 40-50 companies will be represented in the
Fund's portfolio. The Fund thus differs from more typical equity
investment companies because it invests most of its assets in a
relatively small number of intensively researched companies. The
Fund may invest up to 35% of its total assets in equity
securities of non-U.S. companies. The Fund defines non-U.S.
companies to be entities (i) that are organized under the laws of
a country other than the United States and have their principal
office in a country other than the United States, or (ii) the
equity securities of which are traded principally in securities
markets outside the United States. Equity securities of non-U.S.
companies will be selected by the Adviser for investment by the
Fund on the basis of the same growth potential and other
characteristics as equity securities of U.S. companies. The Fund
may invest up to 5% of its total assets in illiquid securities.
Alfred Harrison, Vice Chairman of Alliance Capital Management
Corporation, the general partner of Alliance, and Michael J.
Reilly, Senior Vice President of Alliance Capital Management
Corporation, make day-to-day investment decisions for the Fund.
Both Messrs. Harrison and Reilly are members of Alliance's Large
Cap Growth Group. Alliance depends heavily upon the fundamental
analysis and research of its large internal research staff in
making investment decisions for the Fund. The research staff
generally follows a primary research universe of approximately
600 companies that are considered by the Adviser to have strong
management, superior industry positions, excellent balance
sheets, and the ability to demonstrate superior earnings growth.
As one of the largest multi-national investment firms, the
Adviser has access to considerable information concerning all of
the companies it follows, an in-depth understanding of the
products, services, markets, and competition of these companies,
and a good knowledge of most of these companies' managements.
The Adviser's analysts prepare their own earnings estimates
and financial models for each company followed. While each
analyst has responsibility for following companies in one or more
identified sectors and/or industries, the lateral structure of
the Adviser's research organization and constant communication
among the analysts result in decision-making based on the
relative attractiveness of stocks among industry sectors. The
34
<PAGE>
focus during this process is on the early recognition of change
on the premise that value is created through the dynamics of
changing company, industry, and economic fundamentals. The
Adviser's research emphasizes identifying companies whose
substantially above average prospective earnings growth is not
fully reflected in current market valuations.
The Adviser continually reviews its primary research universe
of approximately 600 companies to maintain a list of favored
securities, the "Alliance 100," considered by the Adviser to have
the most clearly superior earnings potential and valuation
attraction. The Adviser's concentration on a limited universe of
companies allows it to devote its extensive resources to constant
intensive research of these companies. Companies are continually
added to and deleted from the Alliance 100 as fundamentals and
valuations change. Alliance's Large Cap Growth Group, in turn,
further refines, on a weekly basis, the selection process for the
Fund, with each portfolio manager in the Group selecting the 25
such companies which appear to the manager most attractive at
current prices. These individual ratings are then aggregated and
ranked to produce a composite list of the 25 most highly regarded
stocks, the "Favored 25".
In the management of the Fund's investment portfolio, the
Adviser will seek to utilize market volatility judiciously
(assuming no change in company fundamentals) to adjust the Fund's
portfolio positions. The Fund will strive to capitalize on
unwarranted price fluctuations, both to purchase or increase
positions on weakness and to sell or reduce overpriced holdings.
Under normal circumstances, the Fund will remain substantially
fully invested in equity securities and will not take significant
cash positions for market timing purposes. Rather, during a
market decline, while adding to positions in favored stocks, the
Fund will tend to become somewhat more aggressive, gradually
reducing the number of companies represented in the Fund's
portfolio. Conversely, in rising markets, while reducing or
eliminating fully valued positions, the Fund will tend to become
somewhat more conservative, gradually increasing the number of
companies represented in the Fund's portfolio. Through this
"buying into declines" and "selling into strength," the Adviser
seeks to gain positive returns in good markets while providing
some measure of protection in poor markets.
The Fund's investment objective and its policy of investing,
under normal circumstances, at least 65% of the value of its
total assets in the equity securities of companies that, in the
Adviser's opinion, are likely to achieve superior earnings growth
are fundamental and cannot be changed without the approval of the
Fund's stockholders. The Fund's investment policies that are not
designated as fundamental policies may be changed by the Fund
without stockholder approval, but the Fund will not change its
35
<PAGE>
investment policies without contemporaneous notice to its
stockholders. The Fund is designed primarily for long-term
investment and investors should not consider it a trading
vehicle. As with all investment companies, there can be no
assurance that the Fund's investment objective will be achieved.
The Fund also may:
- - engage in short sales of securities with respect to up to 30%
of its total assets;
- - invest up to 20% of its total assets in convertible
securities of companies whose common stocks are eligible for
purchase by the Fund;
- - invest up to 5% of its total assets in rights or warrants
with respect to equity securities deemed appropriate for
inclusion in the Fund's portfolio;
- - write covered put and call options and purchase put and call
options on securities of the type in which the Fund may
invest, on U.S. and foreign securities exchanges and over the
counter, including options on market indices, and write
uncovered options for cross hedging purposes;
- - enter into contracts for the purchase and sale for future
delivery of common stocks and purchase and write put and call
options on such futures contracts;
- - enter into contracts for the purchase and sale for the future
delivery of foreign currencies or contracts based on
financial indices, including any index of U.S. Government
securities or securities issued by foreign government
entities and write put and call options on such futures
contracts;
- - purchase and sell stock index futures for hedging purposes
against movements in the equity markets;
- - purchase and write put and call options on foreign
currencies;
- - purchase or sell forward foreign currency exchange contracts;
- - enter into forward commitments for the purchase or sale of
securities up to 30% of its total assets;
- - enter into reverse repurchase agreements and dollar rolls;
- - enter into standby commitment agreements;
36
<PAGE>
- - enter into currency swaps for hedging purposes;
- - make secured loans of its securities of up to 30% of its
total assets; and
- - enter into repurchase agreements.
Because the Fund is non-diversified and invests in a smaller
number of securities than many other equity funds, your
investment has the risk that changes in the value of a single
security may have a significant effect, either negative or
positive, on the Fund's NAV. In addition, because the Fund may
borrow money or leverage its portfolio, the value of an
investment in the Fund will be more volatile and all other risks
will tend to be compounded. The Fund may create leverage by
using reverse repurchase agreements, derivatives or by borrowing
money. The Fund has, at times, made substantial use of its
ability to leverage its portfolio through borrowing money and
engaging in short sales.
Certain Investment Practices
The Fund may engage in the following investment practices:
Convertible Securities. The Fund may invest up to 20% of its
total assets in the convertible securities of companies whose
common stocks are eligible for purchase by the Fund. Convertible
securities include bonds, debentures, corporate notes and
preferred stocks that are convertible into common stock. Prior
to conversion, convertible securities have the same general
characteristics as non-convertible debt securities, which
generally provide a stable stream of income with generally higher
yields than those of equity securities of the same or similar
issuers. The price of a convertible security will normally vary
with changes in the price of the underlying common stock,
although the higher yield tends to make the price of the
convertible security less volatile than that of the underlying
equity security. As with debt securities, the market values of
convertible securities tend to decrease as interest rates rise
and increase as interest rates fall. While convertible
securities generally offer lower interest yields than non-
convertible debt securities of similar quality, they offer
investors the potential to benefit from increases in the market
prices of the underlying common stock.
The Fund will not invest in convertible debt securities rated
below Baa by Moody's and BBB by S&P, or, if not rated, determined
by Alliance to be of equivalent quality. Securities rated Baa by
Moody's or BBB by S&P, and comparable unrated securities as
determined by Alliance are considered to have speculative
characteristics. Sustained periods of deteriorating economic
37
<PAGE>
conditions or rising interest rates are more likely to lead to a
weakening in the issuer's capacity to pay interest and repay
principal than in the case of higher-rated securities. The Fund
will not retain a convertible debt security that is downgraded
below Baa or BBB, or, if unrated, determined by Alliance to have
undergone similar credit quality deterioration subsequent to
purchase by the Fund.
Currency Swaps. Currency swaps involve the individually
negotiated exchange by the Fund with another party of a series of
payments in specified currencies. A currency swap may involve
the delivery at the end of the exchange period of a substantial
amount of one designated currency in exchange for the other
designated currency. Therefore, the entire principal value of a
currency swap is subject to the risk that the swap counterparty
will default on its contractual delivery obligations. The net
amount of the excess, if any, of the Fund's obligations over its
entitlements with respect to each currency swap will be accrued
on a daily basis and an amount of liquid assets having an
aggregate net asset value at least equal to the accrued excess
will be maintained in a segregated account by the Fund's
custodian. The Fund will enter into currency swaps for hedging
purposes only. The Fund will not enter into any currency swap
unless the credit quality of the unsecured senior debt or the
claims-paying ability of the counterparty is rated in the highest
rating category of at least one nationally recognized rating
organization at the time of entering into the transaction. If
there is a default by the other party to such a transaction, the
Fund will have contractual remedies pursuant to the agreements
related to the transactions.
Forward Commitments. Forward commitments for the purchase or
sale of securities may include purchases on a "when-issued" basis
or purchases or sales on a "delayed delivery" basis. In some
cases, a forward commitment may be conditioned upon the
occurrence of a subsequent event, such as approval and
consummation of a merger, corporate reorganization or debt
restructuring (i.e., a "when, as and if issued" trade).
When forward commitment transactions are negotiated, the
price is fixed at the time the commitment is made, but delivery
and payment for the securities take place at a later date.
Normally, the settlement date occurs within two months after the
transaction, but the Fund may negotiate settlements beyond two
months. Securities purchased or sold under a forward commitment
are subject to market fluctuation, and no interest or dividends
accrue to the purchaser prior to the settlement date.
When-issued securities and forward commitments may be sold
prior to the settlement date, but the Fund enters into when-
issued and forward commitments only with the intention of
38
<PAGE>
actually receiving securities or delivering them, as the case may
be. If the Fund chose to dispose of the right to acquire a when-
issued security prior to its acquisition or dispose of its right
to deliver or receive against a forward commitment, it may
realize a gain or incur a loss. Any significant commitment of
Fund assets to the purchase of securities on a "when, as and if
issued" basis may increase the volatility of the Fund's net asset
value. No forward commitments will be entered into if, as a
result, the Fund's aggregate commitments under the transactions
would be more than 30% of its total assets. In the event the
other party to a forward commitment transaction were to default,
the Fund might lose the opportunity to invest money at favorable
rates or to dispose of securities at favorable prices.
The Fund's custodian will maintain, in a segregated account
of the Fund, liquid assets having value equal to, or greater
than, any commitments to purchase securities on a forward
commitment basis and, with respect to forward commitments to sell
portfolio securities of the Fund, the portfolio securities
themselves.
Forward Foreign Currency Exchange Contracts. The Fund may
purchase or sell forward foreign currency exchange contracts to
attempt to minimize the risk of adverse changes in the
relationship between the U.S. dollar and other currencies. A
forward contract is an obligation to purchase or sell a specific
currency for an agreed price at a future date, and is
individually negotiated and privately traded.
The Fund may enter into a forward contract, for example, when
it enters into a contract for the purchase or sale of a security
denominated in a foreign currency in order to "lock in" the U.S.
dollar price of the security ("transaction hedge"). The Fund may
not engage in transaction hedges with respect to the currency of
a particular country to an extent greater than the aggregate
amount of the Fund's transactions in that currency. When the
Fund believes that a foreign currency may suffer a substantial
decline against the U.S. dollar, it may enter into a forward sale
contract to sell an amount of that foreign currency approximating
the value of some or all of the Fund's portfolio securities
denominated in such foreign currency; or when the Fund believes
that the U.S. dollar may suffer a substantial decline against a
foreign currency, it may enter into a forward purchase contract
to buy that foreign currency for a fixed dollar amount ("position
hedge"). The Fund will not position hedge with respect to a
particular currency to an extent greater than the aggregate
market value (at the time of making such sale) of the securities
held in its portfolio denominated or quoted in that currency.
Instead of entering into a position hedge, the Fund may, in the
alternative, enter into a forward contract to sell a different
foreign currency for a fixed U.S. dollar amount where the Fund
39
<PAGE>
believes that the U.S. dollar value of the currency to be sold
pursuant to the forward contract will fall whenever there is a
decline in the U.S. dollar value of the currency in which
portfolio securities of the Fund are denominated ("cross-hedge").
Unanticipated changes in currency prices may result in poorer
overall performance for the Fund than if it does not enter into
forward contracts.
The Fund's custodian will place liquid assets in a segregated
account of the Fund having a value equal to the aggregate amount
of the Fund's commitments under forward contracts entered into
with respect to position hedges and cross-hedges. If the value
of the securities placed in a segregated account declines,
additional cash or securities will be placed in the account on a
daily basis so that the value of the account will equal the
amount of the Fund's commitments with respect to such contracts.
As an alternative to maintaining all or part of the segregated
account, the Fund may purchase a call option permitting the Fund
to purchase the amount of foreign currency being hedged by a
forward sale contract at a price no higher than the forward
contract price or the Fund may purchase a put option permitting
the Fund to sell the amount of foreign currency subject to a
forward purchase contract at a price as high or higher than the
forward contract price. Unanticipated changes in currency prices
may result in poorer overall performance for the Fund than if it
had not entered into such contracts.
Hedging against a decline in the value of a currency does not
eliminate fluctuations in the prices of portfolio securities or
prevent losses if the prices of securities decline. These
transactions also preclude the opportunity for gain if the value
of the hedge currency should rise. Moreover, it may not be
possible for the Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to
sell the currency at a price above the anticipated devaluation
level.
Futures Contracts and Options on Futures Contracts. A "sale"
of a futures contract means the acquisition of a contractual
obligation to deliver the securities or foreign currency or other
commodity called for by the contract at a specified price on a
specified date. A "purchase" of a futures contract means the
incurring of an obligation to acquire the securities or foreign
currency or other commodity called for by the contract at a
specified price on a specified date. The purchaser of a futures
contract on an index agrees to take or make delivery of an amount
of cash equal to the difference between a specified dollar
multiple of the value of the index on the expiration date of the
contract ("current contract value") and the price at which the
contract was originally struck. No physical delivery of the
securities underlying the index is made.
40
<PAGE>
The Fund will purchase options on futures contracts written
or purchased that are traded on U.S. or foreign exchanges or
over-the-counter. These investment techniques will be used only
to hedge against anticipated future changes in market conditions
and interest or exchange rates which otherwise might either
adversely affect the value of the Fund's portfolio securities or
adversely affect the prices of securities which the Fund intends
to purchase at a later date.
The Fund will not enter into any futures contracts or options
on futures contracts if immediately thereafter the market values
of the outstanding futures contracts of the Fund and the
currencies and futures contracts subject to outstanding options
written by the Fund would exceed 50% of the market value of its
total assets.
The Fund's custodian will place liquid assets in a separate
account of the Fund having a value equal to the aggregate amount
of the Fund's commitments under futures contracts.
Illiquid Securities. The Fund may invest up to 5% of its
total assets in illiquid securities. Illiquid securities
generally include (i) direct placements or other securities that
are subject to legal or contractual restrictions on resale or for
which there is no readily available market (e.g., when trading in
the security is suspended or, in the case of unlisted securities,
when market makers do not exist or will not entertain bids or
offers), including many individually negotiated currency swaps
and any assets used to cover currency swaps, (ii) over-the-
counter options and assets used to cover over-the-counter
options, and (iii) repurchase agreements not terminable within
seven days.
Because of the absence of a trading market for illiquid
securities, the Fund may not be able to realize the price at
which they are carried on the Fund's books upon sale. Alliance
will monitor the illiquidity of the Fund's investments in such
securities. To the extent permitted by applicable law,
securities that may be resold pursuant to Rule 144A of the
Securities Act will not be treated as "illiquid" for purposes of
the foregoing restriction so long as such securities meet
liquidity guidelines established by the Fund's Directors.
The Fund may not be able to readily sell securities for which
there is no ready market. To the extent that these securities
are foreign securities, there is no law in many of the countries
in which the Fund may invest similar to the Securities Act
requiring an issuer to register the sale of securities with a
governmental agency or imposing legal restrictions on resales of
securities, either as to length of time the securities may be
41
<PAGE>
held or manner of resale. There may, however, be contractual
restrictions on resale of securities.
Loans of Portfolio Securities. The Fund may make secured
loans of its portfolio securities to entities with which it can
enter into repurchase agreements, provided that cash and/or
liquid high grade debt securities equal to at least 100% of the
market value of the securities loaned are deposited and
maintained by the borrower with the Fund. The risk in lending
portfolio securities, as with other extensions of credit,
consists of the possible loss of rights in the collateral should
the borrower fail financially. In determining whether to lend
securities to a particular borrower, Alliance will consider all
relevant facts and circumstances, including the creditworthiness
of the borrower. While securities are on loan, the borrower will
pay the Fund any income from the securities. The Fund may invest
any cash collateral in portfolio securities and earn additional
income, or receive an agreed-upon amount of income from a
borrower who has delivered equivalent collateral. The Fund will
have the right to regain record ownership of loaned securities to
exercise beneficial rights such as voting rights, subscription
rights, and rights to dividends, interest or distributions. The
Fund may pay reasonable finders', administrative, and custodial
fees in connection with a loan. The Fund will not lend portfolio
securities in excess of 30% of the value of its total assets nor
will the Fund lend its portfolio securities to any officer,
director, employee or affiliate of the Fund or of the Adviser.
Options on Securities. An option gives the purchaser of the
option, upon payment of a premium, the right to deliver to (in
the case of a put) or receive from (in the case of a call) the
writer of the option a specified amount of a security on or
before a fixed date at a predetermined price. A call option
written by the Fund is "covered" if the Fund owns the underlying
security, has an absolute and immediate right to acquire that
security without additional cash consideration (or for additional
cash consideration held in a segregated account by its custodian)
upon conversion or exchange of another security it holds, or
holds a call option on the underlying security with an exercise
price equal to or less than that of the call option it has
written or is greater than the exercise price of the call written
if the difference is maintained by the Fund in liquid assets in a
segregated account with its custodian. A put option written by
the Fund is "covered" if the Fund maintains liquid assets with a
value equal to the exercise price in a segregated account with
its custodian, or else holds a put on the underlying securities
with an exercise price equal to or greater than that of the put
option it has written.
A call option is for cross-hedging purposes if the Fund does
not own the underlying security and is designed to provide a
42
<PAGE>
hedge against a decline in value in another security which the
Fund owns or has the right to acquire. In such circumstances,
the Fund collateralizes its obligation under the option by
maintaining in a segregated account with the Fund's custodian
liquid assets in an amount not less than the market value of the
underlying security, marked to market daily.The Fund will only
write "covered" put and call options unless such options are for
cross-hedging purposes. The Fund would write a call option for
cross-hedging purposes, instead of writing a covered call option,
when the premium to be received from the cross-hedge transaction
would exceed that which would be received from writing a covered
call option, while at the same time achieving the desired hedge.
In purchasing an option, the Fund would be in a position to
realize a gain if, during the option period, the price of the
underlying security increased (in the case of a call) or
decreased (in the case of a put) by an amount in excess of the
premium paid; otherwise the Fund would experience a loss equal to
the premium paid for the option.
If an option written by the Fund were exercised, the Fund
would be obligated to purchase (in the case of a put) or sell (in
the case of a call) the underlying security at the exercise
price. The risk involved in writing an option is that, if the
option is exercised, the underlying security would then be
purchased or sold by the Fund at a disadvantageous price.
Entering into a closing transaction (i.e., by disposing of the
option prior to its exercise) could reduce these risks. The Fund
retains the premium received from writing a put or call option
whether or not the option is exercised. The writing of call
options could result in increases in the Fund's portfolio
turnover rate, especially during periods when market prices of
the underlying securities appreciate.
The Fund will purchase or write options on securities of the
types in which it is permitted to invest in privately negotiated
(i.e., over-the-counter) transactions only with investment
dealers and other financial institutions (such as commercial
banks or savings and loan institutions) deemed creditworthy by
Alliance. Alliance has adopted procedures for monitoring the
creditworthiness of such entities. Options purchased or written
by the Fund in negotiated transactions are illiquid and it may
not be possible for the Fund to effect a closing transaction at
an advantageous time.
Options on Securities Indices. An option on a securities
index is similar to an option on a security except that, rather
than the right to take or make delivery of a security at a
specified price, an option on a securities index gives the holder
the right to receive, upon exercise of the option, an amount of
cash if the closing level of the chosen index is greater than (in
43
<PAGE>
the case of a call) or less than (in the case of a put) the
exercise price of the option.
Options on Foreign Currencies. The Fund may purchase and
write put and call options on foreign currencies for the purpose
of protecting against declines in the U.S. dollar value of
foreign currency denominated portfolio securities and against
increases in the U.S. dollar cost of securities to be acquired.
As in the case of other kinds of options, the writing of an
option on a foreign currency constitutes only a partial hedge, up
to the amount of the premium received, and the Fund could be
required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The
purchase of an option on a foreign currency may constitute an
effective hedge against fluctuations in exchange rates, although,
in the event of rate movements adverse to the Fund's position,
the Fund may forfeit the entire amount of the premium plus
related transaction costs.
Repurchase Agreements. The Fund may enter into repurchase
agreements pertaining to U.S. Government Securities with member
banks of the Federal Reserve System or "primary dealers" in such
securities. A repurchase agreement arises when a buyer purchases
a security and simultaneously agrees to resell it to the vendor
at an agreed-upon future date, normally a day or a few days
later. The resale price is greater than the purchase price,
reflecting an agreed-upon interest rate for the period the
buyer's money is invested in the security. Such agreements permit
the Fund to keep all of its assets at work while retaining
"overnight" flexibility in pursuit of investments of a longer-
term nature. The Fund requires continual maintenance by its
custodian for its account in the Federal Reserve/Treasury Book
entry System of collateral in an amount equal to, or in excess
of, the resale price. If a vendor defaults on its repurchase
obligation, the Fund would suffer a loss to the extent that the
proceeds from the sale of the collateral were less than the
repurchase price. If a vendor goes bankrupt, the Fund might be
delayed in, or be prevented from, selling the collateral for its
benefit.
Reverse Repurchase Agreements and Dollar Rolls. Reverse
repurchase agreements involve sales by the Fund of portfolio
assets concurrently with an agreement by the Fund to repurchase
the same assets at a later date at a fixed price. During the
reverse repurchase agreement period, the Fund continues to
receive principal and interest payments on these securities.
Generally, the effect of such a transaction is that the Fund can
recover all or most of the cash invested in the portfolio
securities involved during the term of the reverse repurchase
agreement, while it will be able to keep the interest income
associated with those portfolio securities. Such transactions
44
<PAGE>
are only advantageous if the interest cost to the Fund of the
reverse repurchase transaction is less than the cost of otherwise
obtaining the cash.
Dollar rolls involve sales by the Fund of securities for
delivery in the current month and the Fund's simultaneously
contracting to repurchase substantially similar (same type and
coupon) securities on a specified future date. During the roll
period, the Fund forgoes principal and interest paid on the
securities. The Fund is compensated by the difference between
the current sales price and the lower forward price for the
future purchase (often referred to as the "drop") as well as by
the interest earned on the cash proceeds of the initial sale.
The Fund will establish a segregated account with its
custodian in which it will maintain liquid assets equal in value
to its obligations in respect of reverse repurchase agreements
and dollar rolls. Reverse repurchase agreements and dollar rolls
involve the risk that the market value of the securities the Fund
is obligated to repurchase under the agreement may decline below
the repurchase price. In the event the buyer of securities under
a reverse repurchase agreement or dollar roll files for
bankruptcy or becomes insolvent, the Fund's use of the proceeds
of the agreement may be restricted pending a determination by the
other party, or its trustee or receiver, whether to enforce the
Fund's obligation to repurchase the securities. Reverse
repurchase agreements and dollar rolls are speculative techniques
and are considered borrowings by the Fund.
Rights and Warrants. The Fund will invest in rights or
warrants only if the underlying equity securities themselves are
deemed appropriate by Alliance for inclusion in the Fund's
portfolio. Rights and warrants entitle the holder to buy equity
securities at a specific price for a specific period of time.
Rights are similar to warrants except that they have a
substantially shorter duration. Rights and warrants may be
considered more speculative than certain other types of
investments in that they do not entitle a holder to dividends or
voting rights with respect to the underlying securities nor do
they represent any rights in the assets of the issuing company.
The value of a right or warrant does not necessarily change with
the value of the underlying securities, although the value of a
right or warrant may decline because of a decrease in the value
of the underlying stock, the passage of time, or a change in
perception as to the potential of the underlying stock, or any
combination of these factors.
If the market price of the underlying security is below the
exercise price of the warrant on the expiration date, the warrant
will expire worthless. Moreover, a right or warrant ceases to
have value if it is not exercised prior to the expiration date.
45
<PAGE>
Short Sales. The Fund will utilize short selling in order to
attempt both to protect its portfolio against the effects of
potential downtrends in the securities markets and as a means of
enhancing its overall performance. In identifying short selling
opportunities, Alliance's Large Cap Growth Group will use the
fundamental analysis and investment research strategy described
above to identify a small group of companies that it believes may
decline in price as a result of fundamental or market
developments. The Fund is permitted to engage in short sales of
its securities with respect to up to 30% of its total assets.
A short sale is a transaction in which the Fund sells a
security it does not own but has borrowed in anticipation that
the market price of that security will decline. The Fund may be
required to pay a fee to borrow the security and to pay over to
the lender any payments received on the security.
If the price of the security sold short increases between the
time of the short sale and the time the Fund replaces the
borrowed security, the Fund will incur a loss; conversely, if the
price declines, the Fund will realize a capital gain. Although
the Fund's gain is limited by the price at which it sold the
security short, its potential loss is unlimited.
In order to defer realization of gain or loss for U.S.
federal income tax purposes, the Fund may also make short sales
"against the box". In this type of short sale, at the time of
the sale, the Fund owns or has the immediate and unconditional
right to acquire at no additional cost the identical security.
Standby Commitment Agreements. Standby commitment agreements
commit the Fund, for a stated period of time, to purchase a
stated amount of a security that may be issued and sold to the
Fund at the option of the issuer. The price and coupon of the
security are fixed at the time of the commitment. At the time of
entering into the agreement, the Fund is paid a commitment fee,
regardless of whether the security ultimately is issued,
typically equal to approximately 0.5% of the aggregate purchase
price of the security the Fund has committed to purchase. The
Fund will enter into such agreements only for the purpose of
investing in the security underlying the commitment at a yield
and price considered advantageous to the Fund and unavailable on
a firm commitment basis. The Fund will not enter into a standby
commitment with a remaining term in excess of 45 days and will
limit its investment in such commitments so that the aggregate
purchase price of the securities subject to the commitments will
not exceed 50% of its assets taken at the time of making the
commitment. The Fund will at all times maintain a segregated
account with its custodian of liquid assets in an aggregate
amount equal to the purchase price of the securities underlying
the commitment.
46
<PAGE>
There is no guarantee that the securities subject to a
standby commitment will be issued, and the value of the security,
if issued, on the delivery date may be more or less than its
purchase price. Since the issuance of the security underlying
the commitment is at the option of the issuer, the Fund will bear
the risk of capital loss in the event the value of the security
declines and may not benefit from an appreciation in the value of
the security during the commitment period if the issuer decides
not to issue and sell the security to the Fund.
Stock Index Futures. The Fund may purchase and sell stock
index futures as a hedge against movements in the equity markets.
There are several risks in connection with the use of stock index
futures by the Fund as a hedging device. One risk arises because
of the imperfect correlation between movements in the price of a
stock index future and movements in the price of the securities
which are the subject of the hedge. The price of a stock index
future may move more than or less than the price of the
securities being hedged. If the price of a stock index future
moves less than the price of the securities which are the subject
of the hedge, the hedge will not be fully effective but, if the
price of the securities being hedged has moved in an unfavorable
direction, the Fund would be in a better position than if it had
not hedged at all. If the price of the securities being hedged
has moved in a favorable direction, this advantage will be
partially offset by the loss on the index futures contract. If
the price of the index future moves more than the price of the
stock, the Fund will experience either a loss or gain on the
futures contract which will not be completely offset by movements
in the price of the securities which are subject to the hedge.
To compensate for the imperfect correlation of movements in
the price of securities being hedged and movements in the price
of a stock index future, the Fund may buy or sell stock index
futures contracts in a greater dollar amount than the dollar
amount of securities being hedged if the volatility over a
particular time period of the prices of such securities has been
greater than the volatility over such time period of the stock
index, or if otherwise deemed to be appropriate by Alliance.
Conversely, the Fund may buy or sell fewer stock index futures
contracts if the volatility over a particular time period of the
prices of the securities being hedged is less than the volatility
over such time period of the stock index, or it is otherwise
deemed to be appropriate by Alliance. It is also possible that,
where the Fund has sold futures to hedge its portfolio against a
decline in the market, the market may advance and the value of
securities held in the Fund may decline. If this occurred, the
Fund would lose money on the futures and also experience a
decline in value in its portfolio securities. However, over time
the value of a diversified portfolio should tend to move in the
same direction as the market indices upon which the index futures
47
<PAGE>
are based, although there may be deviations arising from
differences between the composition of the Fund and the stocks
comprising the index.
Where a stock index futures contract is purchased to hedge
against a possible increase in the price of stock before the Fund
is able to invest its cash (or cash equivalents) in stocks (or
options) in an orderly fashion, it is possible that the market
may decline instead. If the Fund then concludes not to invest in
stock or options at that time because of concern as to possible
further market decline or for other reasons, the Fund will
realize a loss on the futures contract that is not offset by a
reduction in the price of securities purchased.
In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in stock
index futures and the portion of the portfolio being hedged, the
price of stock index futures may not correlate perfectly with
movement in the stock index due to certain market distortions.
Rather than meeting additional margin deposit requirements,
investors may close futures contracts through offsetting
transactions which could distort the normal relationship between
the index and futures markets. From the point of view of
speculators, the deposit requirements in the futures market are
less onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures
market may also cause temporary price distortions. Due to the
possibility of price distortion in the futures market, and
because of the imperfect correlation between the movements in a
stock index and movements in the price of stock index futures, a
correct forecast of general market trends by the investment
adviser may still not result in a successful hedging transaction
over a short time frame.
Positions in stock index futures may be closed out only on an
exchange or board of trade which provides a secondary market for
such futures. Although the Fund intends to purchase or sell
futures only on exchanges or boards of trade where there appear
to be active secondary markets, there is no assurance that a
liquid secondary market on any exchange or board of trade will
exist for any particular futures contract or at any particular
time. In such event, it may not be possible to close a futures
investment position, and in the event of adverse price movements,
the Fund would continue to be required to make daily cash
payments of variation margin. However, in the event futures
contracts have been used to hedge portfolio securities, such
securities will not be sold until the futures contract can be
terminated. In such circumstances, an increase in the price of
the securities, if any, may partially or completely offset losses
on the futures contract. As described above, however, there is
no guarantee that the price of the securities will in fact
48
<PAGE>
correlate with the price movements in the futures contract and
thus provide an offset on a futures contract.
General. The successful use of the foregoing investment
practices draws upon Alliance's special skills and experience
with respect to such instruments and usually depends on
Alliance's ability to forecast price movements or currency
exchange rate movements correctly. Should prices or exchange
rates move unexpectedly, the Fund may not achieve the anticipated
benefits of the transactions or may realize losses and thus be in
a worse position than if such strategies had not been used.
Unlike many exchange-traded futures contracts and options on
futures contracts, there are no daily price fluctuation limits
with respect to options on currencies and forward contracts, and
adverse market movements could therefore continue to an unlimited
extent over a period of time. In addition, the correlation
between movements in the prices of such instruments and movements
in the prices of the securities and currencies hedged or used for
cover will not be perfect and could produce unanticipated losses.
The Fund's ability to dispose of its positions in futures
contracts, options and forward contracts depends on the
availability of liquid markets in such instruments. Markets in
options and futures with respect to a number of types of
securities and currencies are relatively new and still
developing, and there is no public market for forward contracts.
It is impossible to predict the amount of trading interest that
may exist in various types of futures contracts, options and
forward contracts. If a secondary market does not exist with
respect to an option purchased or written by the Fund, it might
not be possible to effect a closing transaction in the option
(i.e., dispose of the option) with the result that (i) an option
purchased by the Fund would have to be exercised in order for the
Fund to realize any profit and (ii) the Fund may not be able to
sell portfolio securities or currencies covering an option
written by the Fund until the option expires or it delivers the
underlying security, currency or futures contract upon exercise.
Therefore, no assurance can be given that the Fund will be able
to utilize these instruments effectively. In addition, the
Fund's ability to engage in options and futures transactions may
be limited by tax considerations and the use of certain hedging
techniques may adversely impact the characterization of income to
the Fund for U.S. federal income tax purposes.
Future Developments. The Fund may, following written notice
to its stockholders, take advantage of other investment practices
that are not currently contemplated for use by the Fund or are
not available but may yet be developed, to the extent such
investment practices are consistent with the Fund's investment
objective and legally permissible for the Fund. Such investment
49
<PAGE>
practices, if they arise, may involve risks that exceed those
involved in the activities described above.
Temporary Defensive Position. For temporary defensive
purposes, the Fund may reduce its position in equity securities
and invest in, without limit, certain types of short-term,
liquid, high-grade or high quality debt securities. These
securities may include U.S. Government securities, qualifying
bank deposits, money market instruments, prime commercial paper
and other types of short-term debt securities, including notes
and bonds. While the Fund is investing for temporary defensive
purposes, it may not meet its investment objective.
Portfolio Turnover. The portfolio turnover rate for the Fund
is included in the Financial Highlights section. The Fund is
actively managed and, in some cases in response to market
conditions, the Fund's portfolio turnover may exceed 100%. A
higher rate of portfolio turnover increases brokerage and other
expenses, which must be borne by the Fund and its stockholders.
High portfolio turnover also may result in realization of
substantial net short-term capital gains, which, when
distributed, are taxable to stockholders.
Investment Restrictions
The Fund has adopted certain fundamental investment policies
listed below, which may not be changed without the approval of
its stockholders. The percentage limitations set forth below, as
well as those described elsewhere in this Prospectus, apply only
at the time an investment is made or other relevant action is
taken by the Fund.
The Fund may not:
1. Purchase more than 10% of the outstanding voting
securities of any one issuer;
2. Invest 25% or more of its total assets in securities of
issuers conducting their principal business activities
in the same industry, except that this restriction does
not apply to U.S. Government securities;
3. Make loans except through (a) the purchase of debt
obligations in accordance with its investment objective
and policies; (b) the lending of portfolio securities;
or (c) the use of repurchase agreements;
4. Borrow money or issue senior securities except the Fund
may, in accordance with the provisions of the 1940 Act,
(i) borrow from a bank or other entity in a privately
arranged transaction or through reverse repurchase
50
<PAGE>
agreements or dollar rolls if after such borrowing there
is asset coverage of at least 300% as defined in the
1940 Act and (ii) borrow for temporary purposes in an
amount not exceeding 5% of the value of the total assets
of the Fund;
5. Pledge, hypothecate, mortgage or otherwise encumber its
assets, except to secure permitted borrowings;
6. Invest in companies for the purpose of exercising
control; or
7. (a) Purchase or sell real estate, except that it may
purchase and sell securities of companies which deal in
real estate or interests therein and securities that are
secured by real estate, provided such securities are
securities of the type in which the Fund may invest;
(b) purchase or sell commodities or commodity contracts,
including futures contracts (except foreign currencies,
foreign currency options and futures, options and
futures on securities and securities indices and forward
contracts or contracts for the future acquisition or
delivery of securities and foreign currencies and
related options on futures contracts and other similar
contracts); (c) invest in interests in oil, gas, or
other mineral exploration or development programs;
(d) purchase securities on margin, except for such
short-term credits as may be necessary for the clearance
of transactions; and (e) act as an underwriter of
securities, except that the Fund may acquire restricted
securities under circumstances in which, if such
securities were sold, the Fund might be deemed to be an
underwriter for purposes of the Securities Act.
51
<PAGE>
RISK FACTORS AND SPECIAL CONSIDERATIONS
Investment in the Fund is subject to a number of risks and
special considerations, including the following:
Market Risk
This is the risk that the value of the Fund's investments
will fluctuate as the stock or bond markets fluctuate and that
prices overall will decline over short or longer-term periods.
Credit Risk
This is the risk that the issuer of a security will be unable
or unwilling to make timely payments of interest or principal, or
to otherwise honor its obligations. The degree of risk for a
particular security may be reflected in its credit rating.
Interest Rate Risk
This is the risk that changes in interest rates will affect
the value of a Fund's investments in income-producing, fixed-
income (i.e., debt) securities. Increases in interest rates may
cause the value of a Fund's investments to decline.
Dilution
Upon completion of the offer, stockholders who do not fully
exercise their rights will own a smaller proportional interest in
the Fund than would be the case if the offer had not been made.
The subscription price per share is [__]% of the lower of (1) the
average of the last reported sales price of a Fund share on the
NYSE for the five trading days ending with the day the offer
expires and (2) the NAV as of the close of trading on the NYSE on
that date. The subscription price is lower than the Fund's NAV.
Any rights offering priced at a discount to the Fund's NAV
entails some dilution in the NAV. Dilution is the decrease in
NAV that results from the Fund's issuance of new shares at a
discount to NAV when the rights are exercised and from the Fund's
payment of the expenses of the offer. The offer will result in a
dilution of NAV for all Fund stockholders, which will
disproportionately affect stockholders who do not exercise their
rights. Although it is not possible to state precisely the
amount of the decrease in NAV because it is not known at the date
of this Prospectus how many shares will be subscribed for, or
what the subscription price will be, the dilution could be
substantial. For example, assuming all the rights are exercised
at the estimated subscription price of $[____] which is [__]% of
the Fund's NAV as of [________], 1999 and after deducting all
expenses related to the issuance of the shares, the Fund's NAV
per share would be reduced by approximately $[____] per share or
52
<PAGE>
[__]%. This dilution of NAV will disproportionately affect
stockholders who do not exercise their rights.
Foreign Securities
Alliance will select investments of non-U.S. companies on the
basis of the same growth potential and other characteristics as
investments in U.S. companies. Investment in equity securities
of non-U.S. companies, however, involves special considerations
not generally associated with a portfolio invested only in equity
securities of U.S. companies. The economies of individual
foreign countries may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross domestic product
or gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments
position. Issuers of securities in foreign jurisdictions are
generally not subject to the same degree of regulation as are
U.S. issuers with respect to such matters as insider trading
rules, restrictions on market manipulation, stockholder proxy
requirements and timely disclosure of information. The
reporting, accounting and auditing standards of foreign countries
may differ, in some cases significantly, from U.S. standards in
important respects and less information may be available to
investors in foreign securities than to investors in U.S.
securities. Substantially less information is publicly available
about certain non-U.S. issuers than is available about U.S.
issuers. Nationalization, expropriation or confiscatory
taxation, currency blockage, political changes, government
regulation, political or social instability or diplomatic
developments could affect adversely the economy of a foreign
country or the Fund's investments in such country. In the event
of expropriation, nationalization or other confiscation, the Fund
could lose its entire investment in the country involved. In
addition, laws in foreign countries governing business
organizations, bankruptcy and insolvency may provide less
protection to security holders such as the Fund than that
provided by U.S. laws. The Fund is also subject to currency risk
which is the risk that fluctuations in the exchange rates between
the U.S. Dollar and foreign currencies may negatively affect the
value of the Fund's investments.
Management Risk
The Fund is subject to management risk because it is an
actively managed investment fund. Alliance will apply its
investment techniques and risk analyses in making investment
decisions for the Fund, but there is no guarantee that its
techniques will produce the intended result.
53
<PAGE>
Derivative and Leverage Risk
The Fund may, when Alliance believes that market conditions
are appropriate, utilize the market technique of borrowing in
order to take full advantage of available investment
opportunities. The Fund may also make substantial use of
derivatives and employ specialized trading techniques such as
short sales, options, futures and forwards to increase its
exposure to certain selected securities. The Fund may, although
it has no present intention of doing so, borrow money from a bank
or other entity in a privately arranged transaction to increase
the money available to the Fund to invest in securities when the
Fund believes that the return from the securities financed will
be greater than the interest expense paid on the borrowing. The
Fund also may borrow to finance repurchases of or tender offers
for its shares when the Fund deems it desirable in order to avoid
the untimely disposition of portfolio securities. Such
borrowings involve additional risk to the Fund, since the
interest expense may be greater than the income from or
appreciation of the securities carried by the borrowings and
since the value of the securities carried may decline below the
amount borrowed. Alliance employs these trading techniques
speculatively to enhance returns and not merely as hedging tools.
These techniques are riskier than many investment strategies and
will result in greater volatility for the Fund, particularly in
periods of market declines.
The 1940 Act requires the Fund to maintain "asset coverage"
of not less than 300% of its "senior securities representing
indebtedness," as those terms are defined and used in the 1940
Act. In addition, the Fund may not make any cash distributions
to its stockholders if, after the distribution, there would be
less than 300% asset coverage of a senior security representing
indebtedness for borrowings (excluding for this purpose certain
evidences of indebtedness made by a bank or other entity and
privately arranged, and not intended to be publicly distributed).
This limitation on the Fund's ability to make distributions could
under certain circumstances impair the Fund's ability to maintain
its qualification for taxation as a "regulated investment
company".
Any investment gains made with the proceeds obtained from
borrowings in excess of interest paid on the borrowings will
cause the net income per share and the NAV of the Fund's common
stock to be greater than would otherwise be the case. On the
other hand, if the investment performance of the additional
securities purchased fails to cover their cost (including any
interest paid on the money borrowed) to the Fund, then the net
income per share and NAV of the Fund's shares will be less than
would otherwise be the case. This is the speculative factor
known as leverage.
54
<PAGE>
Borrowing is a form of leverage and as such will pose certain
risks for the Fund's stockholders, including the possibility of
higher volatility of both the NAV and market value of the Fund's
shares. There can be no assurance that the Fund will be able to
realize a higher net return on its investment portfolio than the
then current interest rate on any borrowing. Any decline in the
value of the Fund's assets will be borne entirely by stockholders
in the form of reductions in the Fund's NAV, and any requirement
that the Fund sell assets at a loss in order to repay any
borrowing or for other reasons would make it more difficult for
the NAV to recover. Accordingly, the effect of leverage in a
declining market may result in a greater decline in the NAV of
the Fund's share than if the Fund were not leveraged, which may
be reflected in a greater decline in the market price of the
Fund's shares.
Anti-takeover provisions of the Fund's Articles of Incorporation
and By-Laws may limit certain third-party actions.
The Fund's Articles of Incorporation and By-Laws referred to
in this Prospectus as the charter documents, contain certain
"anti-takeover" provisions that limit (i) the ability of other
entities or persons to acquire control of the Fund, (ii) the
Fund's freedom to engage in certain transactions, and (iii) the
ability of the Board or the Fund's stockholders to amend the
charter documents or to effect changes in the Fund's management.
These provisions also may dissuade third parties from making
offers to purchase shares at a premium over market price.
Discount From NAV
Shares of closed-end funds frequently trade at a market price
that is less than the value of the net assets attributable to
those shares. The possibility that shares of the Fund will trade
at a discount from NAV is a separate risk from the risk that the
Fund's NAV will decrease. In some cases, shares of closed-end
funds may trade at a premium to NAV. The Fund's shares have
traded in the market above, at, and below NAV since the
commencement of the Fund's operations. The Fund cannot predict
whether its shares will trade below, at, or above NAV in the
future.
The risk of purchasing shares of a closed-end investment
company that might trade at a discount is more pronounced for
investors who wish to sell their shares in a relatively short
period of time. For those investors, realization of gain or loss
on their investments is likely to be more dependent upon the
existence of a premium or discount than upon portfolio
performance.
55
<PAGE>
Non-Diversified Status
The Fund is a "non-diversified" investment company, which
means the Fund is not limited in the proportion of its assets
that may be invested in the securities of a single issuer.
Because the Fund, as a non-diversified investment company, may
invest in a smaller number of individual issuers than a
diversified investment company, an investment in the Fund may,
under certain circumstances, present greater risk to an investor
than an investment in a diversified investment company.
Quarterly Distributions
The Fund has implemented a quarterly distribution policy
pursuant to which the Fund distributes quarterly each year to
stockholders (i) with respect to each of the first three calendar
quarters of the year, an amount equal to 2.5% of the Fund's NAV
determined as of the beginning of the quarter, and (ii) with
respect to the fourth calendar quarter of each year, an amount
equal to at least 2.5% of the Fund's NAV as of the beginning of
that quarter. If distributions for any quarter exceed the Fund's
net investment income and net realized short-term capital gains,
the difference would be treated as distributions of the Fund's
net realized long-term capital gains and, to the extent of the
amount of any distributions in excess of such gains, as a return
of the stockholder's capital. The reduction of the Fund's assets
by the amount of the excess will have the likely effect of
increasing the Fund's expense ratio. In order to make
distributions, the Fund may have to sell a portion of its
investment portfolio at a time when independent investment
judgment might not suggest that action. The Fund's final
distribution for each calendar year will include any remaining
undistributed net investment income and net realized short-term
capital gains and long-term capital gains realized during the
year, provided that if the Fund's undistributed net investment
income and net realized short-term and long-term capital gains
for the year exceeded the minimum required amount for the
previous quarters' distributions as described above, the Fund
might choose not to distribute all or a portion of such excess
equal to the Fund's net realized long-term capital gains for the
year.
Based on information provided by the Adviser, the Board of
Directors believes that the offer will not result in a change in
the Fund's current level of dividends per share for the
foreseeable future. There can be no assurance, however, that the
Fund will be able to maintain its current level of dividends per
share, and the Board of Directors may, in its sole discretion,
change the Fund's current dividend policy or its current level of
dividends per share in response to market or other conditions.
56
<PAGE>
Year 2000
Many computer systems and applications in use today
process transactions using two-digit date fields for the year of
the transaction, rather than the full four digits. If these
systems are not modified or replaced, transactions occurring
after 1999 could be processed as year "1900", which could result
in processing inaccuracies and computer system failures. This is
commonly known as the Year 2000 problem. Should any of computer
systems employed by the Fund's major service providers fail to
process year 2000 related information properly, that could have a
significant negative impact on the Fund's operations and the
services that are provided to the Fund's stockholders. In
addition, to the extent that the operations of issuers of
securities held by the Fund are impaired by the Year 2000
problem, or prices of securities held by the Fund decline as a
result of real or perceived problems relating to the Year 2000,
the value of the Fund's shares may be materially affected.
With respect to the Year 2000 problem, the Fund has been
advised that Alliance , began to address the Year 2000 issue
several years ago in connection with the replacement or upgrading
of certain computer systems and applications. During 1997,
Alliance began a formal Year 2000 initiative, which established a
structured and coordinated process to deal with the Year 2000
issues. Alliance reports that it has completed its assessment of
the Year 2000 issues on its domestic and international computer
systems and applications. Currently, management of Alliance
expects that the required modifications for the majority of its
significant systems and applications that will be in use on
January 1, 2000, will be completed and tested in early 1999.
Full integration testing of these systems and testing of
interfaces with third-party suppliers will continue through 1999.
At this time, management of Alliance believes that the costs
associated with resolving this issue will not have a material
adverse effect on its operations or on its ability to provide the
level of services it currently provides to the Fund.
The Fund and Alliance have been advised by the Fund's
custodian, transfer agent, dividend paying agent and registrar,
The Bank of New York, and the Fund's shareholder servicing agent,
PaineWebber Incorporated that they are each in the process of
reviewing their systems with the same goals. As of the date of
this Prospectus, the Fund and Alliance have no reason to believe
that these entities will be unable to achieve these goals.
MANAGEMENT OF THE FUND
The Investment Adviser
The Fund's Adviser, Alliance Capital Management L.P., 1345
Avenue of the Americas, New York, New York 10105, is a leading
international investment manager supervising client accounts with
57
<PAGE>
assets as of March 31, 1999 totaling more than $301 billion (of
which approximately $[__] billion represented the assets of
investment companies). Alliance's clients are primarily major
corporate employee benefit funds, public employee retirement
systems, investment companies, foundations and endowment funds.
The [__] registered investment companies managed by Alliance
comprising more than [__] separate investment portfolios
currently have over 4 million shareholder accounts. As of
March 31, 1999 the Adviser was retained as an investment manager
for employee benefit plan assets of 30 of the Fortune 100
companies.
The Adviser determines the composition of the Fund's
portfolio, places all orders for the purchase and sale of
securities and for other transactions, and oversees the
settlement of the Fund's securities and other portfolio
transactions. The Adviser also provides administrative services
to the Fund. These include, among other things, providing
officers and office space, preparing or assisting in preparing
materials for stockholder and regulatory bodies and overseeing
the provision to the Fund of custodial and accounting services.
The persons primarily responsible for the day-to day
management of the Fund are Alfred Harrison, Vice Chairman of
Alliance Capital Management Corporation and Michael J. Reilly,
Senior Vice President of Alliance Capital Management Corporation.
Both Messrs. Harrison and Reilly are members of Alliance's Large
Cap Growth Group and, as such, have had management responsibility
with respect to the Fund since its inception.
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"). ECI is a holding company
controlled by AXA a French insurance holding company which at
March 1, 1998, beneficially owned approximately 59% of the
outstanding voting shares of ECI. As of June 30, 1998, 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 57% of the issued
and outstanding units representing assignments of beneficial
ownership of limited partnership interests in the Adviser.
AXA is a holding company for an international group of
insurance and related financial services companies. AXA's
insurance operations include activities in life insurance,
property and casualty insurance and reinsurance. The insurance
operations are diverse geographically, with activities
58
<PAGE>
principally in Western Europe, North America and the Asia/Pacific
area. AXA 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, as of March 31, 1998,
more than 30% of the voting power of AXA was controlled directly
and indirectly by FINAXA, a French holding company. As of
March 31, 1998 approximately 74% of the voting power of FINAXA
was controlled directly and indirectly by four French mutual
insurance companies (the "Mutuelles AXA"), one of which, AXA
Assurances I.A.R.D. Mutuelle, itself controlled directly and
indirectly more than 42% of the voting power of FINAXA. Acting
as a group, the Mutuelles AXA control AXA and FINAXA.
Investment Advisory Agreement
The Advisory Agreement between the Fund and the Adviser
provides that the Adviser furnishes investment advice and
recommendations to the Fund. Under the Advisory Agreement, the
Adviser receives a basic fee at an annualized rate of 1.50% of
the Fund's average net assets and an adjustment to the basic fee
based on the investment performance of the Fund in relation to
the investment record of the Russell 1000 Growth Index (the
"Index") for certain prescribed periods as described below.
The Russell 1000 universe of securities is compiled by Frank
Russell Company and is segmented into two style indices, the
Russell 1000 Growth Index and the Russell 1000 Value Index, both
based on the capitalization-weighted median book-to-price of each
of the securities. At each reconstitution, the Russell 1000
constituents are ranked by their book-to-price ratio. Once so
ranked, the breakpoint for the two styles is determined by the
median market capitalization of the Russell 1000. Thus, those
securities falling within the top 50% of the cumulative market
capitalization (as ranked by descending book-to-price) become
members of the Russell 1000 Value index and the remaining 50%
become members of the Russell 1000 Growth Index. The Russell
1000 Growth Index is, accordingly, designed to include those
Russell 1000 securities with a greater-than-average growth
orientation. In contrast with the securities in the Russell 1000
Value Index, companies in the Russell 1000 Growth Index tend to
exhibit higher price-to-book and price-earnings ratios, lower
dividend yields and higher forecasted growth values. The Russell
1000 Growth Index reflects changes in market prices, and assumes
reinvestment of investment income.
The basic fee is a monthly fee equal to 1/12th of 1.5% (1.5%
on an annualized basis) of the average of the net assets of the
Fund at the end of each month included in the applicable
59
<PAGE>
performance period. The performance period is a rolling 36 month
period ending with the most recent calendar month. The basic fee
for each such month may be increased or decreased at the rate of
1/12th of .05% per percentage point, depending on the extent, if
any, by which the investment performance of the Fund, measured by
the percentage change in the Fund's NAV, exceeds by more than two
percentage points, or is exceeded by more than two percentage
points by, the percentage change in the investment record of the
Index for such performance period. The maximum increase or
decrease in the basic fee for any month may not exceed 1/12th of
.30%. Accordingly, for each month the maximum monthly fee as
adjusted for performance is 1/12th of 1.80% and is payable if the
investment performance of the Fund exceeded the percentage change
in the investment record of the Index by eight or more percentage
points for the performance period, and the minimum monthly fee
rate as adjusted for performance is 1/12th of 1.20% and is
payable if the percentage change in the investment record of the
Russell 1000 Growth Index exceeded the investment performance of
the Fund by eight or more percentage points for the performance
period.
The following table illustrates the full range of permitted
increases or decreases to the basic fee.
Difference Between
the Percentage change in
NAV of the Fund and
Percentage change in the Adjustment
Russell 1000 Growth to 1.50% Annual Fee
Index* Basic Fee Rate as Adjusted
___________________ __________ ________________
+8 +.30% 1.80%
+7 +.25% 1.75%
+6 +.20% 1.70%
+5 +.15% 1.65%
+4 +.10% 1.60%
+3 +.05% 1.55%
+/-2 0 1.50%
-3 -.05% 1.45%
-4 -.10% 1.40%
-5 -.15% 1.35%
-6 -.20% 1.30%
-7 -.25% 1.25%
-8 -.30% 1.20%
____________________
* Measured over the performance period, which will be a rolling
36-month period ending with the most recent calendar month.
60
<PAGE>
In calculating the investment performance of the Fund and the
Index, all dividends and distributions during the performance
period will treated as having been reinvested, and no effect will
be given to gain or loss resulting from any issuance, sale or
repurchase of the Fund's shares. Fractions of a percentage point
will be rounded to the nearer whole point (to the higher point if
exactly one-half).
For the fiscal years ended September 30, 1998, September 30,
1997 and September 30, 1996, the Fund paid total advisory fees to
the Adviser of $[___], $[____] and $[___], respectively.
The Adviser will benefit from the offer because the Adviser's
fee is based on the average of the net assets of the Fund at the
end of each month included in the applicable performance period.
It is not possible to state precisely the amount of additional
compensation the Adviser will receive as a result of the offer
because it is not known how many shares will be subscribed for
and because the proceeds of the offer will be invested in
additional portfolio securities which will fluctuate in value.
However, based on the estimated proceeds from the offer assuming
all the rights are exercised in full at the subscription price of
$[____] per share, the Adviser would receive additional annual
advisory fees based on the basic fee of approximately $[________]
as a result of the increase in assets under management over the
Fund's current assets under management.
The Fund bears all costs of its operation other than those
incurred by the Adviser under the Investment Advisory Agreement.
In particular, the Fund pays: brokerage and commission expenses;
federal, state, local (if any) and foreign taxes, including issue
and transfer taxes, incurred by or levied on the Fund; interest
charges on borrowings; the organizational and offering expenses
of the Fund; fees and expenses of registering or qualifying the
shares of the Fund under the appropriate federal and state
securities laws; fees and expenses of listing and maintaining the
listing of the Fund's shares on any securities exchange; expenses
of printing and distributing reports to stockholders; costs of
proxy solicitation; fees, charges and expenses of the Fund's
administrator, custodian, registrar, transfer and dividend paying
agent and shareholder servicing agent; compensation of directors,
officers and employees who do not devote any part of their time
to the affairs of the Adviser or its affiliates; legal and
auditing expenses; the cost of stock certificates representing
the Fund's shares; and costs of stationery and supplies. Under
the Investment Advisory Agreement, the Adviser provides the Fund
with office space, facilities and business equipment and provides
the services of executive and clerical personnel for
administering certain of the other affairs of the Fund. The
Adviser compensates Directors of the Fund if such persons are
employed by the Adviser or its affiliates.
61
<PAGE>
The Investment Advisory Agreement provides that the Adviser
shall only be liable for willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties and obligations
under the Investment Advisory Agreement.
Directors And Officers
The Directors and officers of the Fund, and their addresses,
ages and principal occupations for at least the past five years
are set forth below. Unless otherwise specified, the address of
each of the following persons is 1345 Avenue of the Americas, New
York, New York 10105.
Directors
Name and Address Positions Held
with Registrant Age Principal Occupations
During Past 5 Years
_____________________________ _______________ ___ ________________________
John D. Carifa* Chairman of the 54 President and Chief
Board and Operating Officer and
President a Director of Alliance
Capital Management
Corporation ("ACMC"),
the general partner of
the Adviser, with which
he has been associated
since prior to 1994
Ruth Block Director 68 Formerly an Executive
P.O. Box 4623 Vice-President and
Stamford, Connecticut 06903 Chief Insurance Officer
of The Equitable Life
Assurance Society of the
United States. She is a
Director of Ecolab
Incorporated (specialty
chemicals) and BP Amoco
Corporation (oil and
gas).
David H. Dievler Director 69 Independent
P.O. Box 167 Consultant Formerly a
Spring Lake, New Jersey 07762 Senior Vice President of
ACMC until December
1994.
62
<PAGE>
John H. Dobkin Director 57 President of Historic
150 White Plains Road Hudson Valley (historic
Tarrytown, New York 10591 preservation) since
prior to 1994.
Previously, he was
Director of the National
Academy of Design.
William H. Foulk, Jr. Director 66 Investment Adviser and
Room 1000 Independent Consultant.
2 Greenwich Plaza He was formerly Senior
Greenwich, Connecticut 06830 Manager of Barrett
Associates, Inc., a
registered investment
adviser, with which he
had been associated
since prior to 1994.
Dr. James Hester Director 75 President of the Harry
25 Cleveland Lane Frank Guggenheim
Princeton, New Jersey 08540 Foundation, with which
he has been associated
since prior to 1994. He
was formerly President
of New York University
and The New York
Botanical Garden and
Rector of the United
Nations University.
Clifford L. Michel Director 59 Member of the law firm
St. Bernard's Road of Cahill Gordon &
Gladstone, New Jersey 07934 Reindel, with which he
has been associated
since prior to 1994. He
is President and Chief
Executive Officer of
Wenonah Development
Company (investments)
and a Director of Placer
Dome, Inc (mining).
63
<PAGE>
Donald J. Robinson Director 64 Senior Counsel of the
98 Hell's Peak Road law firm of Orrick,
Weston, Vermont 05161 Herrington & Sutcliffe
since January of 1995.
He was formerly a senior
partner and member of
the Executive Committee
of that firm. He was
also a Trustee of the
Museum of the City of
New York from 1977-1995.
Robert C. White Director 78 Formerly Assistant
30835 Rivercrossing Treasurer of Ford Motor
Bingham Farms, MI 48025 Company and until
September 30, 1994, a
Vice President and the
Chief Financial Officer
of the Howard Hughes
Medical Institute.
Officers
Positions Held Age Principal Occupations
Name and Address with Registrant During Past 5 Years
_____________________________ _______________ ___ ________________________
John D. Carifa Chairman of 53 See biography under
the Board "Directors," above.
and President
Kathleen A. Corbet Senior Vice 39 Executive Vice President
President of ACMC, with which she
has been associated
since prior to 1994.
Alfred Harrison Senior Vice 61 Vice Chairman of the
President Board of ACMC, with
which he has been
associated since prior
to 1994.
Thomas J. Bardong Vice President 54 Senior Vice President of
ACMC, with which he has
been associated since
prior to 1994.
John A. Koltes Vice President 56 Senior Vice President of
ACMC, with which he has
been associated since
prior to 1994.
64
<PAGE>
Michael J. Reilly Vice President 34 Senior Vice President of
ACMC, with which he has
been associated since
prior to 1994.
Edmund P. Bergan, Jr. Secretary 49 Senior Vice President
and the General Counsel
of Alliance Fund
Distributors, Inc.
("AFD") and Alliance
Fund Services, Inc.
("AFS") and Vice
President and Assistant
General Counsel of ACMC,
with which he has been
associated since prior
to 1994.
Mark D. Gersten Treasurer and 48 Senior Vice President of
500 Plaza Drive Chief Financial AFS, with which he has
Secaucus, New Jersey 07094 Officer been associated since
prior to 1994.
Vincent S. Noto Controller 34 Vice President of AFS,
500 Plaza Drive with which he has been
Secaucus, New Jersey 07094 associated since prior
to 1994.
____________________
* An "interested person" of the Fund, as defined in the 1940 Act.
The Board of Directors is divided into three classes, each
class having a term of three years. Each year the term of one
class expires. The Fund does not pay any fees to, or reimburse
expenses of, its Directors who are considered "interested
persons" of the Fund, as defined in the 1940 Act.
The table below indicates the aggregate compensation paid by
the Fund to each of the Directors during its fiscal year ended
September 30, 1998, the aggregate compensation paid to each of
the Directors during calendar year 1998 by all of the funds to
which Alliance provides investment advisory services, referred to
below as the Alliance Fund Complex, and the total number of funds
in the Alliance Fund Complex for which each of the Directors
serves as a director or trustee. 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.
65
<PAGE>
Total Number
of Investment
Companies in
Total the Alliance
Compensation Fund Complex,
from the including the
Aggregate Alliance Fund Fund, as to
Compensation Complex, which the
from the Fund including the Director is a
Name of Director for the Fiscal Fund during Director of
or Officer Year 1998 1998 Trustee
__________________ ______________ _____________ _____________
John D. Carifa 0 0 50
Ruth Block $4,376 $164,000 37
David Dievler $4,376 $188,500 43
John H. Dobkin $4,379 $126,500 41
William H. Foulk, Jr. $4,373 $149,145 45
Dr. James M. Hester $4,379 $156,500 37
Clifford L. Michel $4,379 $194,500 38
Donald J. Robinson $4,376 $217,358 41
Robert C. White $8,500 $ 88,500 10
Holdings of Fund Shares
As far as is known to the Fund, no person owned beneficially
five percent or more of the outstanding shares of the Fund at
[________], 1999. The Depository Trust Company ("DTC") held of
record [__]% of the outstanding shares at [________], 1999. As
far as is known to the Fund, no person other than DTC owned of
record shares of the Fund representing more than five percent of
the voting power of the Fund's outstanding shares at [ ],
1999. The Adviser of the Fund beneficially owned [________]
shares at [________], 1999.
As of [________], 1999, all Directors and officers of the
Fund owned in the aggregate less than [__]% of the Fund's shares.
Administrator
The Adviser is also the Fund's Administrator and as such
performs or arranges for the performance of the following
services:
- - prepares and assembles reports required to be sent to Fund
stockholders and arranges for the printing and dissemination
of such reports;
- - assembles reports required to be filed with the SEC and files
such completed reports with the SEC;
- - arranges for the dissemination to stockholders of the Fund's
proxy materials and oversees the tabulation of proxies by the
Fund's transfer agent;
66
<PAGE>
- - negotiates the terms and conditions under which custodian
services will be provided to the Fund and the fees to be paid
by the Fund to its custodian;
- - negotiates the dividend disbursing services fees to be paid
by the Fund and reviews the provision of dividend disbursing
services to the Fund;
- - calculates, or arranges for the calculation of, the NAV of
the Fund's shares;
- - calculates the basic fee payable to the Adviser and the
adjustment to the basic fee based on the investment
performance of the Fund in relation to the investment record
of the Russell 1000 Growth Index;
- - determines the amounts available for distribution as
dividends and distributions to be paid by the Fund to its
stockholders; prepares and arranges for the printing of
dividend notices to stockholders; and provides the Fund's
dividend disbursing agent and custodian with such information
as is required for them to effect the payment of dividends
and distributions and to implement the Fund's dividend
reinvestment plan;
- - assists in providing to the Fund's independent accountants
such information as is necessary for such accountants to
prepare and file the Fund's federal income and excise tax
returns and the Fund's state and local tax returns;
- - monitors compliance of the Fund's operation with the 1940 Act
and with its investment policies and limitations;
- - monitors compliance of the Fund's operations, with respect to
engaging in short sales, with the 1940 Act and the Code;
- - provides accounting and bookkeeping services (including the
maintenance of such accounts, books and records of the Fund
as may be required by Section 31(a) of the 1940 Act and the
rules and regulations thereunder); and
- - makes such reports and recommendations to the Fund's Board of
Directors as the Board reasonably requests or deems
appropriate.
The Administrator will benefit from the offer because it will
receive fees based in part on the average net assets of the Fund.
For the services rendered to the Fund and related expenses borne
by the Administrator, the Fund pays the Administrator a monthly
fee at the annual rate of .25 of 1% of the Fund's average weekly
net assets. For the fiscal years ended September 30, 1998,
September 30, 1997 and September 30, 1996, the Fund paid total
administrative fees to the Administrator of $[____], $[____] and
$[____], respectively. For purposes of the calculation of the
fee payable to the Administrator, average weekly net assets are
determined on the basis of the average net assets of the Fund for
each weekly period (ending on Friday) ending during the month.
The net assets for each weekly period are determined by averaging
the net assets on Friday of such weekly period with the net
assets on Friday of the immediately preceding weekly period. If
67
<PAGE>
a Friday is not a Fund business day, then the calculation will be
based on the net assets of the Fund on the Fund business day
immediately preceding such Friday.
PORTFOLIO TRADING
Subject to the general supervision of the Board of Directors,
the Adviser is responsible for decisions to buy and sell
securities and other portfolio holdings for the Fund, the
selection of brokers and dealers to effect the transactions and
the negotiation of brokerage commissions. It is the Fund's
general policy to seek favorable net prices and prompt reliable
execution in connection with the purchase or sale of all
portfolio securities. In the purchase and sale of over-the-
counter securities, it is the Fund's policy to use the primary
market makers except when a better price can be obtained by using
a broker. The use of brokers who supply supplemental research
and analysis and other services may result in the payment of
higher commissions than those available from other brokers and
dealers who provide only the execution of portfolio transactions.
In addition, the supplemental research and analysis and other
services that may be obtained from brokers and dealers through
which brokerage transactions are effected may be useful to the
Adviser in connection with advisory clients other than the Fund.
Investment decisions for the Fund are made independently from
those for other investment companies and other advisory accounts
managed by the Adviser. It may happen, on occasion, that the
same security is held in the portfolio of the Fund and one or
more of such other companies or accounts. Simultaneous
transactions are likely when several funds or accounts are
managed by the same adviser, particularly when a security is
suitable for the investment objectives of more than one of such
companies or accounts. When two or more companies or accounts
managed by the Adviser are simultaneously engaged in the purchase
or sale of the same security, the transactions are allocated to
the respective companies or accounts both as to amount and price,
in accordance with a method deemed equitable to each company or
account. In some cases this system may adversely affect the
price paid or received by the Fund or the size of the position
obtainable for the Fund.
Allocations are made by the officers of the Fund or of the
Adviser. Purchases and sales of portfolio securities are
determined by the Adviser and are placed with broker-dealers by
the order department of the Adviser.
The extent to which commissions that will be charged by
broker-dealers selected by the Fund may reflect an element of
value for research cannot presently be determined. To the extent
that research services of value are provided by broker-dealers
68
<PAGE>
with or through whom the Fund places portfolio transactions, the
Adviser may be relieved of expenses which it might otherwise
bear. Research services furnished by broker-dealers could be
useful and of value to the Adviser in servicing its other clients
as well as the Fund; but, on the other hand, certain research
services obtained by the Adviser as a result of the placement of
portfolio brokerage of other clients could be useful and of value
to it in serving the Fund. Consistent with the Conduct Rules of
the National Association of Securities Dealers, Inc., and subject
to seeking best execution, the Fund may consider sales of shares
of the Fund or other investment companies managed by the Adviser
as a factor in the selection of brokers to execute portfolio
transactions for the Fund.
The Fund may from time to time place orders for the purchase
or sale of securities (including listed call options) with
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), an
affiliate of the Adviser, and with brokers which may have their
transactions cleared or settled, or both, by the Pershing
Division of DLJ, for which DLJ may receive a portion of the
brokerage commissions. In such instances, the placement of
orders with such brokers would be consistent with the Fund's
objective of obtaining best execution and would not be dependent
upon the fact that DLJ is an affiliate of the Adviser.
During the fiscal periods ended September 30, 1996, 1997 and
1998 the Fund incurred brokerage commissions amounting in the
aggregate to $195,295, $216,191, and $250,574, respectively.
During the fiscal periods ended September 30, 1996, 1997 and
1998, brokerage commissions amounting in the aggregate to $0, $0,
and $0, respectively were paid to DLJ and brokerage commissions
amounting in the aggregate to $[________] were paid to brokers
utilizing the Pershing Division of DLJ. During the fiscal period
ended September 30, 1998, the brokerage commissions paid to DLJ
constituted 0% of the Fund's aggregate brokerage commissions and
the brokerage commissions paid to brokers utilizing the Pershing
Division of DLJ constituted 0% of the Fund's aggregate brokerage
commissions. During the fiscal period ended September 30, 1998,
of the Fund's aggregate dollar amount of brokerage transactions
involving the payment of commissions, 0% were effected through
DLJ and 0% were effected through brokers utilizing the Pershing
Division of DLJ. During the fiscal period ended September 30,
1998, transactions in portfolio securities of the Fund
aggregating $[________] with associated brokerage commissions of
approximately $[________] were allocated to persons of firms
supplying research services to the Fund or the Adviser.
Some of the Fund's portfolio transactions in equity
securities may occur on foreign stock exchanges. Transactions on
stock exchanges involve the payment of brokerage commissions. On
many foreign stock exchanges these commissions are fixed.
69
<PAGE>
Securities traded in foreign over-the-counter markets (including
most fixed-income securities) are purchased from and sold to
dealers acting as principal. Over-the-counter transactions
generally do not involve the payment of a stated commission, but
the price usually includes an undisclosed commission or markup.
The prices of underwritten offerings, however, generally include
a stated underwriter's discount. The Adviser expects to effect
the bulk of its transactions in securities of companies based in
foreign countries through brokers, dealers or underwriters
located in such countries. U.S. Government or other U.S.
securities constituting permissible investments will be purchased
and sold through U.S. brokers, dealers or underwriters.
70
<PAGE>
DETERMINATION OF NAV
The Fund determines NAV no less frequently than the close of
trading on the NYSE (generally 4:00 P.M. New York City time) on
the last business day of each week (generally Friday). The Fund's
per share net asset value is calculated by dividing the value of
the Fund's total assets, less its liabilities, by the total
number of its shares then outstanding. A Fund business day is
any weekday on which the NYSE is open for trading.
In accordance with applicable rules under the 1940 Act,
portfolio securities are valued at current market value or at
fair value as determined in good faith by the Board of Directors.
The Board of Directors has delegated to the Adviser certain of
the Board's duties with respect to the following procedures.
Readily marketable securities listed on the NYSE or on a foreign
securities NYSE (other than foreign securities exchanges whose
operations are similar to those of the United States over-the-
counter market) are valued, except as indicted below, at the last
sale price reflected on the consolidated tape at the close of the
NYSE or, in the case of a foreign securities exchange, at the
last quoted sale price, in each case on the business day as of
which such value is being determined. If there has been no sale
on such day, the securities are valued at the mean of the closing
bid and asked prices on such day. If no bid or asked prices are
quoted on such day, then the security is valued in good faith at
fair value by, or in accordance with procedures established by,
the Board of Directors. Readily marketable securities not listed
on the NYSE or on a foreign securities exchange but listed on
other United States national securities exchanges or traded on
The Nasdaq Stock Market, Inc. are valued in like manner.
Portfolio securities traded on the NYSE and on one or more
foreign or other national securities exchanges, and portfolio
securities not traded on the NYSE but traded on one or more
foreign or other national securities exchanges are valued in
accordance with these procedures by reference to the principal
exchange on which the securities are traded.
Readily marketable securities traded in the over-the- counter
market, securities listed on a foreign securities exchange whose
operations are similar to those of the United States over-the-
counter market, and securities listed on a U.S. national
securities exchange whose primary market is believed to be over-
the-counter (but excluding securities traded on The Nasdaq Stock
Market, Inc.), are valued at the mean of the current bid and
asked prices as reported by Nasdaq or, in the case of securities
not quoted by Nasdaq, the National Quotation Bureau or another
comparable source.
Listed put or call options purchased by the Fund are valued
at the last sale price. If there has been no sale on that day,
71
<PAGE>
such securities will be valued at the closing bid prices on that
day.
Open futures contracts and options thereon will be valued
using the closing settlement price or, in the absence of such a
price, the most recent quoted bid price, If there are no
quotations available for the day of valuations, the last
available closing settlement price will be used.
U.S. Government securities and other debt instruments having
60 days or less remaining until maturity are valued at amortized
cost if their original maturity was 60 days or less, or by
amortizing their fair value as of the 61st day prior to maturity
if their original term to maturity exceeded 60 days (unless in
either case the Board of Directors determines that this method
does not represent fair value).
Fixed-income securities may be valued on the basis of prices
provided by a pricing service when such prices are believed to
reflect the fair market value of such securities. The prices
provided by pricing service take into account many factors,
including institutional size trading in similar groups of
securities and any developments related to specific securities.
All other assets of the Fund are valued in good faith at fair
value by, or in accordance with procedures established by, the
Board of Directors.
Trading in securities on Far Eastern and European securities
exchanges and over-the-counter markets is normally completed well
before the close of business of each Fund business day. In
addition, trading in foreign markets may not take place on all
Fund business days. Furthermore, trading may take place in
various foreign markets on days that are not Fund business days.
The Fund's calculation of the net asset value per share,
therefore, does not always take place contemporaneously with the
most recent determination of the prices of portfolio securities
in these markets. Events affecting the values of these portfolio
securities that occur between the time their prices are
determined in accordance with the above procedures and the close
of the NYSE will not be reflected in the Fund's calculation of
net asset value unless it is believed that these prices do not
reflect current market value, in which case the securities will
be valued in good faith by, or in accordance with procedures
established by, the Board of Directors at fair value.
For purposes of determining the Fund's net asset value per
share, all assets and liabilities initially expressed in a
foreign currency will be converted into U.S. dollars at the mean
of the current bid and asked prices of such currency against the
U.S. dollar last quoted by a major bank that is a regular
72
<PAGE>
participant in the relevant foreign exchange market or on the
basis of a pricing service that takes into account the quotes
provided by a number of such major banks. If such quotations are
not available as of the close of the NYSE, the rate of exchange
will be determined in good faith by, or under the direction of,
the Board of Directors.
TENDER OFFER AND SHARE REPURCHASES
As discussed above, shares of closed-end investment companies
frequently trade at a discount from NAV. To address this
possibility, the Board of Directors presently contemplates that
the Fund may from time to time consider either the repurchase or
tender offer of its shares on the open market. Since
commencement of the Fund's operations, no such open market
purchases or tender offers have been made. The Fund may borrow
money to finance the repurchase of shares.
There can be no assurance that repurchases or tenders will
result in the Fund's shares trading at a price which is equal to
its NAV. The Fund anticipates that the market price of the
Fund's shares will usually vary from NAV. The market price of
the Fund's shares will be determined, among other things, by the
relative demand for and supply of the Fund's shares in the
market, the Fund's investment performance, the Fund's dividends
and yield and investor perception of the Fund's overall
attractiveness as an investment as compared with other investment
alternatives. Nevertheless, the fact that the Fund's shares may
be the subject of repurchases or tender offers from time to time
may enhance its attractiveness to investors and thus reduce the
spread between market price and NAV that may otherwise exist.
Although the Board of Directors believes that share
repurchases and tenders generally would have a favorable effect
on the market price of the Fund's shares, it should be recognized
that the acquisition of shares of the Fund will decrease the
total assets of the Fund and therefore have the effect of
increasing the Fund's expense ratio. Furthermore, any interest
on borrowings to finance Fund shares from repurchase transactions
will reduce the Fund's net income.
Even if a tender offer has been made, it is the Board of
Directors' announced policy, which may be changed by the Board of
Directors, not to accept tenders or effect repurchases if
(1) such transactions, if consummated, would (a) result in the
delisting of the Fund's shares from the NYSE (the NYSE having
advised the Fund that it would consider delisting if the
aggregate market value of the Fund's outstanding publicly held
common stock is less than $5.0 million, the number of publicly
held shares of common stock falls below 600,000 or the number of
round-lot holders falls below 1,200), (b) result in a violation
73
<PAGE>
of applicable asset coverage requirements, (c) impair the Fund's
status as a regulated investment company under the Code (which
would make the Fund a taxable entity, causing the Fund's income
to be taxed at the corporate level in addition to the taxation of
stockholders who receive dividends from the Fund); (2) the Fund
would not be able to liquidate portfolio securities in an orderly
manner and consistent with the Fund's investment objective and
policies in order to repurchase shares; or (3) there is, in the
Board's judgment, any (a) material legal action or proceeding
instituted or threatened challenging, in the Board's judgment,
such transactions or otherwise materially adversely affecting the
Fund, (b) suspension of or limitation on prices for trading
securities generally on the NYSE or any foreign exchange on which
portfolio securities of the Fund are traded, (c) declaration of a
banking moratorium by federal, state or foreign authorities or
any suspension of payment by banks in the United States, New York
State or foreign countries in which the Fund invests,
(d) limitation affecting the Fund or issuers of its portfolio
securities imposed by federal, state or foreign authorities on
the extension of credit by lending institutions or on the
exchange of foreign currency, (e) commencement of war, armed
hostilities or other international or national calamity directly
or indirectly involving the United States or other countries in
which the Fund invests, or (f) other event or condition which
would have a material adverse effect on the Fund or its
stockholders if shares were repurchased. The Board of Directors
may modify these conditions from time to time in light of
experience and may determine to make a tender offer even if one
of the above conditions exists.
Any tender offer made by the Fund will be at a price equal to
the NAV of the shares as of the close of business on the date the
offer ends. Each offering document will contain such information
as is required under the federal securities law. Each offering
document will also disclose the federal income tax consequences
of the Fund's repurchase of shares pursuant to the tender offer.
When a tender offer is authorized to be made by the Board a
stockholder wishing to accept the offer will be required to
tender all (but not less than all) of their shares. The Fund will
purchase shares tendered by a stockholder at any time during the
period of the tender offer in accordance with the terms of the
offer unless it determines to accept none of them (based upon one
of the conditions set forth above). Each person tendering shares
will be required to submit a check in an amount not to exceed $25
payable to the Fund, which will be used to help defray the costs
associated with effecting the tender offer. This fee will be
imposed upon each tendering stockholder whose tendered shares are
purchased in the tender offer and will be imposed regardless of
the number of shares purchased. The Fund expects the cost to the
Fund of effecting a tender offer will be greater than the
aggregate of all service charges received from those who tender
74
<PAGE>
their shares. Costs associated with the tender offer will be
charged against capital of the Fund. During the period of a
tender offer, the Fund's stockholders will be able to obtain the
Fund's current NAV by use of a toll-free telephone number.
Shares that have been purchased by the Fund will be retired
and will be authorized but unissued shares. The purchase of
shares by the Fund will reduce the Fund's net asset value. The
portfolio turnover rate of the Fund may or may not be affected by
the Fund's repurchase of shares pursuant to a tender offer.
75
<PAGE>
DIVIDENDS AND DISTRIBUTIONS; DIVIDEND REINVESTMENT PLAN
The Fund has implemented a quarterly distribution policy that
distributes quarterly each year to stockholders (i) with respect
to each of the first three calendar quarters of the year, an
amount equal to 2.5% of the Fund's NAV determined as of the
beginning of the quarter, and (ii) with respect to the fourth
calendar quarter of each year, an amount equal to at least 2.5%
of the Fund's NAV as of the beginning of that quarter. If
distributions for any quarter exceed the Fund's net investment
income and net realized short-term capital gains, the difference
would be treated as distributed from net realized long-term
capital gains if sufficient and to the extent not sufficient from
other Fund assets as a return of capital. The reduction of the
Fund's assets by the amount of the excess will have the likely
effect of increasing the Fund's expense ratio. In order to make
distributions, the Fund may have to sell investments at an
inopportune time. The Fund's final distribution for each
calendar year will include remaining undistributed net investment
income, realized short-term capital gains, and realized long-term
capital gains, provided that if the Fund's undistributed net
investment income and net realized short-term and long-term
capital gains for the year exceeded the minimum required amount
for the previous quarters distributions as described above, the
Fund might choose not to distribute all or a portion of such
excess equal to the Fund's net realized long-term capital gains
for the year.
If, for any calendar year, for U.S. federal income tax
purposes, the total amount distributed exceeds the aggregate of
net investment income and net realized capital gains, the
difference, distributed from the Fund's assets, will generally be
treated as a tax-free return of capital (up to the amount of the
stockholder's tax basis in his shares). You are advised to
consult your own advisers with respect to the particular tax
consequences to you of these distributions. The Fund's Board of
Directors may change its distribution policy without stockholder
approval.
Under the Fund's Dividend Reinvestment Plan or plan, all
stockholders whose shares are registered in their own names will
have all distributions reinvested automatically in additional
shares of the Fund by The Bank of New York, as plan agent under
the plan, unless a stockholder elects to receive cash. An
election to receive cash may be revoked or reinstated at the
option of the stockholder. Stockholders whose shares are held in
the name of a broker or nominee will have distributions
reinvested automatically by the broker or nominee in additional
shares under the plan, unless the service is not provided by the
broker or nominee, or unless the stockholder elects to receive
distributions in cash. If the service is not available, such
76
<PAGE>
distributions will be paid in cash. Stockholders whose shares
are held in the name of a broker or nominee should contact the
broker or nominee for details. All distributions to investors
who elect not to participate (or whose broker or nominee elects
not to participate) in the plan, will be paid by check mailed
directly to the recordholder by the plan agent, as dividend
paying agent.
If the Board declares a dividend or capital gains
distribution payable either in Fund shares or in cash, as
stockholders may have elected, then nonparticipants in the plan
will receive cash and participants in the plan will receive the
equivalent in Fund shares valued at the lower of market price or
NAV. Whenever market price is equal to or exceeds NAV at the
time shares are valued for the purpose of determining the number
of shares equivalent to the cash dividend or capital gains
distribution, participants will be issued shares at the NAV most
recently determined as described above, but in no event less than
95% of the market price. If the NAV of Fund shares at such time
exceeds the market price of the shares at such time, or if the
Fund should declare a dividend or capital gains distribution
payable only in cash, the plan agent will buy Fund shares in the
open market, on the NYSE or elsewhere, for the participants'
accounts. If, before the plan agent has completed its purchases,
the market price exceeds the Fund's NAV, the average per share
purchase price paid by the plan agent may exceed the Fund's NAV,
resulting in the acquisition of fewer shares than if the dividend
or capital gains distribution had been paid in Fund shares issued
by the Fund. The plan agent will apply all cash received as a
dividend or capital gains distribution to purchase shares on the
open market as soon as practicable after the payment date of such
dividend or capital gains distribution, but in no event later
than 30 days after such date, except where necessary to comply
with applicable provisions of the federal securities laws.
The plan agent maintains all stockholder accounts in the plan
and furnishes written confirmations of all transactions in such
accounts, including information needed by stockholders for
personal and tax records. Fund shares in the account of each
plan participant are held by the plan agent in noncertificated
form in the name of the participant, and each participant's proxy
will include those shares purchased pursuant to the plan.
There is no charge to participants for reinvesting dividends
or capital gains distributions. The plan agent's fees for
handling the reinvestment of dividends and capital gains
distributions are paid by the Fund. There are no brokerage
charges with respect to shares issued directly by the Fund as a
result of dividends or capital gains distributions payable either
in stock or in cash. However, each participant is to pay a pro
rata share of brokerage commissions incurred with respect to the
77
<PAGE>
plan agent's open market purchases in connection with the
reinvestment of dividends and capital gains distributions.
The automatic reinvestment of dividends and capital gains
distributions does not relieve participants of any income tax
which may be payable on such dividends or distributions.
Experience under the plan may indicate that changes are
desirable. Accordingly, the Fund has reserved the right to amend
or terminate the plan as applied to any dividend or capital gains
distribution paid after written notice of the change sent to the
members of the plan at least 90 days before the record date for
such dividend or capital gains distribution. The plan also may
be amended or terminated by the plan agent, with the Fund's prior
written consent but, except when necessary or appropriate to
comply with applicable law or the rules or policies of a
regulatory body, only on at least 90 days' written notice to
participants in the plan. All correspondence concerning the plan
should be directed to The Bank of New York, 101 Barclay Street,
New York, New York 10286.
78
<PAGE>
FEDERAL TAXATION
The following summary addresses only principal United States
federal income tax considerations pertinent to the Fund and to
stockholders of the Fund who are United States citizens or
residents or United States corporations. The effects of federal
income tax law on stockholders who are nonresident alien
individuals, foreign corporations or other foreign persons may be
substantially different. The summary is based upon the advice of
counsel for the Fund and upon current law and interpretations
thereof. No confirmation has been obtained from the relevant tax
authorities. There is no assurance that the applicable laws and
interpretations will not change.
In view of the individual nature of tax consequences, each
stockholder is advised to consult the stockholder's own tax
adviser with respect to the specific consequences of being a
stockholder of the Fund, including the effect and applicability
of federal, state, local, foreign and other tax laws and the
effects of changes therein.
United States Federal Income Taxation of Dividends and
Distributions
General. The Fund intends for each taxable year to qualify
to be taxed as a "regulated investment company." To so qualify,
the Fund must, among other things, (i) derive at least 90% of its
gross income in each taxable year from dividends, interest,
payments with respect to securities loans, gains from the sale or
other disposition of stock, securities or foreign currency, or
certain other income (including, but not limited to, gains from
options, futures and forwards contracts) derived with respect to
its business of investing in stock, securities or currency; and
(ii) diversify its holdings so that, at the end of each quarter
of its taxable year, the following two conditions are met: (a) at
least 50% of the value of the Fund's assets is represented by
cash, U.S. Government securities, securities of other regulated
investment companies and other securities, with respect to which
the Fund's investment is limited, in respect of any one issuer,
to an amount not greater than 5% of the Fund's assets and 10% of
the outstanding voting securities of such issuer, and (b) not
more than 25% of the value of the Fund's assets is invested in
securities of any one issuer (other than U.S. Government
securities or the securities of other regulated investment
companies) or of two or more issuers which the Fund controls and
which are determined to be engaged in the same or similar trades
or businesses or related trades or businesses.
If the Fund qualifies as a regulated investment company for
any taxable year and makes timely distributions to its
stockholders of 90% or more of its investment company taxable
79
<PAGE>
income for that year (calculated without regard to its net
capital gain, i.e., the excess of its net long-term capital gain
over its net short-term capital loss), it will not be subject to
federal income tax on the portion of its taxable income for the
year (including any net capital gain) that it distributes to
stockholders.
The Fund will also avoid the 4% federal excise tax that would
otherwise apply to certain undistributed income for a given
calendar year if it makes timely distributions to the
stockholders equal to at least the sum of (i) 98% of its ordinary
income for the calendar year, (ii) 98% of its capital gain net
income and foreign currency gains for the twelve-month period
ending on October 31 of that year; and (iii) any ordinary income
and capital gain net income from the preceding calendar year that
was not distributed during that year. For this purpose, income
or gain retained by the Fund that is subject to corporate income
tax will be considered to have been distributed by the Fund by
year-end. For federal income and excise tax purposes, dividends
declared and payable to stockholders of record as of a date in
October, November or December of a given year but actually paid
during the immediately following January will be treated as if
paid by the Fund on December 31 of that calendar years, and will
be taxable to these stockholders for the year declared, and not
for the year in which the stockholders actually receive the
dividend.
The Fund intends to make timely distributions of the fund's
taxable income (including any net capital gain) so that the Fund
will not be subject to federal income or excise taxes. However,
exchange control or other regulations on the repatriation of
investment income, capital or the proceeds of securities sales,
if any exist or are enacted in the future, may limit the Fund's
ability to make distributions sufficient in amount to avoid being
subject to one or both of such federal taxes.
Dividends and Distributions. Dividends of the Fund's net
ordinary income and distributions of any net realized short-term
capital gain will be taxable to stockholders as ordinary income
to the extent of the Fund's current and accumulated earnings and
profits for the year of the distribution period. Distributions
of net capital gain (i.e., the excess of net long-term capital
gain over net short-term capital loss) are taxable as long-term
capital gain, regardless of how long a stockholder has held
shares in the Fund. If, because of the Fund's distribution
policies, the amount of the distributions by the Fund with
respect to any calendar year exceed the sum of the Fund's
ordinary income and net realized gains for the year, the amount
of such excess will be treated as a nontaxable return of capital
to the stockholder to the extent of the stockholder's tax basis
in his shares in the Fund. The amount of any distributions in
80
<PAGE>
excess of such tax basis will be taxed as capital gain or loss
assuming the stockholder holds his shares as a capital asset.
Any dividend or distribution received by a stockholder on
shares of the Fund will have the effect of reducing the net asset
value of such shares by the amount of such dividend or
distribution. Furthermore, a dividend or distribution made
shortly after the purchase of such shares by a stockholder,
although in effect a return of capital to that particular
stockholder, would be taxable to the stockholder as described
above. Dividends are taxable in the manner discussed above
regardless of whether they are paid to the stockholder in cash or
are reinvested in additional shares of the Fund. The investment
objective of the Fund is such that only a small portion, if any,
of the Fund' distributions is expected to qualify for dividends-
received deduction for corporate stockholders.
After the end of the taxable year, the Fund will notify
stockholders of the federal income tax status of any
distributions made by the Fund to stockholders during such year.
A dividend or capital gains distribution with respect to
shares of the Fund held by a tax-deferred or qualified plan, such
as an individual retirement account, 403(b)(7) retirement plan or
corporate pension or profit-sharing plan, generally will not be
taxable to the plan. Distributions from such plans will be
taxable to individual participants under applicable tax rules
without regard to the character of the income earned by the
qualified plan.
Sales and Redemptions. Any gain or loss arising from a sale
or redemption of Fund shares generally will be capital gain or
loss except in the case of dealers or certain financial
institutions. Such gain or loss will be long-term capital gain
or loss if the stockholder has held such shares for more than one
year at the time of the sale or redemption and short-term capital
gain or loss if the holding period is one year or less. If a
stockholder has held shares in the Fund for six months or less
and during that period has received a distribution of net capital
gain, any loss recognized by the stockholder on the sale of those
shares during the six-month period will be treated as a long-term
capital loss to the extent of the distribution. In determining
the holding period of such shares for this purpose, any period
during which a stockholder's risk of loss is offset by means of
options, short sales or similar transactions is not counted.
Any loss realized by a stockholder on a sale or exchange of
shares of the Fund will be disallowed to the extent the shares
disposed of are replaced within a period of 61 days beginning 30
days before and ending 30 days after the shares are sold or
exchanged. For this purpose, acquisitions pursuant to the
81
<PAGE>
Dividend Reinvestment Plan would constitute a replacement if made
within the period. If disallowed, the loss will be reflected in
an upward adjustment to the basis of the shares acquired.
Foreign Taxes. Income received by the Fund also may be
subject to foreign income taxes, including withholding taxes. It
is not possible to determine the effective rate of foreign tax in
advance since the amount of the Fund's assets to be invested
within various countries is not known.
Backup Withholding. The Fund may be required to withhold for
federal income tax at the rate of 31% of all taxable
distributions payable to noncorporate stockholders who fail to
provide the Fund with their correct taxpayer identification
numbers or to make required certifications, or who have been
notified by the Internal Revenue Service that they are subject to
backup withholding. Corporate stockholders and certain other
stockholders specified in the Code are exempt from such backup
withholding. Backup withholding is not an additional tax; any
amounts so withheld may be credited against the stockholder's
federal income tax liability or refunded.
United States Federal Income Taxation of the Fund
The following discussion related to certain significant
United States federal income tax consequences to the Fund with
respect to the determination of its "investment company taxable
income" each year. This discussion assumes that the Fund will be
taxed as a regulated investment company for each of its taxable
years.
Currency Fluctuations, "Section 988" Gains or Losses. Under
the Code, gains or losses attributable to fluctuations in
exchange rates which occur between the time the Fund accrues
interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the
Fund actually collects such receivables or pays such liabilities
are treated as ordinary income or ordinary loss. Similarly,
gains or losses from the disposition of foreign currencies, from
the disposition of debt securities denominated in a foreign
currency, or from the disposition of a forward contract
denominated in a foreign currency, which are attributable to
fluctuations in the value of the foreign currency between the
date of acquisition of the asset and the date of disposition also
are treated as ordinary gain or loss. These gains or losses,
referred to under the Code as "section 988" gains or losses,
increase or decrease the amount of the Fund's investment company
taxable income available to be distributed to its stockholders as
ordinary income, rather than increasing or decreasing the amount
of the Fund's net capital gain. Because section 988 losses
reduce the amount of ordinary dividends the Fund will be allowed
82
<PAGE>
to distribute for a taxable year, such section 988 losses may
result in all or a portion of prior dividend distributions for
such year being recharacterized as nontaxable return of capital
to stockholders, rather than as an ordinary dividend, reducing
each stockholder's basis in his Fund shares. If such
distributions exceed such stockholder's basis, such excess will
be treated as a gain from the sale of shares.
Options, Futures and Forward Contracts. Certain listed
options, regulated futures contracts, and forward foreign
currency contracts are considered "section 1256 contracts" for
federal income tax purposes. Section 1256 contracts held by the
Fund at the end of each taxable year will be marked to market"
and treated for federal income tax purposes as though sold for
fair market value on the last business day of such taxable year.
Gain or loss realized by the Fund on section 1256 contracts other
than forward foreign currency contracts will be considered 60%
long-term and 40% short-term capital gain or loss. Gain or loss
realized by the Fund on forward foreign currency contracts
generally will be treated as section 988 gain or loss and will
therefore be characterized as ordinary income or loss and will
increase or decrease the amount of the Fund's net investment
income available to be distributed to stockholders as ordinary
income, as described above. The Fund can elect to exempt its
section 1256 contracts which are part of a "mixed straddle" (as
described below) from the application of section 1256.
With respect to equity options or options traded over-the-
counter on certain foreign exchanges, gain or loss realized by
the Fund upon the lapse or sale of such options held by the Fund
will be either long-term or short-term capital gain or loss
depending upon the Fund's holding period with respect to such
option. However, gain or loss realized upon the lapse or closing
out of such options that are written by the Fund will be treated
as short-term capital gain or loss. In general, if the Fund
exercises an option, or an option that the Fund has written is
exercised, gain or loss on the option will not be separately
recognized but the premium received or paid will be included in
the calculation of gain or loss upon disposition of the property
underlying the option.
Gain or loss realized by the Fund on the lapse or sale of put
and call options on foreign currencies which are traded over-the-
counter or on certain foreign exchanges will be treated as
section 988 gain or loss and will therefore be characterized as
ordinary income or loss and will increase or decrease the amount
of the Fund's net investment income available to be distributed
to stockholders as ordinary income, as described above. The
amount of such gain or loss shall be determined by subtracting
the amount paid, if any, for or with respect to the option
83
<PAGE>
(including any amount paid by the Fund upon termination of an
option written by the Fund) from the amount received, if any, for
or with respect to the option (including any amount received by
the Fund upon termination of an option held by the Fund). In
general, if the Fund exercises such an option on a foreign
currency, or such an option that the Fund has written is
exercised, gain or loss on the option will be recognized in the
same manner as if the Fund had sold the option (or paid another
person to assume the Fund's obligation to make delivery under the
option) on the date on which the option is exercised, for the
fair market value of the option. The foregoing rules will also
apply to other put and call options and which are traded over-
the-counter or on certain foreign exchanges to the extent gain or
loss with respect to such options is attributable to fluctuations
in foreign currency exchange rates.
Tax Straddles. Any option, futures contract, forward foreign
currency contract, currency swap, or other position entered into
or held by the Fund in conjunction with any other position held
by the Fund may constitute a "straddle" for federal income tax
purposes. A straddle of which at least one, but not all, the
positions are section 1256 contracts may constitute a "mixed
straddle." In general, straddles are subject to certain rules
that may affect the character and timing of the Fund's gains and
losses with respect to straddle positions by requiring, among
other things, that (i) loss realized on disposition of one
position of a straddle not be recognized to the extent that the
Fund has unrealized gains with respect to the other position in
such straddle; (ii) the Fund's holding period in straddle
positions be suspended while the straddle exists (possibly
resulting in gain being treated as short-term capital gain rather
than long-term capital gain); (iii) losses recognized with
respect to certain straddle positions which are part of a mixed
straddle and which are non-section 1256 positions be treated as
60% long-term and 40% short-term capital loss; (iv) losses
recognized with respect to certain straddle positions which would
otherwise constitute short-term capital losses be treated as
long-term capital losses; and (v) the deduction of interest and
carrying charges attributable to certain straddle positions may
be deferred. The Treasury Department is authorized to issue
regulations providing for the proper treatment of a mixed
straddle where at least one position is ordinary and at least one
position is capital. No such regulations have yet been issued.
Various elections are available to the Fund which may mitigate
the effects of the straddle rules, particularly with respect to
mixed straddles. In general, the straddle rules described above
do not apply to any straddles held by the Fund all of the
offsetting positions of which consist of section 1256 contracts.
The Fund may be subject to other state and local taxes than
those discussed above. Also, distributions by the Fund may be
84
<PAGE>
subject to additional state, local and foreign taxes depending on
each stockholder's particular circumstances.
DESCRIPTION OF CAPITAL STOCK
General
The authorized capital stock of the Fund consists of
300,000,000 shares of common stock, $0.01 par value. As of the
date of this Prospectus, [________] shares are outstanding.
Description of Fund Shares
Each share has equal voting, dividend, distribution and
liquidation rights. The shares outstanding are, and the shares
offered hereby when issued will be, fully paid and nonassessable.
Stockholders are entitled to one vote per share. All voting
rights for the election of Directors are noncumulative, which
means that the holders of more than 50% of the shares can elect
100% of the Directors then nominated for election if they choose
to do so and, in that event, the holders of the remaining shares
will not be able to elect any Directors. The foregoing
description and the description under "Certain Anti-Takeover
Provisions of the Articles of Incorporation and Bylaws" are
subject to the provisions contained in the Fund's Articles of
Incorporation and Bylaws.
Certain Anti-Takeover Provisions of the Articles of Incorporation
and Bylaws
The Fund presently has provisions in its Articles of
Incorporation and Bylaws (together, the "Charter Documents") that
are intended to limit (i) the ability of other entities or
persons to acquire control of the Fund, (ii) the Fund's freedom
to engage in certain transactions and (iii) the ability of the
Fund's Directors or stockholders to amend the Charter Documents
or effect changes in the Fund's management. These provisions of
the Charter Document may be regarded as "anti-takeover"
provisions. At the first annual meeting of stockholders, the
Board of Directors was divided into three classes. Upon the
expiration of the term of office of each class the Directors in
such class will be elected for a term of three years to succeed
the Directors whose terms of office expire. Accordingly, only
those Directors in one 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-elections, and under Securities and Exchange Commission
regulations, procedures are available for including stockholder
proposals in management's annual proxy statement). Such system
of electing Directors is intended to have the effect of
85
<PAGE>
maintaining the continuity of management and, thus, make it more
difficult for the Fund's stockholders to change the majority of
the Directors. A director may be removed from office only by a
vote of at least 75% of the outstanding shares of the Fund
entitled to vote fore the election of Directors. Under Maryland
law and the Fund's Articles of Incorporation, the affirmative
vote of the holders of a majority of the votes entitled to be
cast is required for the consolidation of the Fund with another
corporation, a merger of the Fund with or into another
corporation (except for certain mergers in which the Fund is the
successor), a statutory share exchange in which the Fund is not
the successor, a sale or transfer of all or substantially all of
the Fund's assets, the dissolution of the Fund and any amendment
to the Fund's Articles of Incorporation (except for amendments to
certain provisions of the Articles of Incorporation that require
the affirmative vote of 75% of the votes entitled to be cast).
The affirmative vote of 75% (which is higher than that required
under Maryland law or the 1940 Act) of the outstanding shares of
the Fund 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 of the Fund
(defined for this purpose as those Directors who are either
members of the Board of Directors on the date of closing of the
initial offering of the shares of the Fund or subsequently become
Directors and whose elections is approved by a majority of the
Continuing Directors then on the Board. If a majority of the
Continuing Directors approve the liquidation or dissolution of
the Fund, then such action shall require an affirmative vote of a
majority of the outstanding shares of the Fund. In addition, the
affirmative vote of 75% (which is higher than that required under
Maryland law or the 1940 Act) of the outstanding shares of the
Fund is required generally to authorize any of the following
transactions involving a corporation, person or entity, or
indirectly through affiliates, the beneficial owner of more than
5% of the outstanding shares of the Fund (a "Principal
Stockholder"), or to amend the provisions of the Articles of
Incorporation relating to such transactions:
i. merger, consolidation or statutory share exchange of the
Fund with or into any Principal Stockholder;
ii. issuance of any securities of the Fund to any Principal
Stockholder for cash except upon (a) reinvestment of
dividends pursuant to a dividend reinvestment plan,
(b) issuance of any securities pursuant to the exercise
of any stock subscription rights distributed by the Fund
or (c) a public offering by the Fund registered under
the Securities Act;
iii. sale, lease or exchange of all or any substantial part
of the assets of the Fund to any Principal Stockholder
86
<PAGE>
(except assets having an aggregate fair market value of
less than $1,000,000);
iv. sale, lease or exchange to the Fund, in exchange for
securities of the Fund, of any assets of any Principal
Stockholder (except assets having an aggregate fair
market value of less than $1,000,000).
However, such vote would not be required when, under certain
conditions, the Continuing Directors approve the transactions
described in (i)-(iv) above, although in certain cases involving
merger, consolidation or statutory share exchange or sale of all
or substantially all of the Fund's assets, the affirmative vote
of a majority of the outstanding shares of the Fund would
nevertheless be required. The affirmative vote of 75% (which is
higher than that required to convert the Fund to an open-end
investment company and to amend the Fund's Articles of
Incorporation to effect any such conversion. For the full text
of these provisions, reference is made to the Articles of
Incorporation and Bylaws of the Fund, on file with the Securities
and Exchange Commission.
The provisions of the Charter Documents described above could
have the effect of depriving the owners of shares of the Fund of
opportunities to sell their shares at a premium over prevailing
market prices by discouraging a third party from seeking to
obtain control of the Fund in a tender offer or similar
transaction. See "Tender Offers and Repurchase of Shares." The
overall effect of these provisions is to render more difficult
the accomplishment of a merger or the assumption of control by a
Principal Stockholder. The Board of Directors of the Fund has
considered the foregoing anti-takeover provisions and concluded
that they are in the best interests of the Fund and its
stockholders.
The Fund is required by the rules of the NYSE to hold annual
meetings of stockholders. The most recent annual meeting of
stockholders was held on March 9, 1999. The next annual meeting
of stockholders will be held between March 9, 2000 and April 9,
2000.
CUSTODIAN, TRANSFER AGENT, DIVIDEND
DISBURSING AGENT, REGISTRAR AND
SHAREHOLDER SERVICING AGENT
The Bank of New York, 101 Barclay Street, New York, New York
10286, acts as the Fund's custodian, transfer agent, dividend
paying agent and registrar. The Fund's portfolio of securities
and cash, when invested in securities of foreign countries, will
be held by its subcustodians, subject to approval by the Board of
87
<PAGE>
Directors of the Fund as and when appropriate in accordance with
the rules of the SEC.
The Dealer Manager also acts as shareholder servicing agent
for the Fund and (i) provides services and makes efforts to
publicize the Fund on an ongoing basis to investors, including
both clients of the shareholder servicing agent and other
investors, and reminds investors, and prospective investors of
the Fund's features and benefits, including communications with
clients and their representatives, periodic seminars or
conference calls, internal and external publications,
presentations at retail system meetings, responses to questions
from potential or current stockholders and specific stockholder
contact where appropriate; (ii) makes available to brokers and
investors market price, NAV and yield information regarding the
Fund for the purpose of helping to maintain the visibility of the
Fund to brokers and clients (including investors and prospective
investors in the Fund); and (iii) provides financial advice and
consultation at the request of the Fund with respect of the Fund
with respect to consideration by the Board of Directors of the
Fund of share repurchases or tender offers. For these services,
the Fund pays the shareholder servicing agent a fee equal on an
annual basis to .10 of 1% of the Fund's average weekly net assets
and payable at the end of each calendar month. The shareholder
servicing agreement by its terms continues until September 30,
1999 and thereafter for successive one year periods unless
terminated by either party upon written notice 60 days prior to
the anniversary date thereof. In this regard, as part of its
ongoing oversight responsibilities, the Board of Directors will
monitor the performance of the shareholder servicing agent and
the continuing appropriateness of that agreement.
LEGAL MATTERS
The validity of the shares offered hereby will be passed upon
for the Fund by Seward & Kissel LLP, New York, New York. Certain
matters will be passed upon for the Dealer Manager by Rogers &
Wells LLP, New York, New York. Seward & Kissel will rely upon
the opinion of Venable, Baetjer and Howard, LLP, for matters relating
to Maryland law.
REPORTS TO STOCKHOLDERS
The Fund will send semi-annual and audited annual reports to
its stockholders, including a list of investments held. A copy
of the Fund's annual report for the fiscal year ended
September 30, 1998 was mailed to stockholders in [________], 1998
and its semi-annual report for the six months ended March 31,
1999 was mailed to stockholders in [________], 1999.
88
<PAGE>
EXPERTS
The audited Financial Statements included in this Prospectus
have been audited by PricewaterhouseCoopers LLP, independent
public accountants, as indicated in their reports and are
included in reliance upon the authority of the firm as experts in
giving the report. The address of PricewaterhouseCoopers LLP is
1177 Avenue of the Americas, New York, NY 10036-2798.
FURTHER INFORMATION
The Fund has filed with the SEC, Washington, D.C. 20549, a
registration statement under the Securities Act relating to the
shares offered by this Prospectus. Further information
concerning these shares and the Fund may be found in that
registration statement on file with the SEC, of which this
Prospectus constitutes a part. The Fund also files reports and
other information with the SEC. The registration statements and
these reports and other information can be inspected, without
charge, and copied, for a fee, at the public reference facilities
maintained by the SEC at 450 5th Street, Washington, D.C. 20549.
The Fund's filings are also available to the public on the SEC's
internet site (http://www.sec.gov). The reports and other
information concerning the Fund may also be inspected at the
offices of the NYSE.
89
<PAGE>
No one has been authorized to give any information or to make
any representation other than those contained in this Prospectus
in connection with this offer. If information is given or other
representations are made, such information or representations
must not be relied upon since neither was authorized by the Fund,
the Adviser, or the Dealer Manager. This Prospectus does not
constitute an offer to sell or the solicitation of any offer to
buy any security other than the Fund's shares, as described in
this Prospectus. This Prospectus also does not constitute an
offer to sell or a solicitation of any offer to buy the Fund's
shares, as described in this Prospectus, by anyone in any state
in which the person making such offer or solicitation is not
qualified to do so, or to any such person to whom it is illegal
to make such offer or solicitation. The information in this
Prospectus may no longer be correct after the date on the
Prospectus. However, if any material change occurs during the
period in which this Prospectus is legally required to be
delivered, the Prospectus will be amended or supplemented
accordingly.
90
<PAGE>
TABLE OF CONTENTS
[To Follow]
91
<PAGE>
838,584 SHARES OF COMMON STOCK
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
ISSUABLE UPON EXERCISE OF
RIGHTS TO SUBSCRIBE FOR
SUCH SECURITIES
PROSPECTUS
DEALER MANAGER
PAINEWEBBER INCORPORATED
[________], 1999
92
<PAGE>
FINANCIAL STATEMENTS
93
<PAGE>
ALLIANCE ALL-MARKET ADVANTAGE FUND
ANNUAL REPORT
SEPTEMBER 30, 1998
ALLIANCE CAPITAL
PORTFOLIO OF INVESTMENTS
SEPTEMBER 30, 1998 ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
SHARES VALUE
- -------------------------------------------------------------------------------
COMMON STOCKS-74.5%
TECHNOLOGY-38.5%
COMMUNICATION EQUIPMENT-10.1%
America Online, Inc.(a) 10,000 $ 1,112,500
Lucent Technologies, Inc.(a) 7,000 483,438
Nokia Corp. ADR(b) 84,500 6,627,969
------------
8,223,907
COMPUTER HARDWARE-15.2%
Compaq Computer Corp. 60,000 1,897,500
Dell Computer Corp.(a)(c) 139,200 9,152,400
EMC Corp.(c) 24,100 1,378,219
------------
12,428,119
COMPUTER SOFTWARE-4.8%
Microsoft Corp.(a)(c) 35,600 3,918,225
NETWORKING SOFTWARE-7.8%
Cisco Systems, Inc.(a)(c) 103,050 6,369,778
SEMICONDUCTOR COMPONENTS-0.6%
Intel Corp. 5,500 471,625
------------
31,411,654
FINANCE-16.0%
BANKING - REGIONAL-1.7%
Norwest Corp.(a) 19,500 698,344
U.S. Bancorp 20,000 711,250
------------
1,409,594
BROKERAGE & MONEY MANAGEMENT-2.1%
Merrill Lynch & Co., Inc.(a) 36,000 1,705,500
INSURANCE-2.4%
Progressive Corp.(a) 9,000 1,014,750
Travelers Group, Inc.(a) 24,000 900,000
------------
1,914,750
MORTGAGE BANKING-3.0%
Fannie Mae Corp. 27,000 1,734,750
H. F. Ahmanson & Co.(a) 8,600 477,300
Washington Mutual, Inc. 8,000 270,000
------------
2,482,050
MISCELLANEOUS-6.8%
Associates First Capital
Corp. Cl. A(a) 21,000 1,370,250
Household International, Inc.(a) 32,100 1,203,750
MBNA Corp.(a) 102,150 2,924,044
------------
5,498,044
------------
13,009,938
CONSUMER SERVICES-11.2%
AIRLINES-2.5%
Northwest Airlines, Inc. Cl. A(c) 34,200 857,137
UAL Corp.(a)(c) 18,300 1,186,069
------------
2,043,206
BROADCASTING & CABLE-5.0%
AirTouch Communications, Inc.(a)(c) 32,000 1,824,000
Tele-Communications Liberty Media
Group Cl. A(c) 60,500 2,219,594
------------
4,043,594
RETAIL - GENERAL MERCHANDISE-3.7%
Dayton Hudson Corp. 39,000 1,394,250
Home Depot, Inc.(a) 15,000 592,500
Kohl's Corp.(c) 27,400 1,068,600
------------
3,055,350
------------
9,142,150
5
PORTFOLIO OF INVESTMENTS (CONTINUED) ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
SHARES OR
CONTRACTS (D) VALUE
- -------------------------------------------------------------------------------
HEALTHCARE-6.2%
DRUGS-2.8%
Pfizer, Inc.(a) 17,000 $ 1,800,937
Warner-Lambert Co.(a) 6,500 490,750
------------
2,291,687
MEDICAL PRODUCTS-3.4%
HBO & Co.(a) 39,200 1,131,900
IMS Health, Inc.(a) 13,000 805,187
Medtronic, Inc.(a) 13,400 775,525
------------
2,712,612
------------
5,004,299
MULTI-INDUSTRY-2.6%
CAPITAL GOODS-2.6%
Tyco International Ltd.(a) 39,000 2,154,750
Total Common Stocks (cost $33,877,467) 60,722,791
CALL OPTIONS PURCHASED-27.2%(C)
AirTouch Communications, Inc.
expiring Jan '99 @ $20 550 2,062,500
expiring Jan '00 @ $20 150 556,875
Bristol-Myers Squibb Co.
expiring Jan '99 @ $60 250 1,110,937
expiring Jan '00 @ $60 100 468,750
Citicorp
expiring Jan '99 @ $60 20 68,500
Coca-Cola Co.
expiring Jan '99 @ $35 50 118,125
Dayton Hudson Corp.
expiring Jan '99 @ $22.50 240 324,000
Fannie Mae
expiring Jan '00 @ $40 80 217,000
General Electric Co.
expiring Jan '99 @ $30 100 502,500
expiring Jan '00 @ $50 100 337,500
Home Depot, Inc.
expiring Jan '99 @ $30 (e) 580 2,142,375
expiring Jan '00 @ $27.50 200 307,500
expiring Jan '00 @ $35 250 590,625
CONTRACTS (D) OR
PRINCIPAL
AMOUNT
(000) VALUE
- -------------------------------------------------------------------------------
MBNA Corp.
expiring Jan '99 @ $13.375 135 $ 311,344
expiring Jan '99 @ $15 180 254,250
expiring Jan '99 @ $16.625 225 417,656
expiring Jan '99 @ $20 100 91,250
Merck & Co., Inc.
expiring Jan '99 @ $55 150 1,125,000
expiring Jan '99 @ $60 20 140,250
Morgan Stanley, Dean Witter & Co.
expiring Jan '99 @ $30 400 595,000
NationsBank Corp.
expiring Jan '99 @ $35 230 457,125
Pfizer, Inc.
expiring Jan '99 @ $30 150 1,151,250
expiring Jan '99 @ $50 100 562,500
Philip Morris Cos., Inc.
expiring Jan '99 @ $23.375 505 1,174,125
Schering-Plough Corp.
expiring Jan '99 @ $25 425 3,352,187
Tyco International Ltd.
expiring Jan '00 @ $30 640 1,768,000
United Technologies Corp.
expiring Jan '99 @ $50 230 618,125
Wal-Mart Stores, Inc.
expiring Jan '00 @ $30 50 135,625
expiring Jan '00 @ $35 350 774,375
expiring Jan '00 @ $40 50 101,250
Walt Disney Co.
expiring Jan '99 @ $50 425 387,813
Total Call Options Purchased
(cost $15,225,920) 22,224,312
SHORT TERM INVESTMENT-1.3%
COMMERCIAL PAPER-1.3%
General Electric Capital Corp.
5.70%, 10/01/98
(amortized cost ($1,049,000) $1,049 1,049,000
TOTAL INVESTMENTS-103.0%
(cost $50,152,387) $83,996,103
6
ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
CONTRACTS (D) VALUE
- -------------------------------------------------------------------------------
CALL OPTIONS WRITTEN-(1.4%)(C)
Chicago Board Options Exchange
NASDAQ 100 Index
expiring Oct '98 @ $1,280 15 $ (136,312)
expiring Oct '98 @ $1,300 30 (231,000)
expiring Oct '98 @ $1,320 5 (31,063)
expiring Oct '98 @ $1,360 10 (38,000)
expiring Oct '98 @ $1,380 10 (25,625)
expiring Oct '98 @ $1,400 20 (40,000)
Cisco Systems, Inc.
expiring Oct '98 @ $65 130 (20,313)
Dell Computer Corp.
expiring Oct '98 @ $60 100 (75,000)
expiring Oct '98 @ $62.50 140 (80,500)
expiring Oct '98 @ $70 70 (12,688)
Merrill Lynch & Co., Inc.
expiring Oct '98 @ $45 100 (42,500)
Nokia Corp.
expiring Oct '98 @ $80 (b) 100 (36,250)
Standard & Poor's 500 Index
expiring Oct '98 @ $995 30 $(142,500)
expiring Oct '98 @ $1,010 20 (70,000)
expiring Oct '98 @ $1,025 20 (54,000)
expiring Oct '98 @ $1,030 20 (48,000)
expiring Oct '98 @ $1,050 65 (96,687)
Total Call Options Written
(premiums received $1,306,240) (1,180,438)
TOTAL INVESTMENTS, NET OF OUTSTANDING
CALL OPTIONS WRITTEN-101.6%
(cost $48,846,147) 82,815,665
Other assets less liabilities-(1.6%) (1,263,646)
NET ASSETS-100% $81,552,019
(a) Security or a portion thereof, has been segregated to collateralize open
options written. This collateral has a total market value of approximately
$25,968,392.
(b) Country of origin--Finland.
(c) Non-income producing.
(d) One contract relates to 100 shares unless otherwise indicated.
(e) One contract relates to 150 shares.
Glossary of Terms:
ADR - American Depository Receipt.
See notes to financial statements.
7
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998 ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $50,152,387) $83,996,103
Receivable for investment securities sold 3,302,994
Dividends receivable 19,468
Deferred organization expenses and other assets 19,112
Total assets 87,337,677
LIABILITIES
Due to custodian 325,058
Outstanding call options written, at value (premiums
received $1,306,240) 1,180,438
Dividend payable 2,464,879
Payable for investment securities purchased 1,437,159
Advisory fee payable 123,649
Administration fee payable 17,620
Accrued expenses 236,855
Total liabilities 5,785,658
NET ASSETS $81,552,019
COMPOSITION OF NET ASSETS
Capital stock, at par $25,080
Additional paid-in capital 49,470,792
Accumulated net realized loss on investment transactions (1,913,371)
Net unrealized appreciation of investments and options written 33,969,518
$81,552,019
NET ASSET VALUE PER SHARE (based on 2,508,017 shares outstanding) $32.52
See notes to financial statements.
8
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1998 ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
INVESTMENT INCOME
Dividends (net of foreign taxes withheld
of $10,345) $284,590
Interest 60,878 $ 345,468
EXPENSES
Advisory fee 1,528,461
Administrative 221,977
Custodian 161,142
Audit and legal 96,327
Shareholder servicing 88,710
Printing 53,599
Directors' fees and expenses 39,672
Transfer agency 17,625
Registration 16,058
Dividends on securities sold short 5,226
Amortization of organization expenses 4,000
Miscellaneous 3,995
Total expenses before interest 2,236,792
Interest expense on short sales 41,327
Total expenses 2,278,119
Net investment loss (1,932,651)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
SHORT SALES AND OPTIONS WRITTEN
Net realized gain on long transactions 10,885,551
Net realized gain on short sale transactions 36,031
Net realized loss on written option transactions (2,055,105)
Net change in unrealized appreciation of
investments, short sales and options written 2,937,240
Net gain on investments 11,803,717
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 9,871,066
See notes to financial statements.
9
STATEMENT OF CHANGES IN NET ASSETS ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
YEAR ENDED YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997
------------- -------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment loss $(1,932,651) $(1,439,672)
Net realized gain on investment,
short sale and written option
transactions 8,866,477 12,310,009
Net change in unrealized
appreciation of investments,
short sales and options written 2,937,240 23,766,594
Net increase in net assets
from operations 9,871,066 34,636,931
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments (12,924,008) (5,741,965)
COMMON STOCK TRANSACTIONS
Reinvestment of dividends resulting
in issuance of common stock 127,507 -0-
Total increase (decrease) (2,925,435) 28,894,966
NET ASSETS
Beginning of year 84,477,454 55,582,488
End of year $81,552,019 $84,477,454
See notes to financial statements.
10
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998 ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
Alliance All-Market Advantage Fund, Inc. (the "Fund") was incorporated under
the laws of the state of Maryland on August 16, 1994 and is registered under
the Investment Company Act of 1940 as a non-diversified, closed-end management
investment company. The financial statements have been prepared in conformity
with generally accepted accounting principles which require management to make
certain estimates and assumptions that affect the reported amounts of assets
and liabilities in the financial statements and amounts of income and expenses
during the reporting period. Actual results could differ from those estimates.
The following is a summary of significant accounting policies followed by the
Fund.
1. SECURITY VALUATION
Portfolio securities traded on a national securities exchange or on a foreign
securities exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are
generally valued at the last reported sales price or if no sale occurred, at
the mean of the closing bid and asked prices on that day. Readily marketable
securities traded in the over-the-counter market, securities listed on a
foreign securities exchange whose operations are similar to the U.S.
over-the-counter market, and securities listed on a national securities
exchange whose primary market is believed to be over-the-counter, are valued at
the mean of the current bid and asked prices. U.S. government and fixed income
securities which mature in 60 days or less are valued at amortized cost, unless
this method does not represent fair value. Securities for which current market
quotations are not readily available are valued at their fair value as
determined in good faith by, or in accordance with procedures adopted by, the
Board of Directors. Fixed income securities may be valued on the basis of
prices obtained from a pricing service when such prices are believed to reflect
the fair market value of such securities.
2. TAXES
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if applicable, to
shareholders. Therefore, no provision for federal income or excise taxes is
required.
3. ORGANIZATION EXPENSES
Organization expenses of approximately $20,000 have been deferred and are being
amortized on a straight-line basis through November, 1999.
4. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Dividend income (or expense on securities sold short) is recorded on the
ex-dividend date. Investment transactions are accounted for on the date
securities are purchased or sold. Investment gains and losses are determined on
the identified cost basis.
5. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income and capital gains distributions are determined in accordance with
federal tax regulations and may differ from those determined in accordance with
generally accepted accounting principles. To the extent these differences are
permanent, such amounts are reclassified within the capital accounts based on
their federal tax basis treatment; temporary differences do not require such
reclassification. During the current fiscal year, permanent differences,
primarily due to net investment loss, resulted in a net decrease in accumulated
net realized gain on investment transactions and a corresponding increase in
accumulated net investment loss. This reclassification had no affect on net
assets.
NOTE B: ADVISORY, ADMINISTRATIVE FEES AND OTHER AFFILIATED TRANSACTIONS
Under the terms of an Investment Advisory Agreement, the Fund pays Alliance
Capital Management L.P. (the "Investment Adviser") a monthly fee at an
annualized rate of 1.50% of the Fund's average weekly net assets (the "Basic
Fee") and an adjustment to the Basic Fee based upon the investment performance
of the Fund in relation to the investment record of the Russell 1000 Growth
Index for certain prescribed periods. During the year ended September 30, 1998,
the fee as adjusted, amounted to 1.72% of the Fund's average net assets.
11
NOTES TO FINANCIAL STATEMENTS
(CONTINUED) ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
Under the terms of an Administrative Agreement, the Fund pays its
Administrator, Alliance Capital Management L.P., a monthly fee equal to the
annualized rate of .25 of 1% of the Fund's average weekly net assets. The
Administrator provides administrative functions to the Fund as well as other
clerical services. The Administrator also prepares financial and regulatory
reports for the Fund.
Under the terms of a Shareholder Inquiry Agency Agreement with Alliance Fund
Services, Inc. ("AFS"), an affiliate of the Investment Adviser, the Fund
reimburses AFS for costs relating to servicing phone inquiries for the Fund.
The Fund reimbursed AFS$1,215 during the year ended September 30, 1998.
Under terms of a Shareholder Servicing Agreement, the Fund pays its Shareholder
Servicing Agent, Paine Webber Inc. a quarterly fee equal to the annualized rate
of .10 of 1% of the Fund's average weekly net assets.
Brokerage commissions paid on investment transactions for the year ended
September 30, 1998 amounted to $250,574, none of which was paid to brokers
utilizing the services of the Pershing Division of Donaldson, Lufkin & Jenrette
Securities Corp., an affiliate of the Adviser.
NOTE C: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments,
short-term options, and U.S. government securities) aggregated $80,730,704 and
$94,323,383, respectively, for the year ended September 30, 1998. There were no
purchases or sales of U.S. government or government agency obligations for the
year ended September 30, 1998.
At September 30, 1998, the cost of investments for federal income tax purposes
was $49,206,916. Accordingly, gross unrealized appreciation of investments was
$35,977,558 and gross unrealized depreciation of investments was $2,368,809
resulting in net unrealized appreciation of $33,608,749.
1. OPTIONS TRANSACTIONS
For hedging purposes, the Fund purchases and writes (sells) options on market
indices and covered put and call options on U.S. securities that are traded on
U.S. securities exchanges and over-the-counter markets.
The risk associated with purchasing an option is that the Fund pays a premium
whether or not the option is exercised. Additionally, the Fund bears the risk
of loss of the premium and any change in market value should the counterparty
not perform under the contract. Put and call options purchased are accounted
for in the same manner as portfolio securities. The cost of securities acquired
through the exercise of call options is increased by premiums paid. The
proceeds from securities sold through the exercise of put options are decreased
by the premiums paid.
When the Fund writes an option, the premium received by the Fund is recorded as
a liability and is subsequently adjusted to the current market value of the
option written.
Premiums received from writing options which expire unexercised are recorded by
the Fund on the expiration date as realized gains from option transactions. The
difference between the premium and the amount paid on effecting a closing
purchase transaction, including brokerage commissions, is also treated as a
realized gain, or if the premium is less than the amount paid for the closing
purchase transaction, as a realized loss. If a written call option is
exercised, the premium is added to the proceeds from the sale of the underlying
security in determining whether the Fund has realized a gain or loss. If a
written put option is exercised, the premium reduces the cost basis of the
security purchased by the Fund. In writing covered options, the Fund bears the
market risk of an unfavorable change in the price of the security underlying
the written option. Exercise of an option written by the Fund could result in
the Fund selling or buying a security at a price different from the current
market value. Losses from written market index options may be unlimited.
12
ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
Transactions in options written for the year ended September 30, 1998 were as
follows:
NUMBER PREMIUMS
OF CONTRACTS RECEIVED
------------ ---------
Options outstanding at beginning of year 350 $ 1,191,160
Options written 13,464 26,336,503
Options terminated in closing purchase
transactions (12,804) (25,834,686)
Options expired (125) (386,737)
Options outstanding at September 30, 1998 885 $ 1,306,240
2. SECURITIES SOLD SHORT
The Fund may sell securities short. A short sale is a transaction in which the
Fund sells securities it does not own, but has borrowed, in anticipation of a
decline in the market price of the securities. The Fund is obligated to replace
the borrowed securities at their market price at the time of replacement. The
Fund's obligation to replace the securities borrowed in connection with a short
sale will be fully secured by collateral deposited with the broker. In
addition, the Fund will consider the short sale to be a borrowing by the Fund
that is subject to the asset coverage requirements of the 1940 Act. Short sales
by the Fund involve certain risks and special considerations. Possible losses
from short sales differ from losses that could be incurred from a purchase of a
security because losses from short sales may be unlimited, whereas losses from
purchases can not exceed the total amount invested. The Fund is currently
paying an interest expense of 6.25% to the prospective brokers on the market
value of the short sales.
NOTE D: CAPITAL STOCK
There are 300,000,000 shares of $.01 par value common stock authorized. Of the
2,508,017 shares outstanding at September 30, 1998, the Investment Adviser
owned 5,000 shares. During the year ended September 30, 1998, the Fund issued
3,017 shares in connection with the Fund's dividend reinvestment plan. During
the year ended September 30, 1997, the Fund did not issue shares in connection
with the Fund's dividend reinvestment plan.
13
FINANCIAL HIGHLIGHTS ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF COMMON STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NOVEMBER 4,
YEAR ENDED SEPTEMBER 30, 1994(A)
------------------------ TO SEPT. 30,
1998 1997 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $33.72 $22.19 $23.78 $19.70(b)
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.77) (.58) (.48) (.09)
Net realized and unrealized gain on
investment transactions 4.73 14.40 1.86 5.65
Net increase in net asset value from
operations 3.96 13.82 1.38 5.56
LESS: DISTRIBUTIONS
Distributions from net realized gains (5.16) (2.29) (2.97) (1.48)
Net asset value, end of period $32.52 $33.72 $22.19 $23.78
Market value, end of period $36.875 $31.188 $19.00 $19.50
TOTAL RETURN
Total investment return based on: (c)
Market value 37.40% 79.27% 13.26% 5.46%
Net asset value 12.49% 65.66% 8.10% 28.60%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) $81,552 $84,477 $55,582 $59,561
Ratio of expenses to average net assets 2.57% 2.48% 2.87% 2.00%(d)
Ratio of expenses to average net assets
excluding interest expense 2.52%(e) 2.43%(e) 2.62%(e) 2.00%(d)
Ratio of net investment loss to
average net assets (2.18)% (2.07)% (2.11)% (.48)%(d)
Portfolio turnover rate 96% 105% 199% 140%
</TABLE>
(a) Commencement of operations.
(b) Net of offering costs of $.30.
(c) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed for
purposes of this calculation, to be reinvested at prices obtained under the
Fund's dividend reinvestment plan. Generally, total investment return based on
net asset value will be higher than total investment return based on market
value in periods where there is an increase in the discount or a decrease in
the premium of the market value to the net asset value from the beginning to
the end of such periods. Conversely, total investment return based on the net
asset value will be lower than total investment return based on market value in
periods where there is a decrease in the discount or an increase in the premium
of the market value to the net asset value from the beginning to the end of
such periods. Total return for a period of less than one year is not annualized.
(d) Annualized.
(e) Net of interest expense of .05%, .05% and .25%, respectively, on short
sales (see Note C).
14
REPORT OF INDEPENDENT ACCOUNTANTS ALLIANCE ALL-MARKET ADVANTAGE FUND
_______________________________________________________________________________
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF ALLIANCE ALL-MARKET ADVANTAGE
FUND, INC.
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Alliance All-Market Advantage
Fund, Inc. (the "Fund") at September 30, 1998, the results of its operations
for the year then ended, the changes in its net assets for each of the two
years in the period then ended, and the financial highlights for each of the
three years in the period then ended and for the period November 4, 1994
(commencement of operations) through September 30, 1995, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at September 30, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
November 18, 1998
ALLIANCE ALL-MARKET ADVANTAGE FUND
Summary of General Information
INVESTMENT OBJECTIVES AND POLICIES
The Fund's investment objective is to seek long-term growth of capital through
all market conditions. Consistent with the investment style of the Adviser's
Large-Cap Growth Group, the Fund will invest in a core portfolio of equity
securities (common stocks, securities convertible into common stocks and rights
and warrants to subscribe for or purchase common stocks) of large,
intensely-researched, high-quality companies that, in the judgement of the
Adviser, are likely to achieve superior earnings growth.
SHAREHOLDER INFORMATION
Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Transaction section of newspapers under the designation
"AllncAll". The Fund's NYSE trading symbol is "AMO". Weekly comparative net
asset value (NAV) and market price information about the Fund is published each
Monday in THE WALL STREET JOURNAL, each Sunday in THE NEW YORK TIMES and each
Saturday in BARRON'S, as well as other newspapers ina table called "Closed-End
Funds".
DIVIDEND REINVESTMENT PLAN
All shareholders whose shares are registered in their own names will have all
distributions reinvested automatically in additional shares, unless a
shareholder elects to receive cash.
Shareholders whose shares are held in the name of a broker or nominee will
automatically have distributions reinvested by the broker or nominee in
additional shares under the Plan, unless the automatic reinvestment service is
not provided by the particular broker or nominee or the Shareholder elects to
receive distributions in cash.
The Plan provides you with a convenient way to reinvest your dividends and
capital gains in additional shares of the Fund, thereby enabling you to
compound your returns from the Fund.
For questions concerning shareholder account information, or if you would like
a brochure describing the Dividend Reinvestment Plan, please call The Bank of
New York at 1-800-432-8224.
ALLIANCE ALL-MARKET ADVANTAGE FUND
1345 Avenue of the Americas
New York, New York 10105
ALLIANCE CAPITAL
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER, ALLIANCE
CAPITAL MANAGEMENT L.P.
AMAAR
<PAGE>
PART C
Item 24. Financial Statements and Exhibits
1. Financial Statements
Included in Part A:
Financial Highlights
Included in Part C: Incorporated in Part C by reference to
Registrant's September 30, 1998 Annual Report and
Registrant's [________], 1999 Semi-Annual Report (To be
filed by subsequent amendment.):
1. Portfolio of Investments for the year ended September
30, 1998 and interim period.
2. Statement of Assets and Liabilities for the year ended
September 30, 1998 and interim period.
3. Statement of Operations for the year ended September
30, 1998 and September 30, 1997 and the interim period.
4. Statement of Changes in Net Assets for the year ended
September 30, 1998 and the interim period.
5. Notes to Financial Statements.
6. Financial Highlights
7. Report of Independent Accountants dated November 18,
1998.
2. Exhibits.
(a) Articles of Incorporation1
(b) By-Laws2
(c) Not applicable.
____________________
1. Previously filed as Exhibit A to the Registrant's
Registration Statement filed August 16, 1994 (File No. 33-
82896, 811-08702); to be filed electronically as an Exhibit
to this Registration Statement by pre-effective amendment.
2. Previously filed as Exhibit B to the Registrant's
Registration Statement filed August 16, 1994 (File No. 33-
82896, 811-08702); to be filed electronically as an Exhibit
to this Registration Statement by pre-effective amendment.
C-94
<PAGE>
(d) (1) Form of Subscription Certificate (To be filed by
subsequent amendment.)
(2) Form of Notice of Guaranteed Delivery (To be filed by
subsequent amendment.)
(3) DTC Participant Over-Subscription Certificate (To be
filed by subsequent amendment.)
(4) Nominee Holder Over-Subscription Certificate (To be
filed by subsequent amendment.)
(5) Subscription Rights Agency Agreement (To be filed by
subsequent amendment.)
(e) Dividend Reinvestment Plan3
(f) Not applicable
(g) Investment Advisory Agreement4
(h) (1) Dealer Manager Agreement (To be filed by subsequent
amendment.)
(2) Master Dealer Manager/Dealer Agreement (To be filed by
subsequent amendment.)
(i) Not applicable
(j) Custodian Agreement5
____________________
3. Previously filed as Exhibit E to Pre-Effective Amendment No.
1 of the Registrant's Registration Statement filed September
23, 1994 (File No. 33-82896, 811-08702); to be filed
electronically as an Exhibit to this Registration Statement
by pre-effective amendment.
4. Previously filed as Exhibit G to Pre-Effective Amendment No.
1 of the Registrant's Registration Statement filed September
23, 1994 (File No. 33-82896, 811-08702); to be filed
electronically as an Exhibit to this Registration Statement
by pre-effective amendment.
5. Previously filed as Exhibit J to Pre-Effective Amendment No.
1 of the Registrant's Registration Statement filed September
23, 1994 (File No. 33-82896, 811-08702); to be filed
electronically as an Exhibit to this Registration Statement
by pre-effective amendment.
C-95
<PAGE>
(k) (1) Transfer Agency Agreement6
(2) Administration Agreement7
(3) Shareholder Servicing Agreement8
(4) Shareholder Inquiry Agency Agreement (To be filed by
subsequent amendment.)
(l) (1) Opinion and Consent of Seward & Kissel LLP (To be filed
by subsequent amendment.)
(2) Opinion and Consent of Venable, Baetjer and Howard, LLP
(To be filed by subsequent amendment.)
(m) Not applicable
(n) Consent of Independent Auditors
(o) Not applicable
(p) Investment Representation Letter9
(q) Not applicable
____________________
6. Previously filed as Exhibit K(1) to Pre-Effective Amendment
No. 1 of the Registrant's Registration Statement filed
September 23, 1994 (File No. 33-82896, 811-08702); to be
filed electronically as an Exhibit to this Registration
Statement by pre-effective amendment.
7. Previously filed as Exhibit K(2) to Pre-Effective Amendment
No. 1 of the Registrant's Registration Statement filed
September 23, 1994 (File No. 33-82896, 811-08702); to be
filed electronically as an Exhibit to this Registration
Statement by pre-effective amendment.
8. Previously filed as Exhibit K(3) to Pre-Effective Amendment
No. 1 of the Registrant's Registration Statement filed
September 23, 1994 (File No. 33-82896, 811-08702); to be
filed electronically as an Exhibit to this Registration
Statement by pre-effective amendment.
9. Previously filed as Exhibit P to Pre-Effective Amendment No.
2 of the Registrant's Registration Statement filed October
28, 1994 (File No. 33-82896, 811-08702); to be filed
electronically as an Exhibit to this Registration Statement
by pre-effective amendment.
C-96
<PAGE>
(r) Financial Data Schedule (To be filed by subsequent
amendment.)
Other Exhibits: Powers of Attorney
Item 25. Marketing Arrangements
See Dealer Manager Agreement to be filed as Exhibit (h)(1).
Item 26. Other Expenses of Issuance and Distribution
(To be filed by subsequent amendment.)
Registration fees $[__]
National Association of Securities Dealers, Inc. fees $[__]
Printing $[__]
Fees and expenses of qualifications under state
securities laws (including fees of counsel) $[__]
Securities laws (including fees of counsel) $[__]
Legal fees and expenses $[__]
Dealer Manager expenses $[__]
Auditing fees and expenses $[__]
New York Stock Exchange listing fees $[__]
Subscription Agent fees and expenses $[__]
Information Agent fees and expenses $[__]
Miscellaneous $[__]
Item 27. Persons Controlled by or Under Common Control
Not applicable
Item 28. Number of Holders of Securities (as of [________],
1999)
Title of Class Number of Record Holders
Common Stock ($0.01 par value per share [________]
Item 29. Indemnification
It is the Registrant's policy to indemnify its directors and
officers, employees and other agents to the maximum extent
permitted by Section 2-418 of the General Corporation Law of the
State of Maryland and as set forth in Article EIGHTH of
Registrant's Articles of Incorporation to be filed as Exhibit
(a),10 Article 9 of the Registrant's Bylaws to be filed as
____________________
10. Previously filed as Exhibit A to the Registrant's
Registration Statement filed August 16, 1994 (File No. 33-
82896, 811-08702); to be filed electronically as an Exhibit
to this Registration Statement by pre-effective amendment.
C-97
<PAGE>
Exhibit (b)11 and Section [_] of the Dealer Manager Agreement to
be filed as Exhibit (h)(1). The Adviser's liability for any loss
suffered by the Registrant or its stockholders is set forth in
Section 4 of the Investment Advisory Agreement to be filed as
Exhibit (g) to this Registration Statement.12 The
Administrator's liability for any loss suffered by the Registrant
or its stockholders is set forth in Section 6 of the
Administration Agreement to be filed as Exhibit (k)(2).13
Item 30. Business and Other Connections of Alliance
The description of Alliance Capital Management L.P. under
the caption "Management of the Fund-Investment Adviser" in the
Prospectus is incorporated by reference herein.
The information as to the directors and executive officers
of Alliance Capital Management Corporation, the general partner
of Alliance, set forth in Alliance Capital Management L.P.'s Form
ADV filed with the Securities and Exchange Commission on April
21, 1988 (File No. 801-32361) and as amended through the date
hereof is incorporated by reference herein.
Item 31. Location of Accounts and Records
The accounts, books and other documents required to be
maintained by Section 31(a) of the Investment Company Act of 1940
and the Rules thereunder are maintained as follows: journals,
ledgers, securities records and other original records are
maintained principally at the offices of Alliance Capital
Management L.P., 500 Plaza Drive, Secaucus, New Jersey 07094, and
at the offices of The Bank of New York, the Registrant's
Custodian, Transfer Agent, Dividend-Disbursing Agent and
Registrar, 101 Barclay Street, New York 10286. All other records
____________________
11. Previously filed as Exhibit B to the Registrant's
Registration Statement filed August 16, 1994 (File No. 33-
82896, 811-08702); to be filed electronically as an Exhibit
to this Registration Statement by pre-effective amendment.
12. Previously filed as Exhibit G to Pre-Effective Amendment No.
1 of the Registrant's Registration Statement filed September
23, 1994 (File No. 33-82896, 811-08702); to be filed
electronically as an Exhibit to this Registration Statement
by pre-effective amendment.
13. Previously filed as Exhibit K(2) to Pre-Effective Amendment
No. 1 of the Registrant's Registration Statement filed
September 23, 1994 (File No. 33-82896, 811-08702); to be
filed electronically as an Exhibit to this Registration
Statement by pre-effective amendment.
C-98
<PAGE>
so required to be maintained are maintained at the offices of
Alliance Capital Management L.P., 1345 Avenue of the Americas,
New York, New York 10105.
Item 32. Management Services
Not applicable.
Item 33. Undertakings
1. Registrant undertakes to suspend offering of the shares
covered hereby until it amends its Prospectus contained
herein if subsequent to the effective date of this
Registration Statement, its net asset value per share
declines more than 10 percent from its net asset value per
share as of the effective date of this Registration
Statement.
2. Not applicable
3. Not applicable
4. (a) Registrant undertakes to file, during any period in
which offers or sales are being made, a post-effective
amendment to this Registration Statement:
(1) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(2) to reflect in the prospectus any facts or events
after the effective date of this Registration
Statement (or the most recent post-effective
amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in this Registration
Statement; and
(3) to include any material information with respect
to the plan of distribution not previously
disclosed in this Registration Statement or any
material change to such information in this
Registration Statement.
(4) (a) Registrant undertakes to file, during any
period in which offers or sales are being made, a
post-effective amendment to this Registration
Statement:
(1) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
C-99
<PAGE>
(2) to reflect in the prospectus any facts or
events after the effective date of this
Registration (or the most recent post-
effective amendment hereof) which,
individually or in the aggregate, represent a
fundamental change in the information set
forth in this Registration Statement; and
(3) to include any material information with
respect to the plan of distribution not
previously disclosed in this Registration
Statement or any material change to such
information in this Registration Statement.
(b) Registrant undertakes that, for the purpose of
determining any liability under the Securities Act of 1933,
each subsequent post-effective amendment shall be deemed to
be a new registration statement relating to the securities
offered therein, and the offering of those securities at
that time shall be deemed to be the initial bona fide
offering thereof.
(c) Registrant undertakes to remove from registration by
means of a post-effective amendment any of the securities
being registered which remain unsold at the termination of
the offering.
5. Not applicable
6. Not applicable
C-100
<PAGE>
EXHIBIT INDEX
Exhibit Sequentially Numbered Page
Exhibit (n) Consent of Independent Auditors
Other Exhibits Powers of Attorney of Ms. Block,
Messrs. Carifa, Dievler, Hester,
Dobkin, Michel, White and Foulk
C-101
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
as amended, and the Investment Company Act of 1940, as amended,
the Registrant has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in The City of New York and the State of New York, on
the 5th day of May 1999.
Alliance All-Market Advantage Fund, Inc.
By /s/ John D. Carifa
_____________________
John D. Carifa
Chairman
Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed below by
the following persons in the capacities and on the date
indicated.
Signature Title Date
_________ _____ ____
(1) Principal Executive Chairman 05/05/99
/s/ John D. Carifa
__________________
John D. Carifa
(2) Principal Financial Treasurer
and Accounting and Chief
Officer: Financial
Officer 05/05/99
/s/ Mark D. Gersten
___________________
Mark D. Gersten
C-102
<PAGE>
(3) Majority of the Directors:
John D. Carifa*
Ruth Block *
David H. Dievler*
John H. Dobkin*
William H. Foulk, Jr.*
Dr. James M. Hester*
Clifford L. Michel*
Robert C. White *
Donald J. Robinson
*By /s/ Edmund P. Bergan, Jr.
____________________________
Edmund P. Bergan, Jr.
Attorney-in-fact
C-103
00250205.AR5
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Prospectus constituting parts of this Registration Statement
under the Investment Company Act of 1940 Amendment No. 3 on Form
N-2 (the "Registration Statement") of our report dated
November 18, 1998, relating to the financial statements and
financial highlights appearing in the September 30, 1998 Annual
Report to Shareholders of Alliance All-Market Advantage Fund,
Inc., which is also incorporated by reference into the
Registration Statement. We also consent to the references to us
under the headings "Financial Highlights" and "Experts" in the
Prospectus.
/s/ PricewaterhouseCoopers LLP
__________________________
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
May 5, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa and Edmund P. Bergan,
Jr., and each of them, to act severally as attorneys-in-fact and
agents, with power of substitution and re-substitution, for the
undersigned in any and all capacities, solely for the purpose of
signing the Registration Statement, and any amendments thereto,
on Form N-2 of Alliance All-Market Advantage Fund, Inc. and
filing the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ John D. Carifa
_________________________
John D. Carifa
Dated: May 4, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa and Edmund P. Bergan,
Jr., and each of them, to act severally as attorneys-in-fact and
agents, with power of substitution and re-substitution, for the
undersigned in any and all capacities, solely for the purpose of
signing the Registration Statement, and any amendments thereto,
on Form N-2 of Alliance All-Market Advantage Fund, Inc. and
filing the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ David H. Dievler
_________________________
David H. Dievler
Dated: May 4, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa and Edmund P. Bergan,
Jr., and each of them, to act severally as attorneys-in-fact and
agents, with power of substitution and re-substitution, for the
undersigned in any and all capacities, solely for the purpose of
signing the Registration Statement, and any amendments thereto,
on Form N-2 of Alliance All-Market Advantage Fund, Inc. and
filing the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may do or
cause to be done by virtue hereof.
/s Ruth Block
_________________________
Ruth Block
Dated: May 4, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa and Edmund P. Bergan,
Jr., and each of them, to act severally as attorneys-in-fact and
agents, with power of substitution and re-substitution, for the
undersigned in any and all capacities, solely for the purpose of
signing the Registration Statement, and any amendments thereto,
on Form N-2 of Alliance All-Market Advantage Fund, Inc. and
filing the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ James M. Hester
_________________________
James M. Hester
Dated: May 4, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa and Edmund P. Bergan,
Jr., and each of them, to act severally as attorneys-in-fact and
agents, with power of substitution and re-substitution, for the
undersigned in any and all capacities, solely for the purpose of
signing the Registration Statement, and any amendments thereto,
on Form N-2 of Alliance All-Market Advantage Fund, Inc. and
filing the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ John H. Dobkin
_________________________
John H. Dobkin
Dated: May 4, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa and Edmund P. Bergan,
Jr., and each of them, to act severally as attorneys-in-fact and
agents, with power of substitution and re-substitution, for the
undersigned in any and all capacities, solely for the purpose of
signing the Registration Statement, and any amendments thereto,
on Form N-2 of Alliance All-Market Advantage Fund, Inc. and
filing the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ Clifford L. Michel
_________________________
Clifford L. Michel
Dated: May 4, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa and Edmund P. Bergan,
Jr., and each of them, to act severally as attorneys-in-fact and
agents, with power of substitution and re-substitution, for the
undersigned in any and all capacities, solely for the purpose of
signing the Registration Statement, and any amendments thereto,
on Form N-2 of Alliance All-Market Advantage Fund, Inc. and
filing the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ Robert C. White
_________________________
Robert C. White
Dated: May 4, 1999
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose
signature appears below hereby revokes all prior powers granted
by the undersigned to the extent inconsistent herewith and
constitutes and appoints John D. Carifa and Edmund P. Bergan,
Jr., and each of them, to act severally as attorneys-in-fact and
agents, with power of substitution and re-substitution, for the
undersigned in any and all capacities, solely for the purpose of
signing the Registration Statement, and any amendments thereto,
on Form N-2 of Alliance All-Market Advantage Fund, Inc. and
filing the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may do or
cause to be done by virtue hereof.
/s/ William H. Foulk, Jr.
_________________________
William H. Foulk, Jr.
Dated: May 4, 1999
00250205.AR6
