As filed with the Securities and Exchange
Commission on August 31, 2007
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [__]
Post-Effective Amendment No. [__]
AllianceBernstein Large Cap Growth Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code:
(800) 221-5672
EMILIE D. WRAPP
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Copies of Communications to:
KATHLEEN K. CLARKE
Seward & Kissel LLP
1200 G. Street, NW., Suite 350
Washington, DC 20005
Title of Securities Being Registered:
Class A
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement becomes effective.
It is proposed that this filing will become effective on October 2, 2007
pursuant to Rule 488 under the Securities Act of 1933.
No filing fee is required because an indefinite number of shares has previously
been registered pursuant to Rule 24f-2 under the Investment Company Act of 1940,
as amended.
CONTENTS OF FORM N-14 REGISTRATION STATEMENT
This Registration Statement contains the following papers and documents:
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o Cover Sheet
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o Contents of Registration Statement
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o Letter to Shareholders
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o Notice of Special Meetings of Shareholders
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o Part A - Proxy Statement/Prospectus
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o Part B - Statement of Additional Information
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o Part C - Other Information
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o Signatures
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o Exhibits
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[LOGO]
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
September [__], 2007
Dear Stockholders:
The Board of Directors (the "Directors") of Alliance All-Market Advantage
Fund, Inc. ("AMA") is pleased to invite you to a Special Meeting of Stockholders
of AMA (the "Meeting") to be held on Friday, November 9, 2007. At this Meeting,
we are asking you to approve the acquisition of the assets and the assumption of
the liabilities of AMA by AllianceBernstein Large Cap Growth Fund, Inc. ("Large
Cap Growth"). The proposed acquisition is described in more detail in the
attached Prospectus/Proxy Statement.
Large Cap Growth is the larger counterpart of AMA with the same core
investment strategy and closely similar investment policies. We anticipate that
the proposed acquisition will result in benefits to the stockholders of AMA,
including a reduction in expenses, as more fully discussed in the
Prospectus/Proxy Statement.
The Directors of AMA have given careful consideration to the proposed
acquisition and have concluded that the acquisition is in the best interests of
AMA and its stockholders. The Directors recommend that you vote "for" the
proposed acquisition of AMA by Large Cap Growth.
If the acquisition of AMA by Large Cap Growth is approved by stockholders
of AMA, each AMA stockholder will receive Class A shares of Large Cap Growth
having an aggregate net asset value ("NAV") equal to the aggregate NAV of the
stockholder's shares in AMA. AMA would then cease operations and dissolve. You
will not be assessed any sales charges or other stockholder fees in connection
with the proposed acquisition.
We welcome your attendance at the Meeting. If you are unable to attend, we
encourage you to authorize proxies to cast your vote. The Altman Group, Inc.
(the "Proxy Solicitor"), a proxy solicitation firm, has been selected to assist
in the proxy solicitation process. If we have not received your proxy as the
date of the Meeting approaches, you may receive a telephone call from the Proxy
Solicitor to remind you to submit your proxy. No matter how many shares you own,
your vote is important.
Sincerely,
Marc O. Mayer
President
[LOGO]
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
(800) 221-5672
NOTICE OF A SPECIAL MEETING OF STOCKHOLDERS
SCHEDULED FOR NOVEMBER 9, 2007
To the stockholders of Alliance All-Market Advantage Fund, Inc. ("AMA"), a
Maryland corporation:
Notice is hereby given that a Special Meeting of the Stockholders of AMA
(the "Meeting") will be held at 1345 Avenue of the Americas, [] Floor, New York,
New York 10105 on Friday, November 9, 2007, at 4:00 p.m., Eastern Time, to
consider and vote on the following proposal, which is more fully described in
the accompanying Prospectus/Proxy Statement dated September [____], 2007:
1. To approve an Agreement and Plan of Acquisition and Liquidation
between Alliance All-Market Advantage Fund, Inc. and AllianceBernstein
Large Cap Growth Fund, Inc. (the "Plan") providing for the acquisition
by AllianceBernstein Large Cap Growth Fund, Inc. ("Large Cap Growth")
of all of the assets and assumption of all of the liabilities of AMA
in exchange for Class A shares of Large Cap Growth (the "Proposal"). A
vote in favor of this Proposal by the stockholders of AMA also will
constitute a vote in favor of the dissolution of AMA and termination
of its registration under the Investment Company Act of 1940, as
amended.
2. To transact any other business that may properly come before the
Meeting and any adjournments or postponements thereof.
Any stockholder of record of AMA at the close of business on August 31,
2007 (the "Record Date") is entitled to notice of, and to vote at, the Meeting
or any adjournments or postponements thereof. Proxies are being solicited on
behalf of the Board of Directors. Each stockholder who does not expect to attend
the Meeting and vote in person is requested to complete, date, sign and promptly
return the enclosed proxy card, or to submit voting instructions by telephone as
described on the enclosed proxy card.
By Order of the Board of Directors,
Marc O. Mayer
President
New York, New York
September [____], 2007
YOUR VOTE IS IMPORTANT
Please indicate your voting instructions on the enclosed proxy card, sign
and date it, and return it in the envelope provided, which needs no postage if
mailed in the United States. Your vote is very important no matter how many
shares you own. In order to save any additional costs of further proxy
solicitation and to allow the Meeting to be held as scheduled, please complete,
date, sign and return your proxy card promptly.
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AllianceBernstein(R) and the AB Logo are registered trademarks and service marks
used by permission of the owner AllianceBernstein L.P.
PROSPECTUS/PROXY STATEMENT
Acquisition of the Assets and Assumption of the Liabilities of
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
By, and in Exchange for Shares of,
ALLIANCEBERNSTEIN LARGE CAP GROWTH FUND, INC.
September [____], 2007
TABLE OF CONTENTS
Questions and Answers [__]
Proposal -- Approval of an Agreement and Plan of Acquisition and
Liquidation between AMA and Large Cap Growth [__]
Summary [__]
Comparison of Operating Expense Ratios [__]
Comparison of Investment Advisory Fees [__]
Comparison of Investment Objectives and Policies [__]
Principal Risks [__]
Federal Income Tax Consequences [__]
Comparison of Distribution and Purchase Procedures [__]
Service Providers [__]
Comparison of Business Structures [__]
Information about the Proposed Transaction [__]
Introduction [__]
Description of the Plan [__]
Reasons for the Acquisition [__]
Description of Securities to be Issued [__]
Dividends and Other Distributions [__]
Surrender and Exchange of AMA Stock Certificates [__]
Federal Income Tax Consequences [__]
Capitalization Information [__]
Trading History and Share Price Data [__]
Information about the Funds [__]
Management of the Funds [__]
Advisory Agreement and Fees [__]
Administrator [__]
Distributor [__]
Other Service Providers [__]
Voting Information [__]
Legal Matters [__]
Experts [__]
Financial Highlights [__]
Appendix A -- Fee Table [__]
Appendix B -- Comparison of Investment Objectives and Policies [__]
Appendix C -- Fund Performance [__]
Appendix D -- Description of Principal Risks of the Funds [__]
Appendix E -- Certain Information Applicable to Class A Shares of Large
Cap Growth [__]
Appendix F -- Other Information
Appendix G -- Differences in Fund Operations and Stockholder Services
between a Closed-End Fund and an Open-End Fund [__]
Appendix H -- Form of Agreement and Plan of Acquisition and Liquidation
between Alliance All-Market Advantage Fund, Inc. and
AllianceBernstein Large Cap Growth Fund, Inc. [__]
Appendix I -- Capitalization
Appendix J -- Trading History and Share Price Data
Appendix K -- Legal Proceedings
Appendix L -- Share Ownership Information
Appendix M -- Financial Highlights
QUESTIONS AND ANSWERS
The following questions and answers provide an overview of key features of the
proposed acquisition and of the information contained in this Prospectus/Proxy
Statement. Please review the full Prospectus/Proxy Statement before casting your
vote.
1. What is this document and why did we send it to you?
This is a combined Prospectus/Proxy Statement that provides you with information
about the proposed acquisition (the "Acquisition") of the assets and liabilities
of Alliance All-Market Advantage Fund, Inc. ("AMA") by AllianceBernstein Large
Cap Growth Fund, Inc. ("Large Cap Growth"). (Large Cap Growth and AMA are each a
"Fund" and collectively, the "Funds"). This document also solicits your vote on
the Acquisition by requesting that you approve the Agreement and Plan of
Acquisition and Liquidation, dated as of [___________], 2007 (the "Plan"),
between AMA and Large Cap Growth.
On August 2, 2007, the Directors approved and declared advisable the Acquisition
of AMA by Large Cap Growth and the subsequent dissolution of AMA and directed
that the Acquisition and dissolution be submitted to the stockholders for
approval at a Special Meeting of Stockholders to be held on November 9, 2007 at
4:00 p.m., Eastern Time (the "Meeting"). You are receiving this Prospectus/Proxy
Statement because you own shares of AMA. Each stockholder of record of AMA as of
the close of business on the record date has the right under applicable legal
and regulatory requirements to vote on the Acquisition. The Acquisition will not
occur unless it is approved by AMA stockholders. This Prospectus/Proxy Statement
contains the information you should know before voting on the proposed
Acquisition.
You may contact a Fund at (800) 221-5672 or write to a Fund at 1345 Avenue of
the Americas, New York, NY 10105.
2. Who is eligible to vote on the Acquisition?
Stockholders of record of AMA at the close of business on August 31, 2007 (the
"Record Date") are entitled to notice of, and to vote at, the Meeting or any
adjournment or postponement of the Meeting. If you owned shares of AMA on the
Record Date, you have the right to vote even if you subsequently sold your
shares.
Each share is entitled to one vote. Shares represented by properly executed
proxies, unless revoked before or at the Meeting, will be voted according to
stockholders' instructions. If you sign and return a proxy card but do not fill
in a vote, your shares will be voted "FOR" the Acquisition. If any other
business properly comes before the Meeting, your shares will be voted at the
discretion of the persons named as proxies.
3. How will the Acquisition work?
The Plan provides for (i) the transfer of all of the assets of AMA to Large Cap
Growth, (ii) the assumption by Large Cap Growth of all of the liabilities of
AMA, (iii) the liquidating distribution to AMA stockholders of Class A shares of
Large Cap Growth, equal in aggregate net asset value ("NAV") to the NAV of their
former AMA shares and (iv) the cessation of operation and dissolution of AMA.
As a result of the Acquisition, stockholders of AMA will no longer be
stockholders of a closed-end fund, and instead, will become stockholders of
Large Cap Growth, an open-end fund, holding Class A shares of Large Cap Growth
having the same aggregate NAV as the shares of AMA that they held immediately
before the Acquisition. After receiving Class A shares of Large Cap Growth in
the proposed Acquisition, shareholders would be able to continue to hold their
shares or to redeem their shares at NAV. The Class A shares of Large Cap Growth
that stockholders of AMA receive will be issued at NAV without a sales charge.
The Acquisition will not occur unless it is approved by the stockholders of AMA.
4. Why is the Acquisition being proposed?
After considering the recommendation of AllianceBernstein L.P. (the "Adviser"),
the Board of Directors of AMA (the "Board") concluded that participation by AMA
in the proposed Acquisition is in the best interests of AMA. The Board also
concluded that the proposed Acquisition would not dilute stockholders'
interests. In reaching this conclusion, the Board considered, among other
things, the closely similar investment objectives and strategies and relatively
minor differences among the investment policies of the Funds, the expense ratio
reduction expected to result from the Acquisition, the continuity of the
portfolio management team, the comparison of fees for the Funds and the pro
forma combined Fund, the trading history of AMA, the costs of the Acquisition,
and the tax-free nature of the Acquisition.
5. When will the Acquisition take place?
If the stockholders of AMA approve the Acquisition on November 9, 2007, the
Acquisition is expected to occur late in the last quarter of this year or in the
first quarter of 2008.
6. Where May I Find Additional Information Regarding the Funds?
Additional information about the Funds is available in the Statement of
Additional Information ("SAI") dated [_________], 2007 that has been filed with
the Securities and Exchange Commission ("SEC") in connection with this
Prospectus/Proxy Statement. The SAI and each Fund's Annual Report to
Stockholders, which contain audited financial statements for the Funds'
respective fiscal years, are incorporated by reference into this
Prospectus/Proxy Statement. In addition, the Funds' Semi-Annual Reports and the
Prospectus for Large Cap Growth dated November 1, 2006 (the "Prospectus") are
also incorporated by reference into this Prospectus/Proxy Statement. To request
a copy of any of these documents, please call AllianceBernstein Investments,
Inc. at (800) 227-4618. The documents are also available at
www.alliancebernstein.com.
All of this information is filed with the SEC. You may view or obtain these
documents from the SEC:
In person: at the SEC's Public Reference Room in Washington, D.C.
By phone: 202-551-8090 (for information on the operations of the
Public Reference Room only)
By mail: Public Reference Section, Securities and Exchange
Commission, Washington, DC 20549-0102 (duplicating fee
required)
By electronic mail: publicinfo@sec.gov (duplicating fee required)
On the Internet: www.sec.gov
The shares of AMA are listed and publicly traded on the New York Stock Exchange
("NYSE") under the symbol, "AMO." Reports, proxy statements and other
information concerning AMA may be inspected at the offices of the NYSE.
Additional copies of the Annual and Semi-annual reports and, as well as the
Prospectus/Proxy Statement and SAI, are available, upon request, without charge,
by writing to or calling the address and telephone number listed below.
By Mail: AllianceBernstein Investor Services, Inc.
P.O. Box 786003
San Antonio, TX 78278-6003
By Phone: For Information: 1-800-221-5672
For Literature: 1-800-227-4618
Other Important Things to Note:
o You may lose money by investing in the Funds.
o The SEC has not approved or disapproved these securities or passed
upon the adequacy of this Prospectus/Proxy Statement. Any
representation to the contrary is a criminal offense.
PROPOSAL
APPROVAL OF AN AGREEMENT AND PLAN OF ACQUISITION AND LIQUIDATION
AMONG AMA, LARGE CAP GROWTH AND ALLIANCEBERNSTEIN L.P.
On August 2, 2007, the Board of Directors of AMA (the "Directors") declared
advisable and voted to approve the Plan and the Acquisition, subject to the
approval of the stockholders of AMA. The Plan provides for (i) the transfer of
all of the assets of AMA to Large Cap Growth, (ii) the assumption by Large Cap
Growth of all of the liabilities of AMA, (iii) the liquidating distribution to
AMA stockholders of Class A shares of Large Cap Growth, equal in aggregate NAV
to the NAV of their former AMA shares and (iv) the cessation of operation and
dissolution of AMA.
Each AMA stockholder will receive the number of full and fractional shares
of Large Cap Growth having an aggregate NAV that is equal to the aggregate NAV
of the stockholder's shares of AMA. Stockholders of AMA will recognize no gain
or loss. If approved by stockholders of AMA, the Acquisition is expected to
occur late in the last quarter of this year or in the first quarter of 2008.
An exchange of AMA shares for Large Cap Growth shares at NAV may result in
AMA stockholders' receiving Large Cap Growth shares with an aggregate market
value on the date of exchange that is higher or lower than the market value of
their shares immediately prior to the exchange. The reason for this difference
is that the market price for shares of AMA in relation to its NAV may be
different, i.e., AMA's shares may trade at different discounts or premiums to
its NAV.
The stockholders of AMA must approve the Acquisition for it to occur.
Approval of the Acquisition requires the affirmative vote of the holders of a
majority of the votes entitled to be cast. The Acquisition does not require
approval of the stockholders of Large Cap Growth.
A quorum for the transaction of business by stockholders of AMA at the
Meeting will consist of the presence in person or by proxy of the holders of a
majority of the shares of AMA entitled to vote at the Meeting.
The Directors concluded that participation by AMA in the proposed
Acquisition is in the best interests of AMA. The Directors also concluded that
the proposed Acquisition would not dilute stockholders' interests. In reaching
this conclusion, the Directors considered, among other things, the closely
similar investment objectives and strategies and relatively minor differences
among the investment policies of the Funds, the expense ratio reduction expected
to result from the Acquisition, the continuity of the portfolio management team,
the comparison of fees for the Funds and the pro forma combined Fund, the
trading history of AMA, the costs of the Acquisition, and the tax-free nature of
the Acquisition.
For a more complete discussion of the factors considered by the Directors
in approving the Acquisition, see "Reasons for the Acquisition" in Information
About the Proposed Transaction.
SUMMARY
The following summary highlights differences between the Funds. This
summary is not complete and does not contain all of the information that you
should consider before voting on the Acquisition. For more complete information,
please read this entire document. Note that certain information is presented as
of June 30, 2007. At the July 31 - August 2, 2007 Regular Meeting of the Board
of Directors of AMA referred to below ("Regular Meeting"), the Adviser
represented to the Board that, if the information was updated, it would not
differ in any material respect.
AMA is a diversified closed-end fund, with assets of, as of June 30, 2007,
approximately $49 million, that invests primarily in large capitalization growth
stocks. Large Cap Growth, which pursues substantially the same investment
strategy as AMA, is a diversified open-end fund, and is significantly larger
than AMA, with assets of, as of June 30, 2007, approximately $2.5 billion.
Comparison of Operating Expense Ratios
AMA, because of its small asset size, has higher operating costs and
therefore a higher expense ratio than Large Cap Growth. The Acquisition is
expected to result in an operating expense ratio for the combined Fund that is
lower than the current expense ratio of AMA. The current and estimated combined
Fund expense ratios, as of June 30, 2007, are set forth below:
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Total Annual
Expense Ratio Projected Total Annual
(as of June 30, 2007) Expense Ratio
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AMA 1.78% --
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Large Cap Growth 1.52% --
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Combined Fund
(pro forma) -- 1.52%
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As the table indicates, the Acquisition would benefit AMA stockholders through a
sizeable reduction in expenses of .26%. Because of the performance component of
AMA's advisory fee (described below), its expense ratio may fluctuate
significantly from period to period. The Fee Table, attached hereto as Appendix
A, describes the fees and expense of each Fund as of June 30, 2007 and includes
pro forma expenses for the combined Fund assuming that the Acquisition is
approved by stockholders of AMA.
If AMA is acquired by Large Cap Growth, an open-end fund, the shares of AMA
will be cancelled and new Class A shares of Large Cap Growth will be issued to
former AMA stockholders. Stockholders of the combined Fund then will bear their
allocable share of Large Cap Growth's expenses. Open-end funds may be more
expensive to operate and administer than closed-end fund primarily due to the
costs associated with the distribution and/or servicing of the open-end fund's
shares and higher transfer agency expenses. A comparison of the operating
expenses of AMA and Large Cap Growth, however, as shown in the Fee Table in
Appendix A, demonstrates that AMA has a significantly higher total expense
ratio, even with the additional expenses of the distribution and/or service
(12b-1) fees for Large Cap Growth.
Comparison of Investment Advisory Fees
The effective advisory fee rates for the Funds, for the period February 12,
2007 through June 30, 2007 expressed as an annualized percentage of net assets,
are as follows:
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Advisory
Fee Rates
-------------------------------
AMA .83%*
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Large Cap Growth .74%
-------------------------------
Combined Fund
(pro forma) .74%
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* Does not reflect a .10% fee waiver which was in effect prior to February
12, 2007.
AMA's advisory fee consists of a basic fee and an adjustment to the basic
fee based on the investment performance of the Fund in relation to the
performance record of the Russell 1000 Growth Index. Prior to February 12, 2007,
the basic fee was 1.25% of average net assets and could be adjusted, based on
investment performance of the Fund, upward or downward by up to .55%. The
Adviser was also voluntarily waiving .10% of the basic fee. Effective February
12, 2007, the basic fee was lowered to .80%, with an upward or downward
adjustment of .15% and the fee waiver was terminated. Under the terms of its
investment advisory agreement, Large Cap Growth pays the Adviser an advisory fee
at an annual rate of .75% of the first $2.5 billion, .65% of the next $2.5
billion and .60% in excess of $5 billion of the Fund's average daily net assets.
Comparison of Investment Objectives and Policies
The investment objectives and strategies of the Funds are substantially the
same. Large Cap Growth is a fund of significantly larger size and scale that
employs the same core strategy as AMA. The following table shows the investment
objective and principal investment strategies of each Fund:
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Investment Objective Principal Investment Strategies
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Large Cap Large Cap Growth's investment Under normal circumstances, Large
Growth objective is long-term growth Cap Growth will invest at least 80%
of capital. of its net assets in common stocks
of large-capitalization companies.
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AMA AMA seeks long-term growth of AMA normally invests at least 65%
capital through all market of its total assets in the equity
conditions. securities of companies that, in
the Adviser's opinion, are likely
to achieve superior earnings growth.
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Each of the Funds invests primarily in the equity securities of a limited number
of large, intensively researched, high-quality U.S. companies that are judged
likely to achieve superior earnings growth. The Funds are subject to similar
investment policies with few differences in their investment styles. These
differences include that AMA may invest up to 20% of its total assets in equity
securities of non-U.S. companies whereas Large Cap Growth normally does not
invest in equity securities of non-U.S. companies. Also, unlike Large Cap
Growth, AMA's core large cap growth strategy may be amplified through the use of
operational leverage and AMA may make substantial use of specialized trading
techniques, such as short sales, forward commitments, reverse repurchase
agreements and dollar rolls, standby commitment agreements, currency swaps and
repurchase agreements. Recently, AMA has not used operational leverage or
these specialized trading techniques.
Because the Funds pursue similar investment objectives, have largely
similar investment strategies and hold substantially similar securities, the
proposed Acquisition will not result in significant portfolio turnover or
transaction expenses due to the disposal of securities that are incompatible
with the investment objective and strategies of Large Cap Growth. A more
detailed comparison of the investment strategies and policies of the Funds is
provided in Appendix B and the historical performance of Large Cap Growth is
provided in Appendix C. You can find additional information on the Funds in the
SAI.
Principal Risks
Each Fund is subject to market risk, focused portfolio risk and management
risk. In addition, AMA is subject to foreign risk and currency risk because of
its investments in non-U.S. securities. AMA is also subject to leverage risk and
derivatives risk because of its ability to utilize leverage and hedging
strategies. Large Cap Growth is a less risky investment because Large Cap Growth
does not have the ability to use leverage or hedging strategies in an effort to
enhance its returns. A description of each of these risks is provided in
Appendix D.
Federal Income Tax Consequences
No gain or loss will be recognized by AMA or its stockholders as a result
of the Acquisition. The aggregate tax basis of the shares of Large Cap Growth
received by a stockholder of AMA (including any fractional shares to which the
stockholder may be entitled) will be the same as the aggregate tax basis of the
stockholder's shares of AMA. The holding period of the shares of Large Cap
Growth received by a stockholder of AMA (including any fractional share to which
the stockholder may be entitled) will include the holding period of the shares
of AMA held by the stockholder, provided that such shares are held as capital
assets by the stockholder of AMA at the time of the Acquisition. The holding
period and tax basis of each asset of AMA in the hands of Large Cap Growth as a
result of the Acquisition will be the same as the holding period and tax basis
of each such asset in the hands of AMA prior to the Acquisition. Provided that
AMA shares surrendered constitute capital assets in the hands of the
stockholder, such gain or loss realized by the stockholder will be capital gain
or loss upon disposition of the shares. This tax information is based on the
advice of Seward & Kissel LLP, counsel to each of the Funds. It is a condition
to the closing of the Acquisition that such advice be confirmed in a written
opinion of counsel. An opinion of counsel is not binding on the Internal Revenue
Service. Additional tax considerations are discussed under the section on
"Federal Income Tax Consequences" in Information About the Proposed
Transactions.
AMA has, as of January 31, 2007, net realized capital gains and unrealized
appreciation and substantial capital loss carryforwards as a percentage of net
assets. The realized capital gains will be offset by the Fund's capital loss
carryforwards so that no distribution of capital gains to AMA stockholders prior
to the Acquisition is anticipated.
AMA has, as of January 31, 2007, capital loss carryforwards of
approximately $12 million or $3.20 per share. Large Cap Growth has, as of
January 31, 2007, tax loss carryforwards of approximately $8.2 billion or $58.78
per share (representing approximately 300% of net assets). After the
Acquisition, the combined Fund's capital loss carryforwards will be
approximately $8.3 billion or $57.89 per share. As a result, the amount of
capital loss carryforwards initially available to AMA stockholders will increase
significantly. The combined Fund's amount of capital loss carryforwards will
decrease somewhat from the current Large Cap Growth amount due to the spreading
of losses over the combined Fund's larger share price.
Comparison of Distribution and Purchase Procedures
AMA's shares are traded on the NYSE at prevailing market price, which may
be equal to, less than or more than their NAV. These shares may be purchased by
placing an order with any broker who effects trades in NYSE listed stocks.
Large Cap Growth continuously offers new shares to investors at the
offering price at the time of purchase, which is normally NAV plus an initial
sales charge. However, in some cases, as described in the Fund's Prospectus,
purchases are not subject to an initial sales charge, and the offering price
will be the NAV. In other cases, reduced sales charges may be available, as
described in the Fund's Prospectus or Statement of Additional Information.
Large Cap Growth Class A shares have a .30% distribution (Rule 12b-1) fee.
Class A shares of Large Cap Growth may be exchanged for comparable class of
shares of other AllianceBernstein mutual funds. More information on distribution
and purchase procedures of Large Cap Growth is provided in Appendix E.
Service Providers
The Adviser serves as the administrator for both Funds and will continue in
this capacity after the Acquisition. The Bank of New York is the custodian for
AMA. State Street Bank and Trust Company is the custodian for Large Cap Growth
and will continue to serve in that capacity after the Acquisition. Computershare
Trust Company, N.A. is the transfer agent for AMA. AllianceBernstein Investor
Services, Inc. ("ABIS") is the transfer agent for Large Cap Growth and will
continue to serve in that capacity after the Acquisition.
Comparison of Business Structures
Each Fund is organized as a Maryland corporation and is governed by its
Charter, Bylaws and Maryland law. A few differences exist between AMA and Large
Cap Growth in terms of their respective corporate organization structure,
primarily because AMA is a closed-end fund and Large Cap Growth is an open-end
fund. For more information on the comparison of the business structure of the
Funds, see Appendix F. For other important information on the differences
between a closed-end fund, such as AMA, and an open-end fund, such as Large Cap
Growth, see Appendix G.
INFORMATION ABOUT THE PROPOSED TRANSACTION
Introduction
This Prospectus/Proxy Statement is provided to you to solicit your proxy
for exercise at the Meeting to approve the acquisition of the assets and
assumption of the liabilities of AMA by Large Cap Growth and the subsequent
liquidation and dissolution of AMA. The Meeting will be held at 1345 Avenue of
the Americas, [41st] Floor, New York, New York 10105 at 4:00 p.m., Eastern Time,
on November 9, 2007. This Prospectus/Proxy Statement, the accompanying Notice of
the Special Meeting of Stockholders and the enclosed proxy card are being mailed
to stockholders of AMA on or about September [ ], 2007.
Description of the Plan
As provided in the Plan, Large Cap Growth will acquire all the assets and
assume all the liabilities of AMA at the effective time of the Acquisition (the
"Effective Time"). In return, Large Cap Growth will issue, and AMA will
distribute to its stockholders, a number of full and fractional shares of Large
Cap Growth, determined by dividing the net value of all the assets of AMA by the
NAV of one share of Large Cap Growth. For this purpose, the Plan provides the
times for and methods of determining the net value of the assets of each Fund.
The Plan provides that stockholders of AMA will be credited with shares of Large
Cap Growth corresponding to the aggregate NAV of the AMA's shares that the
stockholder holds of record at the Effective Time.
Following the distribution of shares of Large Cap Growth in full
liquidation of AMA, AMA will wind up its affairs, and liquidate and dissolve as
soon as is reasonably practicable after the Acquisition. In the event the
Acquisition does not receive the required stockholder approval, AMA will
continue its operations and its Directors will consider what future action, if
any, is appropriate.
The projected expenses of the Acquisition, largely those for legal,
accounting, printing and proxy solicitation expenses, are estimated to total
approximately $260,000, or $.07 per share, and will be borne by AMA.
The Acquisition is expected to occur late in the last quarter of this year
or in the first quarter of 2008. The Acquisition is conditioned upon approval of
the Plan by AMA stockholders and AMA satisfying the terms of the Plan. Under
applicable legal and regulatory requirements, none of AMA's stockholders will be
entitled to exercise objecting stockholders' appraisal rights, i.e., to demand
the fair value of their shares in connection with the Acquisition. Therefore,
stockholders will be bound by the terms of the Acquisition under the Plan.
However, any stockholder of AMA may sell shares of the Fund's common stock on
the NYSE prior to the Acquisition. The shares of AMA may cease trading on the
NYSE beginning several days prior to the date of the Acquisition. Any cessation
of trading will be accomplished in compliance with NYSE rules, including
issuance of a press release.
After the Acquisition, AMA's shares of common stock will be removed from
listing on the NYSE. In addition, AMA's shares of common stock will be withdrawn
from registration under the Securities Exchange Act of 1934 and AMA will
deregister as an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act") and will dissolve under Maryland law.
Completion of the Acquisition is subject to certain conditions set forth in
the Plan, some of which may be waived by a party to the Plan. The Plan may be
amended in any mutually agreed manner, except that no amendment may be made
subsequent to stockholder approval of the Acquisition that materially alters the
obligations of either party. The parties to the Plan may terminate the Plan by
mutual consent and either party has the right to terminate the Plan under
certain circumstances. Among other circumstances, either party may at any time
terminate the Plan unilaterally upon a determination by the party's Board of
Directors that proceeding with the Plan is not in the best interests of the Fund
or its stockholders.
A copy of a form of the Plan is attached as Appendix H.
Reasons for the Acquisition
At the July 31 - August 2, 2007 Regular Meeting of the Board of Directors
of AMA ("Regular Meeting"), the Adviser recommended that the Directors approve
and recommend to the Fund's stockholders for their approval the proposed Plan
and the Acquisition. The Directors considered the factors discussed below from
the point of view of the interests of AMA and its stockholders. After careful
consideration, the Directors (including all Directors who are not "interested
persons" of the Fund, the Adviser or its affiliates) determined that the
Acquisition would be in the best interests of AMA and that the interests of
existing stockholders of the Funds would not be diluted as a result of the
Acquisition. The Directors approved the Plan and the Acquisition and recommended
that the stockholders of AMA vote in favor of the Acquisition by approving the
Plan.
The Adviser presented the following reasons in favor of the Acquisition:
o Compared to Large Cap Growth AMA is a relatively small fund,
with, as of June 30, 2007, approximately $49 million in assets
and has higher expenses. Large Cap Growth is a significantly
larger fund, with approximately $2.5 billion in net assets as of
June 30, 2007, employing the same investment strategy as AMA. The
Adviser believed that combining the Funds offers an alternative
that would benefit investors with comparable or better all-in
expenses.
o AMA is a diversified, closed-end fund, which was designed to
offer investors access to the Adviser's large cap growth strategy
as its core strategy, with the additional intent to amplify its
returns through the use of operational leverage and hedging
techniques. As demonstrated by the growth bubble's burst in the
early 2000's, this return strategy amplified both gains and
losses. AMA significantly underperformed its open-end fund
counterparts and closed-end fund peers in the years 2000 through
2004. The Adviser noted that, as a result of general client
disappointment with leveraged, long-term growth funds, it has
closed all of its hedge funds managed with the same investment
philosophy. In addition, the Adviser stated that AMA has not
pursued leveraged management techniques for some time.
o The Adviser and the Directors have discussed for some time that
the two Funds were essentially pursuing the same strategy and, in
February 2007, the Directors approved a management fee reduction
for AMA. The Adviser noted that it believed that the long-term
viability of AMA, given the size of its assets is questionable.
In addition, the Adviser stated that there is little prospect for
increasing AMA's assets in the secondary market. The Fund's last
rights offering in 1999 raised $42 million in new assets for the
Fund but that was at the height of the growth market and those
circumstances no longer characterize this segment of the market.
At the Regular Meeting, the Directors (with the advice and assistance of
independent counsel) also considered, among other things:
o potential shareholder benefits of the Acquisition, including the
fact that the expense ratio of the Class A shares of Large Cap
Growth, 1.52% as of June 30, 2007, is considerably lower than
that of AMA's expense ratio, 1.78% as of the same date, even
though the expense ratio of the Large Cap Growth Class A shares
includes a distribution fee;
o the trading characteristics and managed distribution policy of
AMA, including the fact that (i) as of July 19, 2007, AMA's
shares were trading at a discount of -0.36%, (ii) over the past
three years, AMA's shares have generally traded in a range of
between a discount of -3.69% (November 21, 2005) and a premium of
17.19% (June 28, 2006), and generally traded at a premium during
the past three years with the premium in the first quarter of
2007 ranging from 12.79% to 3.89% but trading lower, in the
second and third quarters of 2007, (iii) the generally positive
trading history is predominantly due to AMA's managed
distribution policy, which currently pays 2.5% per quarter of the
total net assets, and (iv) since 1997, the Fund has distributed
$54 million to shareholders as a return of capital as part of its
managed distribution policy and the Adviser intends to recommend
that the managed distribution policy be terminated or
significantly reduced if the Acquisition is not approved;
o the current asset levels of AMA and the combined pro forma asset
levels of Large Cap Growth;
o the historical investment performance of the Funds;
o the substantially similar investment objectives and principal
investment strategies of AMA and Large Cap Growth; and
o the portfolio management personnel of the parties to the
Acquisition and the continuity of portfolio management associated
with the Acquisition.
The Directors also considered, among other things:
o the historical and pro forma tax attributes of the Funds,
including that AMA has net realized capital gains and unrealized
appreciation, and capital loss carryforwards, and that Large Cap
Growth has sizeable capital loss carryforwards, which will mean
that the capital loss carryforwards available to AMA stockholders
in the combined Fund will increase significantly;
o the form of the Plan and the terms and conditions of the
Acquisition;
o the fact that Large Cap Growth has a lower advisory fee than AMA;
o whether the Acquisition would result in the dilution of
stockholders' interests;
o the number of stockholder accounts and average account sizes of
the Funds;
o changes in service providers that would result from the
Acquisition;
o the fact that realignment of the investment holdings of AMA prior
to the Acquisition is not anticipated;
o the benefits of the Acquisition to persons other than AMA and its
stockholders, in particular, the Adviser, which would benefit
from the elimination of monitoring and administrating the
relatively small AMA;
o the fact that Large Cap Growth will assume all the liabilities of
AMA;
o the expected federal income tax consequences of the Acquisition;
o whether the Acquisition would be preferable to acquisition by
potential acquirors other than Large Cap Growth, including funds
that are not sponsored by the Adviser;
o the costs of the Acquisition, which will be borne by AMA; and
o the fact that the Adviser has agreed to indemnify Large Cap
Growth for a three-year period against any liability not
disclosed or not reflected in the NAV of AMA at the time of the
Acquisition, to reimburse Large Cap Growth for any reasonable
legal or other costs and expenses in connection with
investigating any such liability, and to continue certain
insurance coverage for a six-year period.
At the Regular Meeting, the Directors of Large Cap Growth (comprised of the
same members as the Directors of AMA) approved the proposed Plan. No vote of
Large Cap Growth stockholders is required to approve the Acquisition.
Description of Securities to be Issued
Under the Plan, Large Cap Growth will issue additional shares of Class A
common stock for distribution to AMA. Under its Charter and Bylaws, Large Cap
Growth may issue up to 3,000,000,000 Class A shares of common stock, par value
$.001 per share. Each share of Large Cap Growth represents an equal
proportionate interest with other shares of the Fund. Each share has equal
earnings, assets and voting privileges and is entitled to dividends and other
distributions out of the income earned and gain realized on the assets belonging
to Large Cap Growth as authorized by the Board of Directors. Shares of Large Cap
Growth entitle their holders to one vote per full share and fractional votes for
fractional shares held. Shares of Large Cap Growth received by stockholders of
AMA will be issued at NAV without a sales charge, fully paid and non-assessable.
Dividends and Other Distributions
On or before the Closing Date, as defined in the Plan, AMA will, if
necessary, declare and pay as a distribution substantially all of its
undistributed net investment income, net short-term capital gain, net long-term
capital gain and net gains from foreign currency transactions, as applicable, to
maintain its treatment as a regulated investment company.
Surrender and Exchange of AMA Stock Certificates
After the Plan's Effective Time, each holder of a certificate (or
certificates) formerly representing shares of AMA will not receive, upon
surrender of the certificate, a certificate representing the number of Large Cap
Growth shares distributable as a result of the Acquisition since Large Cap
Growth will not issue certificates representing Large Cap Growth shares in
connection with the Acquisition. Ownership of Large Cap Growth's shares will be
shown on the books of Large Cap Growth's transfer agent. Promptly, after the
Plan's Effective Time, Computershare Trust Company, N.A. will mail to AMA's
certificate holders instructions and a letter of transmittal for use in
surrendering the certificates. Please do not send share certificates at this
time. Although the certificates will be deemed for all purposes to evidence
ownership of the equivalent number of Large Cap Growth shares, no dividends will
be paid to holders of certificates of AMA until the holder surrenders the
certificates in accordance with the instructions and letter of transmittal. Any
dividends on Large Cap Growth shares payable after the Effective Time, will be
paid to the certificate holder, without interest, when that holder surrenders an
AMA share certificate for exchange.
Federal Income Tax Consequences
Subject to certain stated assumptions contained therein, AMA will receive
an opinion of Seward & Kissel LLP, its counsel, substantially to the following
effect: (i) the Acquisition will constitute a "reorganization" within the
meaning of Section 368(a) of the Code and that AMA and Large Cap Growth will
each be "a party to a reorganization" within the meaning of Section 368(b) of
the Code; (ii) a stockholder of AMA will recognize no gain or loss on the
exchange of the stockholder's shares of AMA solely for shares of Large Cap
Growth; (iii) neither AMA nor Large Cap Growth will recognize any gain or loss
upon the transfer of all of the assets of AMA to Large Cap Growth in exchange
for shares of Large Cap Growth and the assumption by Large Cap Growth of the
liabilities of AMA pursuant to the Plan or upon the distribution of shares of
Large Cap Growth to stockholders of AMA in exchange for their respective shares
of AMA; (iv) the holding period and tax basis of the assets of AMA acquired by
Large Cap Growth will be the same as the holding period and tax basis that AMA
had in such assets immediately prior to the Acquisition; (v) the aggregate tax
basis of shares of Large Cap Growth received in connection with the Acquisition
by each stockholder of AMA (including any fractional share to which the
stockholder may be entitled) will be the same as the aggregate tax basis of the
shares of AMA surrendered in exchange therefore; (vi) the holding period of
shares of Large Cap Growth received in connection with the Acquisition by each
stockholder of AMA (including any fractional share to which the stockholder may
be entitled) will include the holding period of the shares of AMA surrendered in
exchange therefore, provided that such AMA shares constitute capital assets in
the hands of the stockholder as of the Closing Date; and (vii) Large Cap Growth
will succeed to the capital loss carryovers of AMA, if any, under Section 381 of
the Code, but the use by Large Cap Growth of any such capital loss carryovers
(and of capital loss carryovers of Large Cap Growth) may be subject to
limitation under certain sections of the Code. This opinion of counsel will not
be binding on the Internal Revenue Service or a court and there is no assurance
that the Internal Revenue Service or a court will not take a view contrary to
those expressed in the opinion.
Stockholders of AMA are encouraged to consult their tax advisers regarding
the effect, if any, of the Acquisition in light of their individual
circumstances. Because the foregoing only relates to the federal income tax
consequences of the Acquisition, those stockholders also should consult their
tax advisers as to state and local tax consequences, if any, of the Acquisition.
Capitalization Information
For information on the existing and pro forma capitalization of the Funds,
see Appendix I.
Trading History and Share Price Data
For information on the trading history and share price data for AMA, see
Appendix J.
INFORMATION ABOUT THE FUNDS
AMA is a diversified, closed-end management investment company registered
under the 1940 Act and organized as a Maryland corporation in 1994. Large Cap
Growth is a diversified open-end management investment company registered under
the 1940 Act and organized as a Maryland corporation in 1992.
Management of the Funds
The Board of Directors of each Fund directs the management of the business
and affairs of the Funds. Each Board of Directors approves all significant
agreements between the respective Fund and persons or companies furnishing
services to it, including a Fund's agreements with the Adviser and the Fund's
administrator, custodian and transfer and dividend disbursing agent. The
day-to-day operations of a Fund are delegated to its officers and the Fund's
administrator, subject to the Fund's investment objective and policies and to
general supervision by the Fund's Board of Directors. Subsequent to the
consummation of the Acquisition, the directors and officers of Large Cap Growth
will continue to serve as the directors and officers of the combined Fund. The
portfolio manager responsible for the day-to-day management of AMA is Mr.
Michael J. Reilly, a senior member of the Adviser's U.S. Large Cap Growth
Investment Team and a Senior Vice President of the Adviser, with which he has
been associated since prior to 2001. Messrs. Syed J. Hasnain, David P. Handke,
Jr., Michael J. Reilly, James G. Reilly and P. Scott Wallace, the senior members
of the Adviser's U.S. Large Cap Growth Investment Team, are primarily
responsible for day-to-day management of Large Cap Growth's portfolios. Messrs.
Syed J. Hasnain, David P. Handke, Jr., Michael J. Reilly and P. Scott Wallace
are Senior Vice Presidents of the Adviser with which they have been associated
since prior to 2001. Mr. James G. Reilly is an Executive Vice President of the
Adviser with which he has been associated since prior to 2001. Subsequent to the
consummation of the Acquisition, Messrs. Syed J. Hasnain, David P. Handke, Jr.,
Michael J. Reilly, James G. Reilly and P. Scott Wallace will continue to be
primarily responsible for day-to-day management of the combined Fund.
Additional information about the portfolio managers is in the SAI.
Advisory Agreement and Fees
Each Fund's investment adviser is AllianceBernstein L.P. (the "Adviser"),
1345 Avenue of the Americas, New York, New York 10105. The Adviser is a leading
international investment adviser managing client accounts with assets as of June
30, 2007 totaling more than $792.9 billion (of which more than $96 billion
represented the assets of investment companies). As of June 30, 2007, the
Adviser managed retirement assets for many of the largest public and private
employee benefit plans (including 50 of the nation's FORTUNE 100 companies), for
public employee retirement funds in 37 states, for investment companies, and for
foundations, endowments, banks and insurance companies worldwide. The 41
registered investment companies managed by the Adviser, comprising 123 separate
investment portfolios, currently have approximately 4.3 million shareholder
accounts. The Adviser also serves as administrator for each Fund.
Under each Fund's advisory agreement with the Adviser (the "Advisory
Agreement"), the Adviser provides office space, investment advisory services,
and order placement facilities for the Fund and pays all compensation of
directors and officers of the Fund who are affiliated persons of the Adviser.
Under the Advisory Agreement of AMA, the Fund paid the Adviser an advisory fee
at an annual rate of .99% as of June 30, 2007 of its average monthly net assets.
AMA's advisory fee consists of a basic fee 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. Prior to February 12, 2007, the basic
fee was 1.25% of average net assets and could be adjusted upward or downward by
up to .55%. The Adviser was also voluntarily waiving .10% of the basic fee.
Effective February 12, 2007, the basic fee was lowered to .80%, with an upward
or downward adjustment of .15%. Under the Advisory Agreement of Large Cap
Growth, the Fund paid the Adviser an advisory fee at an annual rate of .74% as
of June 30, 2007 of its average daily net assets. Such fee is accrued daily and
paid monthly. Under the terms of its advisory agreement, Large Cap Growth pays
the Adviser an advisory fee at an annual rate of .75% of the first $2.5 billion,
..65% of the next $2.5 billion and .60% in excess of $5 billion of the Fund's
average daily net assets.
The Advisory Agreements by their terms continue in effect from year to year
if such continuance is specifically approved, at least annually, by a majority
vote of the directors of a Fund who neither are interested persons of the Fund
nor have any direct or indirect financial interest in the Advisory Agreement,
cast in person at a meeting called for the purpose of voting on such approval. A
discussion regarding the basis for the Board of Directors approving the advisory
agreements of AMA and Large Cap Growth is available in each Fund's Annual Report
to Shareholders for fiscal years ended September 30, 2006 and July 31, 2006,
respectively.
The Adviser is the subject of certain legal proceedings instituted by the
SEC and the Office of the New York Attorney General. A discussion of those
proceedings is presented in Appendix K.
Administrator
The Adviser serves as administrator for AMA and Large Cap Growth and
performs standard administration services for the Funds. Pursuant to an
Administration Agreement, AMA reimburses the Adviser for its costs incurred for
providing administrative services, provided, however, that such reimbursement
shall not exceed an annualized rate of .25% of the average weekly net assets of
the Fund. The amount reimbursed by AMA in fiscal 2006 was 0.25% of the average
weekly net assets of the Fund. Pursuant to the Advisory Agreement Large Cap
Growth reimburses the Adviser for the costs to it of providing certain
administrative services. The amount reimbursed by Large Cap Growth in fiscal
2006 was 0.002% of the average daily net assets of the Fund.
Distributor
AllianceBernstein Investments, Inc. (the "Distributor"), a wholly-owned
subsidiary of the Adviser, serves as the distributor of Large Cap Growth's
shares. Under a Distribution Services Agreement, Large Cap Growth pays
distribution and service fees to the Distributor at an annual rate of up to .30%
of Large Cap Growth's average daily net assets attributable to its Class A
shares. The Distribution Services Agreement provides that the Distributor will
use such payments in their entirety for distribution assistance and promotional
activities.
Other Service Providers
ABIS, an affiliate of the Adviser, provides shareholder services for the
Funds. The Funds compensate ABIS for these services. The Bank of New York, 100
Church Street, New York, NY 10286, serves as custodian for AMA and State Street
Bank and Trust Company, One Lincoln Street, Boston, MA0211, serves as custodian
for Large Cap Growth. Computershare Trust Company, N.A., P.O. Box 43010,
Providence, RI 02940, serves as dividend paying agent, transfer agent and
registrar and accounting agent for AMA. ABIS, P.O. Box 786003, San Antonio, TX
78278-6003, serves as transfer agent for Large Cap Growth. After the
Acquisition, State Street Bank & Trust Company and ABIS will serve,
respectively, as custodian and transfer agent for the combined Fund.
VOTING INFORMATION
The Board of Directors of each Fund has fixed the close of business on
August 31, 2007 as the record date for the determination of shareholders
entitled to notice of, and to vote at, the Meeting and at any adjournments
thereof. Appendix L to this Prospectus/Proxy Statement lists the total number of
shares outstanding as of that date for each class of each Acquired Fund entitled
to vote at the Meeting. It also identifies holders of more than five percent of
any class of shares of each Fund, and contains information about the executive
officers and Directors of the Funds and their shareholdings in the Funds.
Those shareholders who hold shares directly and not through a broker or
nominee (that is, a shareholder of record) may authorize their proxies to cast
their votes by completing a Proxy Card and returning it by mail in the enclosed
postage-paid envelope as well as either telephoning toll free 1-800-331-5817.
Shares held for a shareholder through a broker or nominee (who is the
shareholder of record for those shares) should be voted by following the
instructions provided to the shareholder by the broker or nominee. The telephone
and Internet voting instructions to be followed by a shareholder of record,
including use of the Control Number on the shareholder's Proxy Card, are
designed to verify shareholder identities, to allow shareholders to give voting
instructions and to confirm that shareholder instructions have been recorded
properly. Shareholders who authorize proxies by telephone or through the
Internet should not also return a Proxy Card. Shareholders who authorize proxies
through the Internet should be aware that they are responsible for any
applicable telecommunication and access charges. A shareholder of record may
revoke that shareholder's proxy at any time prior to exercise thereof by giving
written notice to the Secretary of the Fund at 1345 Avenue of the Americas, New
York, New York 10105, by authorizing a later-dated proxy (either by signing and
mailing another Proxy Card or, by telephone or through the Internet as indicated
above), or by personally attending and voting at the Meeting.
Properly executed proxies may be returned with instructions to abstain from
voting or to withhold authority to vote (an "abstention") or represent a broker
"non-vote" (which is a proxy from a broker or nominee indicating that the broker
or nominee has not received instructions from the beneficial owner or other
person entitled to vote shares on a particular matter with respect to which the
broker or nominee does not have the discretionary power to vote).
Approval of the Acquisition for AMA requires the affirmative vote of a
majority of the votes entitled to be cast.
Abstentions and broker non-votes will be considered present for purposes of
determining the existence of a quorum for the transaction of business but will
have the effect of a vote against the Proposal. If any proposal, other than the
Proposal to be voted on by the shareholders of each Fund, properly comes before
the Meeting, the shares represented by proxies will be voted on all such
proposals in the discretion of the person or persons voting the proxies. The
Funds have not received notice of, and are not otherwise aware of, any other
matter to be presented at the Meeting.
A quorum for the transaction of business by the shareholders of AMA at the
Meeting will consist of the presence in person or by proxy of the holders of a
majority of the shares of AMA entitled to vote at the Meeting. In the event that
a quorum is not represented at the Meeting or, even if a quorum is so present,
in the event that sufficient votes in favor of the position recommended by the
Board of Directors on the Proposal are not timely received, the persons named as
proxies may propose and vote for one or more adjournments of the Meeting with no
other notice than announcement at the Meeting, up to 120 days after the Record
Date, in order to permit further solicitation of proxies. Shares represented by
proxies indicating a vote against the Proposal will be voted against
adjournment.
AMA has engaged The Altman Group, Inc. (the "Proxy Solicitor"), 60 E. 42nd
St., Ste. 405, New York, NY 10165, to assist in soliciting proxies for the
Meeting. The Proxy Solicitor will receive a fee of approximately $5,750 for its
solicitation services, plus reimbursement of out-of-pocket expenses.
LEGAL MATTERS
The validity of the shares offered hereby will be passed upon for AMA by
Seward & Kissel LLP.
EXPERTS
The audited financial statements and financial highlights in the
Prospectus/Proxy Statement and the SAI have been included in reliance on the
reports of KPMG LLP, 345 Park Avenue, New York, New York 10154, the registered
public accounting firm for the Funds as of the end of each Fund's last fiscal
year, and PricewaterhouseCoopers LLP, 300 Madison Avenue, New York, New York
10017, the independent registered public accounting firm for the Funds as of the
end of each Fund's 2005 fiscal year, given on their authority as experts in
auditing and accounting.
FINANCIAL HIGHLIGHTS
Financial highlights information for Large Cap Growth is available at
Appendix M.
THE DIRECTORS RECOMMEND THAT YOU VOTE FOR THE
ACQUISITION OF THE ASSETS AND LIABILITIES OF ALLIANCE ALL-MARKET ADVANTAGE
FUND, INC. BY ALLIANCEBERNSTEIN LARGE CAP GROWTH FUND, INC.
APPENDIX A
FEE TABLE
The purpose of the tables below is to assist an investor in understanding
the various costs and expenses that a shareholder bears directly and indirectly
from an investment in the Funds. The tables allow you to compare the sales
charges, expenses of each Fund and estimates for the combined Fund in its first
year following the Acquisition. The tables also include Annual Fund Operating
Expenses and Expense Examples on a pro forma combined basis assuming AMA is
acquired by Large Cap Growth. The information presented for Large Cap Growth is
for Class A, the class of shares that will be exchanged for shares of AMA, not
all classes of Large Cap Growth shares.
Shareholder Fees
(fees paid directly from your investment)
AMA
---
----------------------------------------------------
Maximum Sales Charge (Load) Imposed on None
Purchases (as a percentage of offering
price)
----------------------------------------------------
Maximum Deferred Sales Charge (Load) (as a
percentage of original purchase price or
redemption price, whichever is
lower) None
----------------------------------------------------
Redemption Fee (as a percentage of amount
redeemed, if applicable) None
----------------------------------------------------
Large Cap Growth
----------------
-----------------------------------------------------
Class A
-----------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering
price) 4.25%(a)
-----------------------------------------------------
Maximum Deferred Sales Charge (Load) (as
a percentage of original purchase price
or redemption price, whichever is lower) None
-----------------------------------------------------
Redemption Fee (as a percentage of amount
redeemed, if applicable) None
-----------------------------------------------------
(a) Class A sales charges may be reduced or eliminated in certain
circumstances, typically for large purchases and for certain group
retirement plans. In some cases, however, a 1%, 1-year contingent
deferred sales charge ("CDSC") may apply. CDSCs for Class A shares may
also be subject to waiver in certain circumstances.
Combined Fund
-------------
-----------------------------------------------------
Class A
-----------------------------------------------------
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering
price) 4.25%(a)
-----------------------------------------------------
Maximum Deferred Sales Charge (Load) (as
a percentage of original purchase price
or redemption price, whichever is
lower) None
-----------------------------------------------------
Redemption Fee (as a percentage of amount
redeemed, if applicable) None
-----------------------------------------------------
(a) Class A sales charges may be reduced or eliminated in certain
circumstances, typically for large purchases and for certain group
retirement plans. In some cases, however, a 1%, 1-year contingent
deferred sales charge ("CDSC") may apply. CDSCs for Class A shares may
also be subject to waiver in certain circumstances. Class A shares of
Large Cap Growth received by AMA in connection with the Acquisition of
AMA will be issued without a sales charge and will not be subject to a
CDSC.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
AMA
---
----------------------------------------------------
Management Fees 1.35%
----------------------------------------------------
Distribution and/or Service (12b-1) Fees None
----------------------------------------------------
Other Expenses(a) 1.03%
----------------------------------------------------
Total Fund Operating Expenses 2.38%
----------------------------------------------------
Waiver and/or Expense Reimbursement(b) (.10)%
----------------------------------------------------
Net Expenses 2.28%
----------------------------------------------------
(a) Based on estimated expenses.
(b) Reflects the Adviser's voluntary waiver of an additional .05% of its
advisory fee since July 1, 2005. For the period July 1, 2004 through
June 30, 2005, the Adviser voluntarily agreed to waive .05% of the
base advisory fee.
Large Cap Growth
----------------
----------------------------------------------------
Class A
----------------------------------------------------
Management Fees .72%
----------------------------------------------------
Distribution and/or Service (12b-1) Fees .30%
----------------------------------------------------
Other Expenses(a) .45%
----------------------------------------------------
Net Expenses 1.47%
----------------------------------------------------
(a) Based on estimated expenses.
Combined Fund
-------------
----------------------------------------------------
Class A
----------------------------------------------------
Management Fees .74%
----------------------------------------------------
Distribution and/or Service (12b-1) Fees .30%
----------------------------------------------------
Other Expenses(a) 1.48%
----------------------------------------------------
Net Expenses 1.52%
----------------------------------------------------
(a) Based on estimated expenses.
EXAMPLE
The Examples are to help you compare the cost of investing in each Fund
with the cost of investing in the combined Fund on a pro forma combined basis.
They assume that you invest $10,000 in a Fund for the time periods indicated and
then sell (in the case of AMA) or redeem (in the case of Large Cap Growth and
the combined Fund) all of your shares at the end of those periods. They also
assume that your investment has a 5% return each year, that a Fund's operating
expenses stay the same and that all dividends and distributions are reinvested.
AMA
---
-------------------------------------------
After 1 Year $ 231
-------------------------------------------
After 3 Years(a) $ 712
-------------------------------------------
After 5 Years(a) $1,220
-------------------------------------------
After 10 Years(a) $2,615
-------------------------------------------
(a) These examples assume that the Adviser's agreement to waive management
fees and/or to bear operating expenses is not extended beyond its
initial period.
Large Cap Growth
----------------
-------------------------------------------
Class A
-------------------------------------------
After 1 Year $ 568
-------------------------------------------
After 3 Years $ 870
-------------------------------------------
After 5 Years $1,194
-------------------------------------------
After 10 Years $2,108
-------------------------------------------
Combined Fund
-------------
-------------------------------------------
Class A
-------------------------------------------
After 1 Year $ 573
-------------------------------------------
After 3 Years $ 885
-------------------------------------------
After 5 Years $1,219
-------------------------------------------
After 10 Years $2,160
-------------------------------------------
The projected post-Acquisition pro forma Annual Fund Operating Expenses and
Examples presented above are based upon numerous material assumptions. Although
these projections represent good faith estimates, there can be no assurance that
any particular level of expenses or expense savings will be achieved, because
expenses depend on a variety of factors, including the future level of fund
assets, many of which are beyond the control of Large Cap Growth and the
Adviser.
APPENDIX B
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------------------------
AMA Large Cap Growth
- --------------------------------------------------------------------------------------------------
Investment Objective The Fund seeks long-term growth of The Fund's investment objective is
capital through all market long-term growth of capital.
conditions. (F)
- --------------------------------------------------------------------------------------------------
Investment Policies(1)
- --------------------------------------------------------------------------------------------------
Status The Fund is a diversified closed- The Fund is a diversified open-end
end management investment company. management investment company. (F)
- --------------------------------------------------------------------------------------------------
80% Policy Under normal circumstances, the
Fund will invest at least 80% of
its net assets in common stocks of
large-capitalization companies.
- --------------------------------------------------------------------------------------------------
Investment Policy The Fund normally invests at least
65% of its total assets in the
equity securities of companies
that, in the Adviser's opinion,
are likely to achieve superior
earnings growth. (F)
- --------------------------------------------------------------------------------------------------
Portfolio Companies Normally, about 40-60 companies
will be represented in the Fund's
portfolio. 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. 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's Core Portfolio, which
will constitute at least the
majority of, and at times may
constitute substantially all of,
its total assets, will normally
consist of the equity securities
of 25 companies.
- --------------------------------------------------------------------------------------------------
Convertible Securities The Fund may invest up to 20% of
its total assets in convertible
securities of companies whose
common stocks are eligible for
purchase by the Fund.
- --------------------------------------------------------------------------------------------------
Non-U.S. Companies The Fund may invest up to 35% of
its total assets in equity
securities of non-U.S. companies.
- --------------------------------------------------------------------------------------------------
Rights and Warrants The Fund may invest up to 5% of The Fund may invest in rights and
its total assets in rights or warrants.
warrants with respect to equity
securities deemed appropriate for
inclusion in the Fund's portfolio.
- --------------------------------------------------------------------------------------------------
Forward Foreign The Fund may purchase or sell
Currency Exchange forward foreign currency exchange
Contracts contracts.
- --------------------------------------------------------------------------------------------------
Forward Commitments The Fund may enter into forward
commitments for the purchase or
sale of securities up to 30% of
its total assets.
- --------------------------------------------------------------------------------------------------
Reverse Repurchase The Fund may enter into reverse
Agreements and Dollar repurchase agreements and dollar
Rolls rolls.
- --------------------------------------------------------------------------------------------------
Standby Commitment The Fund may enter into standby
Agreements commitment agreements.
- --------------------------------------------------------------------------------------------------
Currency Swaps The Fund may enter into currency
swaps for hedging purposes.
- --------------------------------------------------------------------------------------------------
Repurchase Agreements The Fund may enter into repurchase
agreements.
- --------------------------------------------------------------------------------------------------
Concentration The Fund may not invest 25% or The Fund may not concentrate
more of its total assets in investments in an industry, as
securities of issuers conducting concentration may be defined under
their principal business the 1940 Act or the rules and
activities in the same industry, regulations thereunder (as such
except that this restriction does statute, rules or regulations may
not apply to U.S. Government be amended from time to time) or
securities. (F) by guidance regarding,
interpretations of, or exemptive
orders under, the 1940 Act or the
rules or regulations thereunder
published by appropriate
regulatory authorities. (F)
- --------------------------------------------------------------------------------------------------
Senior Securities The Fund may not borrow money or The Fund may not issue any senior
and Borrowing issue senior securities except the security (as that term is defined
Fund may, in accordance with the in the 1940 Act) or borrow money,
provisions of the 1940 Act, (i) except to the extent permitted by
borrow from a bank or other entity the 1940 Act or the rules and
in a privately arranged regulations thereunder (as such
transaction or through reverse statute, rules or regulations may
repurchase agreements or dollar be amended from time to time) or
rolls if after such borrowing by guidance regarding, or
there is asset coverage of at interpretations of, or exemptive
least 300% as defined in the 1940 orders under, the 1940 Act or the
Act and (ii) borrow for temporary rules or regulations thereunder
purposes in an amount not published by appropriate
exceeding 5% of the value of the regulatory authorities.
total assets of the Fund. (F)
For the purposes of this
restriction, collateral
arrangements, including for
example, with respect to options,
futures contracts and options on
futures contracts and collateral
arrangements with respect to
initial and variation margin, are
not deemed to be the issuance of a
senior security. (F)
- --------------------------------------------------------------------------------------------------
Options and Futures The Fund may write covered put and The Fund may purchase and sell
call options and purchase put and exchange-traded index option and
call options on securities of the stock index futures contracts.
type in which the Fund may invest,
on U.S. and foreign securities The Fund may write exchange-traded
exchanges and over the counter, call options on its securities and
including options on market purchase and sell exchange-traded
indices, and write uncovered call and put options on common
options for cross-hedging stocks written by others.
purposes.
The Fund may 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.
The Fund may 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.
The Fund may purchase and sell
stock index futures for hedging
purposes against movements in the
equity markets.
The Fund may purchase write put
and call options on foreign
currencies.
The Fund will purchase options
on futures contracts written
or purchased that are traded
on U.S. or foreign exchanges
or over-the-counter.
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.
- --------------------------------------------------------------------------------------------------
Investments in Other The Fund may invest in the
Investment Companies securities of other investment
companies, including
exchange-traded funds, to the
extent permitted under the 1940
Act or the rules and regulations
thereunder (as such statute, rules
or regulations may be amended from
time to time) or by guidance
regarding, interpretations of, or
exemptive orders under, the 1940
Act or the rules or regulations
thereunder published by
appropriate regulatory
authorities. (F)
- --------------------------------------------------------------------------------------------------
Real Estate The Fund may not purchase or sell The Fund may not purchase or sell
real estate, except that it may real estate except that it may
purchase and sell securities of dispose of real estate acquired as
companies which deal in real a result of the ownership of
estate or interests therein and securities or other instruments.
securities that are secured by This restriction does not prohibit
real estate, provided such the Fund from investing in
securities are securities of the securities or other instruments
type in which the Fund may invest. backed by real estate or in
(F) securities of companies engaged in
the real estate business. (F)
- --------------------------------------------------------------------------------------------------
Commodities The Fund may not purchase or sell The Fund may not purchase or sell
commodities or commodity commodities regulated by the
contracts, including futures Commodity Futures Trading
contracts (except foreign Commission under the Commodity
currencies, foreign currency Exchange Act or commodities
options and futures, options and contracts except for futures
futures on securities and contracts and options on futures
securities indices and forward contracts. (F)
contracts or contracts for the
future acquisition or delivery of
securities and foreign currencies
and related options on futures
contracts and other similar
contracts). (F)
- --------------------------------------------------------------------------------------------------
Pledging, Mortgaging, The Fund may not pledge, mortgage,
and Hypothecation hypothecate or otherwise encumber
its assets, except to secure
permitted borrowings. (F)
- --------------------------------------------------------------------------------------------------
Loans The Fund may not make loans except The Fund may not make loans except
through (a) the purchase of debt through (i) the purchase of debt
obligations in accordance with its obligations in accordance with its
investment objective and policies; investment objectives and
(b) the lending of portfolio policies; (ii) the lending of Fund
securities; or (c) the use of securities; (iii) the use of
repurchase agreements. (F) repurchase agreements; or (iv) the
making of loans to affiliated
funds as permitted under the 1940
Act, the rules and regulations
thereunder (as such statutes, rule
or regulations may be amended from
time to time), or by guidance
regarding, and interpretations of,
or exemptive orders under, the
1940 Act. (F)
- --------------------------------------------------------------------------------------------------
Investment to Exercise The Fund may not invest in
Control companies for the purpose of
exercising control. (F)
The Fund may not purchase more
than 10% of the outstanding voting
securities of any one issuer. (F)
- --------------------------------------------------------------------------------------------------
Oil, Gas and Minerals The Fund may not invest in
interest in oil, gas, or other
mineral exploration or development
programs. (F)
- --------------------------------------------------------------------------------------------------
Short Sales The Fund may engage in short sales
of securities with respect to up
to 30% of its total assets.
- --------------------------------------------------------------------------------------------------
Margin The Fund may not purchase
securities on margin, except for
such short-term credits as may be
necessary for the clearance of
transactions. (F)
- --------------------------------------------------------------------------------------------------
Underwriting of The Fund may not act as an The Fund may not act as an
Securities underwriter of securities, except underwriter of securities, except
that the Fund may acquire that a Fund may acquire restricted
restricted securities under securities under circumstances in
circumstances in which, if such which, if such securities were
securities were sold, the Fund sold, the Fund might be deemed to
might be deemed to be an be an underwriter for purposes of
underwriter for purposes of the the Securities Act of 1933, as
Securities Act. (F) amended (the "Securities Act").
(F)
- --------------------------------------------------------------------------------------------------
Lending of Securities The Fund may make secured loans of The Fund may lend Fund securities
its portfolio securities to to the extent permitted under the
entities with which it can enter 1940 Act or the rules and
into repurchase agreements, regulations thereunder (as such
provided that cash and/or liquid statute, rules or regulations may
high grade debt securities equal be amended from time to time) or
to at least 100% of the market by guidance regarding,
value of the securities loaned are interpretations of, or exemptive
deposited and maintained by the orders under, the 1940 Act.
borrower with the Fund.
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.
- --------------------------------------------------------------------------------------------------
Illiquid Securities The Fund may invest up to 5% of The Fund will limit its investment
its total assets in illiquid in illiquid securities to no more
securities. than 15% of net assets or such
other amount permitted by guidance
regarding the 1940 Act.
- --------------------------------------------------------------------------------------------------
- ----------
(1) Policies with the notation "F" are fundamental policies.
APPENDIX C
FUND PERFORMANCE
The chart below shows the percentage gain or loss in each calendar year for
the ten-year period ended December 31, 20056, for Class A shares of Large Cap
Growth.
They should give you a general idea of how the Fund's return has varied
from year to year. The charts include the effects of Fund expenses, but not
applicable sales charges. Returns would be lower if any applicable sales charges
were included. The calculations of annual total return assume the reinvestment
of all dividends and capital gain distributions on the reinvestment date.
Performance results included the effect of expense reduction arrangements, if
any. If these arrangements had not been in place, the performance results would
have been lower. As with all mutual funds, past performance is not an indication
of future results. No assurance can be given that Large Cap Growth will achieve
any particular level of performance after the Acquisition. Additional discussion
of the manner of calculation of total return is contained in the Fund's
Prospectus and SAI.
Calendar Year Total Returns
Large Cap Growth
----------------
Bar Chart
- --------------------------------------------------------------------------------
[The following table was depicted as a bar chart in the printed material.]
32.67 49.31 28.98 -19.87 -23.92 -32.38 22.71 8.19 14.15 -0.91
- --------------------------------------------------------------------------------
97 98 99 00 01 02 03 04 05 06
Calendar Year
The annual returns in the bar chart are for the Fund's Class A shares and do not
reflect sales loads. If sales loads were reflected, returns would be less than
those shown. Through June 30, 2007, the year-to-date unannualized return for
Class A shares was 5.62%.
Best Quarter was up 31.05%, 4th quarter, 1998; and Worst Quarter was down
- -19.84%, 3rd quarter, 2001.
The following tables list Large Cap Growth's average annual total return
before taxes for Class A for the one-year, five-year and ten-year periods ending
December 31, 2006 (including applicable sales charges). These tables are
intended to provide you with some indication of the risks of investing in the
Fund. At the bottom of each table, you can compare the Fund's performance with
the performance of a broad-based market index.
Average Annual Total Returns
Large Cap Growth - PERFORMANCE TABLE
- -----------------------------------------------------------------------------------------------
Average Annual Total Returns*
(For the periods ended December 31, 2006)
- -----------------------------------------------------------------------------------------------
1 Year 5 Years 10 Years
- -----------------------------------------------------------------------------------------------
Class A** Return Before Taxes -5.11% -0.56% 4.24%
-------------------------------------------------------------------
Return After Taxes on -5.11% -0.56% 3.68%
Distributions
-------------------------------------------------------------------
Return After Taxes on -3.32% -0.48% 3.57%
Distributions and Sale of Fund
Shares
- -----------------------------------------------------------------------------------------------
Russell 1000 Growth Index (reflects no deduction for fees,
expenses, or taxes) 9.46% 3.02% 5.34%
- -----------------------------------------------------------------------------------------------
* Average annual total returns reflect imposition of the maximum front-end or
contingent deferred sales charges.
** After-tax returns:
-- Are an estimate, which is based on the highest historical individual
federal marginal income tax rates, and do not reflect the impact of
state and local taxes; actual after-tax returns depend on an
individual investor's tax situation and are likely to differ from
those shown; and
-- Are not relevant to investors who hold fund shares through
tax-deferred arrangements such as 401(k) plans or individual
retirement accounts.
APPENDIX D
DESCRIPTION OF PRINCIPAL RISKS OF THE FUNDS
Among the principal risks of investing in a Fund are market risk, leverage
risk, foreign (non-U.S.) risk, currency risk, derivatives risk, focused
portfolio risk and management risk. Each of these risks is more fully described
below. Each Fund could become subject to additional risks because the types of
investments made by each Fund can change over time.
- --------------------------------------------------------------------------------
Market Risk and This is the risk that the value of a Fund's investments will
Net Asset Value fluctuate as the stock or bond markets fluctuate and that
of Shares prices overall will decline over shorter- or longer-term
periods. Shares of common stock of closed-end investment
companies, such as AMA, frequently trade at a discount to
its NAV. Whether an investor will realize gains or losses
upon the sale of shares of the Fund does not depend directly
upon changes in the Fund's NAV, but rather upon whether the
market price of the shares at the time of sale is above or
below the investor's purchase price for the shares. The
market price of the shares of AMA is determined by such
factors as relative demand for and supply of the shares in
the market, general market and economic conditions, changes
in the Fund's NAV and other factors beyond the control of
the Fund. This market risk is separate and distinct from the
risk that each Fund's NAV may decrease.
- --------------------------------------------------------------------------------
Foreign A Fund's investments in non-U.S. securities may experience
(Non-U.S.) Risk more rapid and extreme changes in value than investments in
securities of U.S. companies. The securities markets of many
foreign countries are relatively small, with a limited
number of companies representing a small number of
securities. Foreign companies usually are not subject to the
same degree of regulation as U.S. issuers. Reporting,
accounting, and auditing standards of foreign countries
differ, in some cases significantly, from U.S. standards.
Nationalization, expropriation or confiscatory taxation,
currency blockage, political changes, or diplomatic
developments could adversely affect a Fund's investments in
a foreign country. These risks are heightened for emerging
market countries because there may be more economic,
political and social instability, and investments in
companies in emerging markets may have more risk because
these securities may be more volatile and less liquid. To
the extent a Fund invests in a particular country or
geographic region, the Fund may have more significant risk
due to market changes or other factors affecting that
country or region, including political instability and
unpredictable economic conditions.
- --------------------------------------------------------------------------------
Currency Risk This is the risk that fluctuations in the exchange rates
between the U.S. Dollar and foreign (non-U.S.) currencies
may negatively affect the value of a Fund's investments or
reduce the returns of a Fund.
- --------------------------------------------------------------------------------
Leverage Risk When a Fund borrows money or otherwise leverages its
portfolio, it may be volatile because leverage tends to
exaggerate the effect of any increase or decrease in the
value of a Portfolio's investments. A Portfolio may create
leverage through the use of reverse repurchase arrangements,
forward contracts or dollar rolls or by borrowing money.
- --------------------------------------------------------------------------------
Derivatives Risk The Funds may use derivatives. These investment strategies
may be riskier than other investment strategies and may
result in greater volatility for a Fund, particularly during
periods of market declines.
- --------------------------------------------------------------------------------
Focused Portfolio Funds that invest in a limited number of companies may have
Risk more risk because changes in the value of a single security
may have a more significant effect, either negative or
positive on the Portfolio's net asset value.
- --------------------------------------------------------------------------------
Management Risk Each Fund is subject to management risk because it is an
actively managed investment portfolio. The Adviser will
apply its investment techniques and risk analyses in making
investment decisions for each Fund, but there can be no
guarantee that its decisions will produce the desired
results.
- --------------------------------------------------------------------------------
APPENDIX E
CERTAIN INFORMATION APPLICABLE TO CLASS A SHARES OF Large Cap Growth
How to Buy Shares
Large Cap Growth continuously offers new shares to investors at the
offering price at the time of purchase, which is the NAV plus any initial sales
charge that applies. The offering price is based on the next calculation of NAV
per share that is made after the Distributor receives the purchase order, or
after any agent appointed by the Distributor receives the order. The Fund's NAV
per share is determined as of close of regular trading on the NYSE, on each day
that the NYSE is open for regular business, by dividing the value of the Fund's
net assets by the total number of shares outstanding. The Fund's investments
generally are valued based on market value or, where market quotations are not
readily available, based on fair value as determined in good faith by the Fund's
Board of Directors. See "Investing in the Funds" in the Fund's Prospectus for
more information on how the Fund values its shares.
Class A shares of Large Cap Growth are sold at their offering price, which
is normally NAV plus an initial sales charge. However, in some cases, as
described in the Fund's Prospectus, purchases are not subject to an initial
sales charge, and the offering price will be the NAV. In other cases, reduced
sales charges may be available, as described in the Fund's Prospectus or
Statement of Additional Information.
The sales charge varies depending on the amount of your purchase. Class A
shares of Large Cap Growth are sold with a front-end sales charge of up to 4.25%
for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000
or more, Class A shares redeemed within one year of purchase may be subject to a
contingent deferred sales charge of 1%.
Required Information
- --------------------
The Fund is required by law to obtain, verify and record certain personal
information from you or persons on your behalf in order to establish an account.
Required information includes name, date of birth, permanent residential address
and taxpayer identification number (for most investors, your social security
number). The Fund may also ask to see other identifying documents. If you do not
provide the information, the Fund will not be able to open your account. If the
Fund is unable to verify your identity, or that of another person(s) authorized
to act on your behalf, or if the Fund believes it has identified potentially
criminal activity, the Fund reserves the right to take action it deems
appropriate or as required by law, which may include closing your account. If
you are not a U.S. citizen or Resident Alien, your account must be affiliated
with a NASD member firm.
General
- -------
The Fund may refuse any order to purchase shares. The Fund reserves the
right to suspend the sale of its shares to the public in response to conditions
in the securities markets or for other reasons.
The Different Share Class Expenses
This section describes the different expenses of investing in Class A
shares. The expenses can include distribution and/or service fees (12b-1 fees)
or CDSCs. Please see below for a discussion of how CDSCs are calculated.
----------------------------------------------------------
What is a Rule 12b-1 Fee?
A Rule 12b-1 fee is a fee deducted from the Fund's assets
that is used to pay for personal service, maintenance of
shareholder accounts and distribution costs, such as
advertising and compensation of financial intermediaries.
The amount of each share class's 12b-1 fee, if any, is
disclosed below and in the Fund's fee table near the front
of its Prospectus.
----------------------------------------------------------
Asset-Based Sales Charges or Distribution and/or Service (Rule 12b-1) Fees
- --------------------------------------------------------------------------
The Fund has adopted plans under Commission Rule 12b-1 that allows the Fund
to pay asset-based sales charges or distribution and/or service fees for the
distribution and sale of its shares. The amount of these fees for Class A of the
Fund's shares is .30% of aggregate average daily net assets. The maximum fee
allowed under the Rule 12b-1 Plan for the Class A shares of Large Cap Growth is
..50% of the aggregate average daily net assets. The Directors of Large Cap
Growth currently limit the payments to .30%.
Because these fees are paid out of the Fund's assets on an on-going basis,
over time these fees will increase the cost of your investment and may cost you
more than paying other types of sales fees. All or some of these fees may be
paid to financial intermediaries, including your financial advisor's firm.
The sales charge varies depending on the amount of your purchase. Class A
shares of Large Cap Growth are sold with a front-end sales charge of up to 4.25%
for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000
or more, Class A shares redeemed within one year of purchase may be subject to a
contingent deferred sales charge of 1%. When a non-AllianceBernstein-sponsored
group retirement plan terminates a Fund as an investment option, all investments
in Class A shares of that Fund through the plan are subject to a 1%, 1-year CDSC
upon redemption. In addition, when a group retirement plan ceases to participate
in an AllianceBernstein-sponsored group retirement plan program, investments in
the Fund's Class A shares through the plan are subject to a 1%, 1-year CDSC upon
redemption. The CDSC is applied to the lesser of NAV at the time of redemption
of shares or the original cost of shares being redeemed.
Distribution Arrangements for Group Retirement Plans
The Fund offers distribution arrangements for group retirement plans.
However, plan sponsors, plan fiduciaries and other financial intermediaries may
establish requirements for group retirement plans as to the purchase, sale or
exchange of shares of the Fund, including maximum and minimum initial investment
requirements that are different from those described in the Fund's Prospectus
and SAI. Therefore, plan sponsors or fiduciaries may not impose the same share
class parameters as set forth in the Fund's Prospectus and SAI. Group retirement
plans also may not offer all classes of shares of the Fund. The Fund is not
responsible for, and has no control over, the decision of any plan sponsor or
fiduciary to impose such differing requirements.
Payments to Financial Intermediaries
Financial intermediaries market and sell shares of the Fund. These
financial intermediaries may receive compensation for selling shares of the
Fund. This compensation is paid from various sources, including any CDSC and/or
Rule 12b-1 fee that you may pay.
----------------------------------------------------------
What is a Financial Intermediary?
A financial intermediary is a firm that receives
compensation for selling shares of the Fund offered in this
Prospectus and/or provides services to the Fund's
shareholders. Financial intermediaries may include, among
others, brokers, financial planners or advisors, banks,
pension plan consultants and insurance companies. Financial
intermediaries employ financial advisors who deal with you
and other investors on an individual basis.
----------------------------------------------------------
In the case of Class A shares, the Fund's principal underwriter,
AllianceBernstein Investments, Inc. or ABI, may pay financial intermediaries a
fee of up to 1%. Additionally, up to 100% of the Rule 12b-1 fees applicable to
Class A shares each year may be paid to financial intermediaries, including your
financial intermediary, that sell Class A shares.
Your financial advisor's firm receives compensation from the Fund, ABI
and/or the Adviser in several ways from various sources, which include some or
all of the following:
o upfront sales commissions;
o Rule 12b-1 fees;
o additional distribution support;
o defrayal of costs for educational seminars and training; and
o payments related to providing shareholder recordkeeping and/or
transfer agency services.
Other Payments for Distribution Services and Educational Support
In addition to the Rule 12b-1 fees described above, ABI, at its expense,
currently provides additional payments to firms that sell shares of the
AllianceBernstein mutual funds. Although the individual components may be higher
and the total amount of payments made to each qualifying firm in any given year
may vary, the total amount paid to a financial intermediary in connection with
the sale of shares of the AllianceBernstein mutual funds will generally not
exceed the sum of (a) 0.25% of the current year's fund sales by that firm and
(b) 0.10% of average daily net assets attributable to that firm over the year.
These sums include payments to reimburse directly or indirectly the costs
incurred by these firms and their employers in connection with educational
seminars and training efforts about the AllianceBernstein mutual funds for the
firm's employees and/or their clients and potential clients. The costs and
expenses associated with these efforts may include travel, lodging,
entertainment, and meals.
For 2007, ABI's additional payments to these firms for distribution
services and educational support related to the AllianceBernstein mutual funds
is expected to be approximately 0.04% of the average monthly assets of the
AllianceBernstein mutual funds, or approximately $22,000,000. In 2006, ABI paid
approximately 0.04% of the average monthly assets of the AllianceBernstein
mutual funds or approximately $20,000,000, for distribution services and
educational support related to the AllianceBernstein mutual funds.
A number of factors are considered in determining the additional payments,
including each firm's AllianceBernstein mutual fund sales, assets and redemption
rates, and the willingness and ability of the firm to allow ABI to provide
information for educational and marketing purposes. In some cases, firms will
include the AllianceBernstein mutual funds on a "preferred" list. ABI's goal is
to make the financial intermediaries who interact with current and prospective
investors and shareholders more knowledgeable about the AllianceBernstein mutual
funds so that they can provide suitable information and advice about the funds
and related investor services.
The Fund and ABI also make payments for recordkeeping and other transfer
agency services to financial intermediaries that sell AllianceBernstein mutual
fund shares. These expenses paid by the Fund are included in "Other Expenses"
under "Fees and Expenses of the Funds--Annual Fund Operating Expenses" in the
Fund's Prospectus.
If one mutual fund sponsor makes greater distribution assistance payments
than another, a financial advisor and his or her firm may have an incentive to
recommend one fund complex over another. Similarly, if a financial intermediary
receives more distribution assistance for one share class versus another, the
financial intermediary may have an incentive to recommend that class.
Please speak with your financial advisor to learn more about the total
amounts paid to your financial advisor and his or her firm by the Fund, the
Adviser, ABI, and by sponsors of other mutual funds he or she may recommend to
you. You should also consult disclosures made by your financial advisor at the
time of purchase.
As of the date of the Fund's most recent Prospectus, ABI anticipates that
the firms that will receive additional payments for distribution services and/or
educational support include:
A.G. Edwards
AIG Advisor Group
Ameriprise Financial Services
AXA Advisors
Banc of America
Cadaret Grant & Co.
CCO Investment Services Corp.
Charles Schwab
Chase Investment Services
Citicorp Investment Services
Citigroup Global Markets
Commonwealth Financial Network
Donegal Securities
Independent Financial Marketing Group
ING Advisors Network
Linsco/Private Ledger
McDonal Investments
Merrill Lynch
MetLife Securities
Morgan Stanley
Mutual Service Corporation
National Financial
PFS Investments
Raymond James
RBC Dain Rauscher
Robert W. Baird
Securities America
Signator Investors
UBS AG
UBS Financial Service
Wachovia Securities
Wells Fargo Investments
Although the Fund may use brokers or other financial intermediaries who
sell shares of the Fund to effect portfolio transactions, the Fund does not
consider the sale of AllianceBernstein Mutual Fund shares as a factor when
selecting brokers or dealers to effect portfolio transactions.
How to Exchange Shares
You may exchange your Fund shares for shares of the same class of other
AllianceBernstein mutual funds (including AllianceBernstein Exchange Reserves, a
money market fund managed by the Adviser). Exchanges of shares are made at the
next-determined NAV, without sales or service charges. You may request an
exchange by mail or telephone or through your financial intermediary. In order
to receive a day's NAV, ABIS or your financial intermediary must receive and
confirm your telephone exchange request by 4:00 p.m., Eastern Time, on that day.
The Fund may modify, restrict, or terminate the exchange privilege on 60 days'
written notice.
How to Sell or Redeem Shares
You may "redeem" your shares (i.e., sell your shares to the Fund) on any
day the New York Stock Exchange (the "Exchange") is open. Your sale price will
be the next-determined NAV, less any applicable CDSC, after the Fund receives
your redemption request in proper form. Normally, redemption proceeds are sent
to you within 7 days. If you recently purchased your shares by check or
electronic funds transfer, your redemption payment may be delayed until the Fund
is reasonably satisfied that the check or electronic funds transfer has been
collected (which may take up to 15 days). For Advisor Class shares, if you are
in doubt about what procedures or documents are required by your fee-based
program or employee benefit plan to sell your shares, you should contact your
financial advisor. Your financial intermediary must receive your sales request
by 4:00 p.m., Eastern Time, and submit it to the Fund by a pre-arranged time for
you to receive the next-determined NAV, less any applicable CDSC. Your financial
intermediary is responsible for submitting all necessary documentation to the
Fund and may charge you a fee for this service.
Frequent Purchases and Redemptions of Fund Shares
The Fund's Board of Directors has adopted policies and procedures designed
to detect and deter frequent purchases and redemptions of Fund shares or
excessive or short-term trading that may disadvantage long-term Fund
shareholders. These policies are described below. The Fund reserves the right to
restrict, reject or cancel, without any prior notice, any purchase or exchange
order for any reason, including any purchase or exchange order accepted by any
shareholder's financial intermediary.
Risks Associated With Excessive Or Short-term Trading Generally
- ---------------------------------------------------------------
While the Fund will try to prevent market timing by utilizing the
procedures described below, these procedures may not be successful in
identifying or stopping excessive or short-term trading in all circumstances. By
realizing profits through short-term trading, shareholders that engage in rapid
purchases and sales or exchanges of the Fund's shares dilute the value of shares
held by long-term shareholders. Volatility resulting from excessive purchases
and sales or exchanges of Fund shares, especially involving large dollar
amounts, may disrupt efficient portfolio management. In particular, the Fund may
have difficulty implementing its long-term investment strategies if it is forced
to maintain a higher level of its assets in cash to accommodate significant
short-term trading activity. Excessive purchases and sales or exchanges of the
Fund's shares may force the Fund to sell portfolio securities at inopportune
times to raise cash to accommodate short-term trading activity. In addition, the
Fund may incur increased expenses if one or more shareholders engage in
excessive or short-term trading. For example, a Fund may be forced to liquidate
investments as a result of short-term trading and incur increased brokerage
costs and realization of taxable capital gains without attaining any investment
advantage. Similarly, the Fund may bear increased administrative costs due to
asset level and investment volatility that accompanies patterns of short-term
trading activity. All of these factors may adversely affect Fund performance.
A Fund that invests significantly in foreign securities may be particularly
susceptible to short-term trading strategies. This is because foreign securities
are typically traded on markets that close well before the time a Fund
calculates its NAV at 4:00 p.m., Eastern Time, which gives rise to the
possibility that developments may have occurred in the interim that would affect
the value of these securities. The time zone differences among international
stock markets can allow a shareholder engaging in a short-term trading strategy
to exploit differences in Fund share prices that are based on closing prices of
foreign securities established some time before the Fund calculates its own
share price (referred to as "time zone arbitrage"). The Fund has procedures,
referred to as fair value pricing, designed to adjust closing market prices of
foreign securities to reflect what is believed to be the fair value of those
securities at the time the Fund calculates its NAV. While there is no assurance,
the Fund expects that the use of fair value pricing, in addition to the
short-term trading policies discussed below, will significantly reduce a
shareholder's ability to engage in time zone arbitrage to the detriment of other
Fund shareholders. This risk is generally not applicable to the Fund because it
does not invest in foreign equity securities.
A shareholder engaging in a short-term trading strategy may also target a
Fund that does not invest primarily in foreign securities. Any Fund that invests
in securities that are, among other things, thinly traded, traded infrequently,
or relatively illiquid has the risk that the current market price for the
securities may not accurately reflect current market values. A shareholder may
seek to engage in short-term trading to take advantage of these pricing
differences (referred to as "price arbitrage").
Policy Regarding Short-term Trading
- -----------------------------------
Purchases and exchanges of shares of the Fund should be made for investment
purposes only. The Fund seeks to prevent patterns of excessive purchases and
sales or exchanges of Fund shares. The Fund will seek to prevent such practices
to the extent they are detected by the procedures described below. The Fund
reserves the right to modify this policy, including any surveillance or account
blocking procedures established from time to time to effectuate this policy, at
any time without notice.
Transaction Surveillance Procedures. The Fund, through its agents, ABI and
ABIS, maintains surveillance procedures to detect excessive or short-term
trading in Fund shares. This surveillance process involves several factors,
which include scrutinizing transactions in Fund shares that exceed certain
monetary thresholds or numerical limits within a specified period of time.
Generally, more than two exchanges of Fund shares during any 90-day period or
purchases of shares followed by a sale within 90 days will be identified by
these surveillance procedures. For purposes of these transaction surveillance
procedures, the Fund may consider trading activity in multiple accounts under
common ownership, control, or influence. Trading activity identified by either,
or a combination, of these factors, or as a result of any other information
available at the time, will be evaluated to determine whether such activity
might constitute excessive or short-term trading. These surveillance procedures
may be modified from time to time, as necessary or appropriate to improve the
detection of excessive or short-term trading or to address specific
circumstances, such as for certain retirement plans, to conform to plan exchange
limits or U.S. Department of Labor regulations, or for certain automated or
pre-established exchange, asset allocation or dollar cost averaging programs, or
omnibus account arrangements.
Account Blocking Procedures. If the Fund determines, in its sole
discretion, that a particular transaction or pattern of transactions identified
by the transaction surveillance procedures described above is excessive or
short-term trading in nature, the relevant Fund account(s) will be immediately
"blocked" and no future purchase or exchange activity will be permitted.
However, sales of Fund shares back to the Fund or redemptions will continue to
be permitted in accordance with the terms of the Fund's current Prospectus. In
the event an account is blocked, certain account-related privileges, such as the
ability to place purchase, sale and exchange orders over the internet or by
phone, may also be suspended. A blocked account will generally remain blocked
unless and until the account holder or the associated broker, dealer or other
financial intermediary provides evidence or assurance acceptable to the Fund
that the account holder did not or will not in the future engage in excessive or
short-term trading.
Applications of Surveillance Procedures and Restrictions to Omnibus
Accounts. Omnibus account arrangements are common forms of holding shares of the
Fund, particularly among certain brokers, dealers, and other financial
intermediaries, including sponsors of retirement plans and variable insurance
products. The Fund seeks to apply its surveillance procedures to these omnibus
account arrangements. If an intermediary does not have the capabilities, or
declines, to provide individual account level detail to the Fund, the Fund will
monitor turnover of assets to purchases and redemptions of the omnibus account.
If excessive turnover, defined as annualized purchases and redemptions exceeding
50% of assets, is detected, the Fund will notify the intermediary and request
that the intermediary review individual account transactions for excessive or
short-term trading activity and confirm to the Fund that appropriate action has
been taken to curtail the activity, which may include applying blocks to
accounts to prohibit future purchases and exchanges of Fund shares. For certain
retirement plan accounts, the Fund may request that the retirement plan or other
intermediary revoke the relevant participant's privilege to effect transactions
in Fund shares via the internet or telephone, in which case the relevant
participant must submit future transaction orders via the U.S. Postal Service
(i.e., regular mail). The Fund will continue to monitor the turnover
attributable to an intermediary's omnibus account arrangement and may consider
whether to terminate the relationship if the intermediary does not demonstrate
that appropriate action has been taken.
Risks to Shareholders Resulting From Imposition of Account Blocks in Response to
Excessive Short-term Trading Activity
- --------------------------------------------------------------------------------
A shareholder identified as having engaged in excessive or short-term
trading activity whose account is "blocked" and who may not otherwise wish to
redeem his or her shares effectively may be "locked" into an investment in the
Fund that the shareholder did not intend to hold on a long-term basis or that
may not be appropriate for the shareholder's risk profile. To rectify this
situation, a shareholder with a "blocked" account may be forced to redeem Fund
shares, which could be costly if, for example, these shares have declined in
value, the shares are subject to a CDSC, or the sale results in adverse tax
consequences to the shareholder. To avoid this risk, a shareholder should
carefully monitor the purchases, sales, and exchanges of Fund shares and avoid
frequent trading in Fund shares.
Limitations on Ability to Detect and Curtail Excessive Trading Practices
- ------------------------------------------------------------------------
Shareholders seeking to engage in excessive short-term trading activities
may deploy a variety of strategies to avoid detection and, despite the efforts
of the Fund and its agents to detect excessive or short duration trading in Fund
shares, there is no guarantee that the Fund will be able to identify these
shareholders or curtail their trading practices. In particular, the Fund may not
be able to detect excessive or short-term trading in Fund shares attributable to
a particular investor who effects purchase and/or exchange activity in Fund
shares through omnibus accounts. Also, multiple tiers of these entities may
exist, each utilizing an omnibus account arrangement, which may further compound
the difficulty of detecting excessive or short duration trading activity in Fund
shares.
How the Fund Values Its Shares
- ------------------------------
The Fund's NAV is calculated at the close of regular trading on the
Exchange (ordinarily, 4:00 p.m., Eastern Time), only on days when the Exchange
is open for business. To calculate NAV, a Fund's assets are valued and totaled,
liabilities are subtracted, and the balance, called net assets, is divided by
the number of shares outstanding. If the Fund invests in securities that are
primarily traded on foreign exchanges that trade on weekends or other days when
the Fund does not price its shares, the NAV of the Fund's shares may change on
days when shareholders will not be able to purchase or redeem their shares in
the Fund.
The Fund values its securities at their current market value determined on
the basis of market quotations or, if market quotations are not readily
available or are unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of the Fund's Board
of Directors. When a Fund uses fair value pricing, it may take into account any
factors it deems appropriate. The Fund may determine fair value based upon
developments related to a specific security, current valuations of foreign stock
indices (as reflected in the U.S. futures markets) and/or U.S. sector or broader
stock market indices. The prices of securities used by the Fund to calculate its
NAV may differ from quoted or published prices for the same securities. Fair
value pricing involves subjective judgments and it is possible that the fair
value determined for a security is materially different than the value that
could be realized upon the sale of that security.
Funds expect to use fair value pricing for securities traded primarily on
U.S. stock exchanges only under very limited circumstances, such as early
closing of the exchange on which a security is traded or suspension of trading
in the security. The Fund may use fair value pricing more frequently for
securities primarily traded in non-U.S. markets because, among other things,
most foreign markets close well before the Fund values its securities at 4:00
p.m., Eastern Time. The earlier close of these foreign markets gives rise to the
possibility that significant events, including broad market moves, may have
occurred in the interim. For example, the Fund believes that foreign security
values may be affected by events that occur after the close of foreign
securities markets. To account for this, the Fund may frequently value many of
its foreign securities using fair value prices based on independent pricing
services or third party vendor modeling tools to the extent available.
Subject to the Board's oversight, the Fund's Board has delegated
responsibility for valuing the Fund's assets to the Adviser. The Adviser has
established a Valuation Committee, which operates under the policies and
procedures approved by the Board, to value the Fund's assets on behalf of the
Fund. The Valuation Committee values Fund assets as described above.
Your order for purchase, sale, or exchange of shares is priced at the
next-determined NAV after your order is received in proper form by the Fund.
APPENDIX F
OTHER INFORMATION
The following information provides only a summary of the key features of
the organizational structure and governing documents of the Funds. Each Fund is
organized as a Maryland corporation. The differences in the Bylaw provisions of
AMA, a closed-end fund, and Large Cap Growth, an open-end fund, and their
respective corporate organizational structures are noted below.
General
Each Fund has procedures available to its respective shareholders for
calling shareholders' meetings for the removal of directors. For AMA, under
Maryland law and the Fund's Charter, a director may be removed, only with cause,
at a meeting duly called and at which a quorum is present by the affirmative
vote of 75% of the votes entitled to be cast for the election of such director.
For Large Cap Growth, under Maryland law and the Fund's Charter, a director may
be removed, either with or without cause, at a meeting duly called and at which
a quorum is present by the affirmative vote of the majority of the votes
entitled to be cast. In addition, special meetings of shareholders for any other
purpose shall be called by the Fund's Secretary upon the written request of
shareholders entitled to cast not less than a majority of all the votes entitled
to be cast at the meeting.
For AMA, except as otherwise required by law, the presence in person or by
proxy of the holders of a majority of the shares entitled to be cast constitutes
a quorum at any meeting of shareholders of the Fund. For Large Cap Growth, the
presence in person or by proxy of the holders of one-third of the shares
entitled to be cast constitutes a quorum at any meeting of shareholders of the
Fund. Pursuant to AMA's Charter, in instances involving extraordinary corporate
action, such as in a merger or in making amendments to its Charter, generally
the vote of 75% of the votes entitled to be cast on a matter is required in
order to take or authorize any such action for which approval of the
shareholders is sought. With respect to other matters, the Bylaws of the Fund
provide that when a quorum is present at any meeting, the affirmative vote of a
majority of the votes (or with respect to the election of directors, a plurality
of votes) cast shall decide any question brought before such meeting. For Large
Cap Growth, when a quorum is present at any meeting, the affirmative vote of a
majority of the votes (or with respect to the election of directors, a plurality
of votes) cast shall decide any question brought before such meeting, except as
otherwise required by law.
Shares of Common Stock of the Funds
The Funds' shares have no preemptive rights. Each share has equal voting,
dividend, distribution and liquidation rights. Shareholders are entitled to one
vote per share. All voting rights for the election of directors are
non-cumulative, which means that the holders of more than 50% of the shares of
common stock of a Fund can elect 100% of the directors then nominated for
election if they choose to do so and, in such event, the holders of the
remaining shares of common stock will not be able to elect any directors. AMA
and Large Cap Growth are organized as Maryland corporations and thus their
shareholders have the same rights due to them under state law. However, because
the shares of AMA are listed on the NYSE, AMA currently holds annual meetings of
shareholders, as required under the rules of the NYSE applicable to listed
companies. Large Cap Growth is not required to, and does not, hold annual
meetings of shareholders and have no current intention to hold such meetings,
except as required by the 1940 Act. Under the 1940 Act, Large Cap Growth is
required to hold a shareholder meeting if, among other reasons, the number of
Directors elected by shareholders is less than a majority of the total number of
Directors, or if the Fund seeks to change its fundamental investment policies.
Dividends and Distributions
While Large Cap Growth intends to distribute to its shareholders
substantially all of each fiscal year's net income and net realized capital
gains, if any, the amount and time of any dividend or distribution will depend
on the realization by the Fund of income and capital gains from investments.
There is no fixed dividend rate and there can be no assurance that the Fund will
pay any dividends or realize any capital gains. The final determination of the
amount of the Fund's return of capital distributions for the period will be made
after the end of each calendar year. AMA has different dividends and
distributions policies from those of Large Cap Growth. AMA distributes to its
shareholders an amount equal to 2.5% of the Fund's total net assets at the
beginning of each of the first three quarters of the calendar year. With respect
to the fourth quarter, an amount equal to at least 2.5% of the total net assets
is distributed to shareholders. If these distributions exceed the Fund's
aggregate net investment income and net realized capital gains with respect to a
given year, the difference will generally constitute a return of capital to
shareholders.
Large Cap Growth's income dividends and capital gains distributions, if
any, declared by the Fund on its outstanding shares will, at the election of
each shareholder, be paid in cash or in additional shares. If paid in additional
shares, the shares will have an aggregate net asset value as of the close of
business on the declaration date of the dividend or distribution equal to the
cash amount of the dividend or distribution. A shareholder may make an election
to receive dividends and distributions in cash or in shares at the time of
purchase of shares. The shareholder's election can be changed at any time prior
to a record date for a dividend. There is no sales or other charge in connection
with the reinvestment of dividends or capital gains distributions.
Dividend Reinvestment Plan
Shareholders of AMA whose shares are registered in their own names may
elect to be participants in the Fund's Dividend Reinvestment and Cash Purchase
Plan (the "DRIP"), under which dividends and capital gain distributions to
shareholders will be paid or reinvested in additional shares of the Fund (the
"Dividend Shares"). Computershare Trust Company N.A. (the "Agent") acts as the
agent for participants under the DRIP. 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 DRIP, unless the automatic
reinvestment service is not provided by the particular broker or nominee or the
shareholder elects to receive distributions in cash.
Shareholders who do not elect to participate in the DRIP will receive all
distributions in cash paid by check mailed directly to the shareholder of record
(or, if the shares are held in street or other nominee name, then to the
nominee) by Computershare Trust Company N.A., as dividend disbursing agent.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income taxes that may be payable (or required to be
withheld) on dividends and distributions.
A shareholder who has elected to participate in the DRIP may withdraw from
the DRIP at any time. There will be no penalty for withdrawal from the DRIP and
shareholders who have previously withdrawn from the DRIP may rejoin it at any
time. Changes in elections must be in writing and should include the
shareholders name and address as they appear on the share certificate. An
election to withdraw from the DRIP will, until such election is changed, be
deemed to be an election by a shareholder to take all subsequent distributions
in cash. An election will be effective only for a distribution declared and
having a record dated of at least 10 days after the date on which the election
is received. A shareholder whose shares are held in the name of a broker or
nominee should contact such broker or nominee concerning changes in that
shareholder's election.
All correspondence concerning the DRIP for AMA should be directed to the
Agent at Computershare Trust Company, P.O. Box 43010, Providence, RI 02940.
Repurchase of Shares
AMA's Board of Directors has determined that it would be in the interest of
shareholders of the Fund to attempt to reduce or eliminate any market value
discount should it exist. To that end, the Fund's Board of Directors presently
contemplates that it would from time to time take action either to repurchase in
the open market or to make a tender offer for its own shares at net asset value.
Since commencement of the Fund's operations, no such open market purchases or
tender offers have been made.
Any tender offer made by the Fund will be at a price equal to the NAV of
the shares on a date subsequent to receipt by the Fund of all tenders. Each
offer will be made and shareholders notified in accordance with the requirements
of the Securities and Exchange Act of 1934 and the 1940 Act, either by
publication or mailing or both. Each offering document will contain such
information as is prescribed by such laws and the rules and regulations
promulgated thereunder. When a tender offer is authorized to be made by the
Board of Directors, a shareholder wishing to accept the offer will be required
to tender all (and not less than all) of the shares owned by such shareholder
(or attributed to the shareholder for federal income tax purposes under section
318 of the Code). The Fund will purchase all shares tendered 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).
Possible Future Conversion to Open-End Investment Company
If, during any fiscal year of AMA, (i) shares of the Fund's common stock
have traded on the principal securities exchange where listed at an average
discount from net asset value of more than 10%, determined on the basis of the
discount as of the end of the last trading day in each week during the period of
12 calendar weeks preceding December 31 in such year, and (ii) during such year
the Fund receives written requests from the holders of 10% or more of the Fund's
outstanding shares of common stock that such a proposal be submitted to the
Fund's shareholders, the Fund will submit to its shareholders at the next
succeeding annual meeting of shareholders a proposal, to the extent consistent
with the 1940 Act, to amend the Fund's Charter. Such amendment would provide
that, upon its adoption by the holders of 75% of the Fund's outstanding shares
of common stock, the Fund will convert from a closed-end to an open-end
investment company. The 75% vote requirement would not be necessary to authorize
the conversion if such action has been approved by the affirmative vote of
two-thirds of the Fund's Directors, in which case the affirmative vote of the
holders of a majority of the outstanding shares will be sufficient to approve
the action. The 75% vote requirement is higher than the minimum vote required
under the 1940 Act. If the Fund converted to an open-end investment company, it
would be able to continuously issue and offer shares of its common stock and
each outstanding share of the Fund's common stock could be presented to the Fund
at the option of the holder thereof for redemption at net asset value per share.
In such event, the Fund might be required to liquidate portfolio securities to
meet requests for redemption, and its shares would no longer be listed on the
NYSE.
The Fund cannot predict whether any repurchase of shares made while the
Fund is a closed-end investment company (as described under "Repurchase of
Shares" above) would increase or decrease the discount, if any, from NAV. To the
extent that any such repurchase decreased the discount from NAV to below 10%
during the measurement period described in (i) above, the Fund would not be
required to submit to shareholders a proposal to convert the Fund to an open-end
investment company at the next annual meeting of shareholders.
Certain Anti-Takeover Provisions of the Charter and Bylaws of AMA
AMA presently has provisions in its Charter and By-Laws (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, or (iii) the ability of the Fund's directors or
shareholders to amend the Charter Documents or effect changes in the Fund's
management. These provisions of the Charter Documents may be regarded as
"anti-takeover" provisions.
The Board of Directors of AMA is divided into three classes, each having a
term of three years. At each annual meeting of shareholders, the term of one
class of directors expires. 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 reelections
and under SEC regulations procedures are available for including shareholder
proposals in management's annual proxy statement). Such system of electing
directors may have the effect of maintaining the continuity of management and,
thus, make it more difficult for the Fund's shareholders to change the majority
of directors.
Generally, under the Fund's Charter, 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 matters 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 assets, the dissolution of the
Fund or amendment to the Fund's Charter. 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 common stock of the Fund is required generally to
authorize any of the following transaction or to amend the provisions of the
Charter relating to such transactions:
(i) merger, consolidation or statutory share exchange of the Fund with or
into any other corporation;
(ii) issuance of any securities of the Fund to any person or entity for
cash;
(iii) sale, lease or exchange of all or any substantial part of the assets
of the Fund to any entity or person (except assets having an aggregate
fair market value of less than $1,000,000); or
(iv) sale, lease or exchange to the Fund, in exchange for securities of the
Fund, of any assets of any entity or person (except assets having an
aggregate fair market value of less than $1,000,000);
if such corporation, person or entity is directly, or indirectly through
affiliates, the beneficial owner of more than 5% of the outstanding shares of
the Fund (a "principal shareholder"). Such vote would not be required where,
under certain conditions, the Board of Directors approves the transaction. In
certain cases involving merger, consolidation or statutory share exchange or
sale of all or substantially all of the Fund's assets, however, the affirmative
vote of a majority of the outstanding shares of the Fund would nevertheless be
required.
The provisions of the Charter Documents described above and the Fund's
right to repurchase or make a tender offer for its common stock could have the
effect of depriving the owners of shares 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.
The overall effect of these provisions is to render more difficult the
accomplishment of a merger or the assumption of control by a principal
shareholder. However, they provide the advantage of potentially requiring
persons seeking control of the Fund to negotiate with its management regarding
the price to be paid and facilitating the continuity of the Fund's management
and investment objective and policies. The Board of Directors of AMA has
considered the foregoing anti-takeover provisions and concluded that they are in
the best interests of the Fund and its shareholders.
Liability of Directors and Officers
Each of the Funds indemnifies its officers and directors, as applicable, to
the full extent permitted by law. This indemnification does not protect any such
person against any liability to a Fund or any shareholder thereof to which such
person would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
satisfaction of such person's office.
APPENDIX G
DIFFERENCES IN FUND OPERATIONS AND STOCKHOLDER SERVICES BETWEEN A CLOSED-END
FUND AND AN OPEN-END FUND
Fund Operations
AMA is a "closed-end" management investment company under the 1940 Act
(commonly referred to as "closed-end funds"). Closed-end funds do not redeem
their outstanding shares and generally do not engage in the continuous sale of
new securities, and thus operate with a relatively fixed capitalization. The
shares of closed-end funds are normally bought and sold on national securities
exchanges. As a result, you may only purchase or sell shares of AMA through a
broker or dealer at the market price, plus a brokerage commission. AMA's shares
are currently traded on the New York Stock Exchange ("NYSE") under the symbol
"AMO." AMA's shares will be delisted from the NYSE upon the closing of the
Acquisition.
In contrast, open-end management investment companies, such as Large Cap
Growth, continuously issue new shares to investors through the fund's
distributor at the public offering price (which is the NAV plus any applicable
sales charge) at the time of such issuance. Those shares also are redeemable
which means the holders of those shares have the right to sell (or redeem) those
shares back to the fund on any regular business day on which the fund is open
and obtain in return their proportionate share of the value of the fund's net
assets (less any redemption fee or deferred sales charge charged by the fund).
Some of the other significant differences between operations of a
closed-end and an open-end investment company are as follows:
Acquisition and disposition of shares
- -------------------------------------
If the Acquisition of AMA by Large Cap Growth is completed, AMA's shares
will no longer be listed on the NYSE. Investors wishing to acquire shares of
Large Cap Growth (including current AMA shareholders wishing to purchase
additional shares of Large Cap Growth) would be able to purchase them from
AllianceBernstein Investments, Inc. (the "Distributor") or any broker-dealer or
financial institution that has a sales agreement with the Distributor at the
public offering price (the NAV plus any applicable sales charge). Shareholders
of Large Cap Growth desiring to realize the value of their shares would be able
to do so by exercising their right to have such shares redeemed by Large Cap
Growth at the next determined NAV. A fund's NAV per share is calculated by
dividing (i) the value of its portfolio securities plus all cash and other
assets (including accrued interest and dividends received but not collected)
less all liabilities (including accrued expenses) by (ii) the number of
outstanding shares of the fund. The SEC generally requires open-end investment
companies to value their assets on each business day in order to determine the
current NAV on the basis of which their shares may be redeemed by shareholders
or purchased by investors. The NAV of shares of Large Cap Growth is published
daily by leading financial publications.
Portfolio management
- --------------------
Because a closed-end fund does not continuously sell new shares and does
not have to stand ready to redeem its shares, it may keep its assets more fully
invested and make investment decisions without having to adjust for cash inflows
and outflows from continuous sales and redemptions of its shares. In contrast,
open-end funds may be forced to hold a higher cash position or sell portfolio
securities at disadvantageous times or prices to satisfy redemption requests.
Expenses
- --------
If AMA is acquired by Large Cap Growth, an open-end fund, the shares of AMA
will be cancelled and new Class A shares of Large Cap Growth will be issued to
former AMA shareholders. Shareholders of the combined Fund then will bear their
allocable share of Large Cap Growth's expenses. Open-end funds may be more
expensive to operate and administer than closed-end fund primarily due to the
costs associated with the distribution and/or servicing of the open-end fund's
shares and higher transfer agency expenses. A comparison of the operating
expenses of AMA and Large Cap Growth, however, as shown in the Fee Table in
Appendix A, demonstrates that AMA has a significantly higher total expense
ratio, even with the additional expenses of the distribution and/or service
(12b-1) fees for Large Cap Growth.
Similar to most open-end funds, Large Cap Growth pays 12b-1 fees because of
the nature of how open-end funds sell their shares. Shares of Large Cap Growth
are sold to investors through a network of broker-dealers and other financial
intermediaries. Most broker-dealers and financial intermediaries will only sell
shares of the Large Cap Growth if they can earn a competitive sales compensation
and be compensated for ongoing support and services provided to shareholders.
Rule 12b-1 under the 1940 Act allows open-end funds to finance directly or
indirectly any activity that is primarily intended to result in the sale of fund
shares pursuant to a written plan of distribution. Large Cap Growth's Class A
service plan pursuant to Rule 12b-1 allows Large Cap Growth to pay competitive
compensation to brokers, dealers and other financial institutions for personal
services they provide to their customers who hold Class A shares of Large Cap
Growth.
As discussed below, the inability to pay 12b-1 fees would place an open-end
fund at a severe competitive disadvantage with its competitor funds because most
other competitor funds have such plans and are able to pay dealers to be
included in their various distribution programs and to provide distribution
related services. Large Cap Growth's Class A service plan allows the Fund to pay
broker-dealers and financial intermediaries to provide certain distribution
assistance and/or administrative support services to Fund shareholders. Without
the ability to pay these fees, Large Cap Growth would be unable to pay
broker-dealers and financial intermediaries to provide those services to Fund
shareholders, which would likely result, first, in a reduction or elimination of
distribution assistance and/or administrative support services to the Fund's
Class A shareholders, and second, in substantially increased redemptions in the
Fund because of the lack of those services being provided to shareholders.
State registration requirements
- -------------------------------
As a closed-end fund listed on the NYSE, AMA does not issue and offer new
shares for purchase. As a result, it does not incur the expense of registering
the sale of its shares with state securities commissions. However, Large Cap
Growth, an open-end fund which makes a continuous offering of its shares, is
required to register the sale of its shares with state securities authorities
and incurs the costs related to such registration.
Account Features and Shareholder Services
The Funds are part of the AllianceBernstein family of mutual funds.
However, because of the differences between open-end and closed-end funds, the
procedures for purchases, exchanges and redemptions of shares of AMA and Large
Cap Growth are substantially different. These differences stem primarily from
the fact that AMA is a closed-end fund and Large Cap Growth is an open-end fund.
Purchases
- ---------
AMA's shares are traded on the NYSE at prevailing market price, which may
be equal to, less than or more than their NAV. These shares may be purchased by
placing an order with any broker who effects trades in NYSE listed stocks. The
market price of AMA's shares are determined by the relative demand for and
supply of shares in the market which may be affected by, among other things, the
Fund's investment performance, the Fund's dividends and yield and the investor
perception of the Fund's overall attractiveness as an investment as compared
with other investment alternatives.
Large Cap Growth continuously offers new shares to investors at the
offering price at the time of purchase, which is the NAV plus any initial sales
charge that applies. The offering price is based on the next calculation of NAV
per share that is made after the Distributor receives the purchase order, or
after any agent appointed by the Distributor receives the order. The Fund's NAV
per share is determined as of close of regular trading on the NYSE, on each day
that the NYSE is open for regular business, by dividing the value of the Fund's
net assets by the total number of shares outstanding. The Fund's investments
generally are valued based on market value or, where market quotations are not
readily available, based on fair value as determined in good faith by the Fund's
Board of Directors. See "Investing in the Funds" in the Fund's Prospectus for
more information on how the Fund values its shares.
Class A shares of Large Cap Growth are sold at their offering price, which
is normally NAV plus an initial sales charge. However, in some cases, as
described in the Fund's Prospectus, purchases are not subject to an initial
sales charge, and the offering price will be the NAV. In other cases, reduced
sales charges may be available, as described in the Fund's Prospectus or
Statement of Additional Information.
The sales charge varies depending on the amount of your purchase. Class A
shares of Large Cap Growth are sold with a front-end sales charge of up to 4.25%
for purchases not exceeding $1,000,000. With respect to purchases of $1,000,000
or more, Class A shares redeemed within one year of purchase may be subject to a
contingent deferred sales charge of 1%.
For additional information with respect to how to buy Class A shares of
Large Cap Growth, including how to reduce Class A sales charges and other
special sales charge arrangements and waivers, see "Investing in the Funds" in
the Fund's Prospectus.
Share redemption procedures
- ---------------------------
The redemption procedures for shares of AMA and Large Cap Growth also are
different. A shareholder of AMA has no right to redeem his or her shares at NAV
by tendering those shares back to the Fund. Rather, AMA shareholders generally
may sell their shares only in the secondary market at the then-current market
price, which may be more or less than the Fund's NAV per share.
In contrast, a shareholder of Large Cap Growth may redeem some or all of
his or her shares from Large Cap Growth on any regular business day during which
the Fund is open for business by tendering such shares to Large Cap Growth.
Shares of Large Cap Growth may be redeemed in writing, over the phone or through
the internet on any regular business day. The redemption price Large Cap Growth
will pay for such shares is equal to the next NAV (less any applicable
contingent deferred sales charge) calculated after your order is received in
proper form and is accepted by the Fund's transfer agent, AllianceBernstein
Investor Services, Inc. (the "Transfer Agent"). See "Investing in the Funds -
How to Sell or Redeem Shares" in Large Cap Growth's Prospectus for additional
information.
Exchange privilege
- ------------------
AMA does not offer its shareholders the ability to exchange shares of AMA
for shares of any other AllianceBernstein fund. Shareholders of Large Cap
Growth, however, may exchange at NAV all or a portion of their Large Cap Growth
shares for the same class of shares of certain other AllianceBernstein funds at
NAV. This is a benefit that would be available to shareholders of AMA if the
Acquisition is approved.
The Adviser and the Board of Directors of Large Cap Growth have adopted
certain policies and procedures to detect and prevent frequent and/or excessive
exchanges, and/or purchase and redemption activity, while balancing the needs of
investors who seek liquidity from their investment and the ability to exchange
shares as investment needs change. For additional information about exchanges of
Large Cap Growth shares, see Large Cap Growth's current Prospectus.
APPENDIX H
FORM OF AGREEMENT AND PLAN OF ACQUISITION AND LIQUIDATION
RELATING TO THE ACQUISITION OF ALL OF THE ASSETS AND LIABILITIES OF
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
As of
[________], 2007
This Agreement and Plan of Acquisition and Liquidation (the "Plan") is made as
of this [__]th day of [________], 2007, by and between AllianceBernstein Large
Cap Growth Fund Inc. ("Large Cap Growth"), a Maryland corporation, and Alliance
All-Market Advantage Fund, Inc. (the "Acquired Fund"), a Maryland corporation.
WHEREAS, Large Cap Growth is an open-end management investment company
registered with the Securities and Exchange Commission (the "SEC") under the
Investment Company Act of 1940, as amended (the "1940 Act"), and the Securities
Exchange Act of 1934, as amended (the "1934 Act");
WHEREAS, the Acquired Fund is a closed-end management investment company
registered with the SEC under the 1940 Act and the 1934 Act, and shares of
common stock of which Fund are currently purchased and sold on the New York
Stock Exchange (the "NYSE");
WHEREAS, the parties desire that Large Cap Growth acquire the assets and
assume the liabilities of the Acquired Fund in exchange for shares of equal net
asset value of Large Cap Growth and the distribution of such shares of Large Cap
Growth to the Stockholders of the Acquired Fund (the "Acquisition") and that the
Acquired Fund thereafter liquidate and dissolve; and
WHEREAS, the parties intend that the Acquisition qualify as a
"reorganization" within the meaning of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code"), and any successor
provisions, and that with respect to the Acquisition, Large Cap Growth and the
Acquired Fund will each be a "party to a reorganization" within the meaning of
Section 368(b) of the Code;
Now, therefore, Large Cap Growth and the Acquired Fund agree as follows:
1. Definitions
In addition to the terms elsewhere defined herein, each of the following terms
shall have the meaning indicated for that term as follows:
1933 Act Securities Act of 1933, as amended.
Large Cap Growth Share A share of Class A common stock of Large Cap
Growth.
Assets All assets of any kind and all interests, rights,
privileges and powers of or attributable to the
Acquired Fund or its shares, as appropriate,
whether or not determinable at the appropriate
Effective Time and wherever located, including,
without limitation, all cash, cash equivalents,
securities, claims (whether absolute or
contingent, known or unknown, accrued or unaccrued
or conditional or unmatured), contract rights and
receivables (including dividend and interest
receivables) owned by the Acquired Fund or
attributable to its shares and any deferred or
prepaid expense, other than unamortized
organizational expenses, shown as an asset on the
Acquired Fund's books.
Closing Date Shall be on such other date following the date
that Stockholders of the Acquired Fund approve the
Plan as the parties may agree.
Effective Time 5:00 p.m. Eastern time on the Closing Date, or
such other time as the parties may agree to in
writing.
Financial Statements The audited financial statements of the relevant
Fund for its most recently completed fiscal year
and, if applicable, the unaudited financial
statements of that Fund for its most recently
completed semi-annual period.
Fund Large Cap Growth and/or the Acquired Fund, as the
case may be.
Liabilities All liabilities, expenses and obligations of any
kind whatsoever of the Acquired Fund, whether
known or unknown, accrued or unaccrued, absolute
or contingent or conditional or unmatured, except
that expenses of the Acquisition contemplated
hereby to be paid by the Acquired Fund pursuant to
Section 24 of the Plan and which shall not be
assumed or paid by the Large Cap Growth shall not
fall within the definition of Liabilities for
purposes of this Plan.
N-14 Registration Statement The Registration Statement of Large Cap Growth on
Form N-14 under the 1940 Act that will register
the Large Cap Growth Shares to be issued in the
Acquisition and will include the proxy materials
necessary for the Stockholders of the Acquired
Fund to approve the Acquisition.
Valuation Time The close of regular session trading on the NYSE
on the Closing Date, when for purposes of the
Plan, Large Cap Growth determines its net asset
value per Large Cap Growth Share and the Acquired
Fund determines the net value of the Assets.
NAV A Fund's net asset value is calculated by valuing
and totaling assets and then subtracting
liabilities and then dividing the balance by the
number of shares that are outstanding.
2. Regulatory Filings
Large Cap Growth shall promptly prepare and file the N-14 Registration
Statement with the SEC, and Large Cap Growth and the Acquired Fund also shall
make any other required or appropriate filings with respect to the actions
contemplated hereby.
3. Stockholder Action
As soon as practicable after the effective date of the N-14 Registration
Statement, the Acquired Fund shall hold a Stockholders meeting to consider and
approve the Acquisition and this Plan and such other matters as the Board of
Directors may determine. Such approval by the Stockholders of the Acquired Fund
shall, to the extent necessary to permit the consummation of the transactions
contemplated herein without violating any investment objective, policy or
restriction of the Acquired Fund, be deemed to constitute approval by the
Stockholders of a temporary amendment of any investment objective, policy or
restriction that would otherwise be inconsistent with or violated upon the
consummation of such transactions solely for the purpose of consummating such
transactions.
4. Transfer of the Acquired Fund's Assets
Large Cap Growth and the Acquired Fund shall take the following steps with
respect to the Acquisition, as applicable:
(a) On or prior to the Closing Date, the Acquired Fund shall pay or
provide for the payment of all of the Liabilities, expenses, costs and
charges of or attributable to the Acquired Fund that are known to the
Acquired Fund and that are due and payable prior to or as of the
Closing Date.
(b) Prior to the Effective Time, except to the extent prohibited by Rule
19b-1 under the 1940 Act, the Acquired Fund will declare to Acquired
Fund Stockholders of record a dividend or dividends which, together
with all previous such dividends, shall have the effect of
distributing (a) all the excess of (i) Acquired Fund's investment
income excludable from gross income under Section 103(a) of the Code
over (ii) Acquired Fund's deductions disallowed under Sections 265 and
171(a)(2) of the Code, (b) all of Acquired Fund's investment company
taxable income (as defined in Code Section 852), (computed in each
case without regard to any deduction for dividends paid), and (c) all
of Acquired Fund's net realized capital gain (as defined in Code
Section 1222), if any (after reduction for any capital loss
carryover), in each case for both the taxable year ending on September
30, 2007, and for the short taxable year beginning on October 1, 2007,
and ending on the Closing Date. Such dividends will be declared and
paid to ensure continued qualification of the Acquired Fund as a
"regulated investment company" for tax purposes and to eliminate
fund-level tax.
(c) At the Effective Time, pursuant to Articles of Transfer accepted for
record by the State Department of Assessments and Taxation of Maryland
(the "SDAT"), the Acquired Fund shall assign, transfer, deliver and
convey the Assets to Large Cap Growth, subject to the Liabilities.
Large Cap Growth shall then accept the Assets and assume the
Liabilities such that at and after the Effective Time (i) the Assets
at or after the Effective Time shall become and be assets of Large Cap
Growth, and (ii) the Liabilities at the Effective Time shall attach to
Large Cap Growth, and shall be enforceable against Large Cap Growth to
the same extent as if initially incurred by Large Cap Growth.
(d) Within a reasonable time prior to the Closing Date, the Acquired Fund
shall provide, if requested, a list of the Assets to Large Cap Growth.
The Acquired Fund may sell any asset on such list prior to the
Effective Time. After the Acquired Fund provides such list, the
Acquired Fund will not acquire any additional securities or permit to
exist any encumbrances, rights, restrictions or claims not reflected
on such list, without the approval of Large Cap Growth. Within a
reasonable time after receipt of the list and prior to the Closing
Date, Large Cap Growth will advise the Acquired Fund in writing of any
investments shown on the list that Large Cap Growth has determined to
be inconsistent with its investment objective, policies and
restrictions. The Acquired Fund will dispose of any such securities
prior to the Closing Date to the extent practicable and consistent
with applicable legal requirements, including the Acquired Fund's
investment objectives, policies and restrictions. In addition, if
Large Cap Growth determines that, as a result of the Acquisition,
Large Cap Growth would own an aggregate amount of an investment that
would exceed a percentage limitation applicable to Large Cap Growth,
Large Cap Growth will advise the Acquired Fund in writing of any such
limitation and the Acquired Fund shall dispose of a sufficient amount
of such investment as may be necessary to avoid the limitation as of
the Effective Time, to the extent practicable and consistent with
applicable legal requirements, including the Acquired Fund's
investment objectives, policies and restrictions.
(e) The Acquired Fund shall assign, transfer, deliver and convey the
Assets to Large Cap Growth at the Effective Time on the following
basis:
(1) The value of the Assets less the Liabilities, both determined as
of the Valuation Time, shall be divided by the then NAV of one
Large Cap Growth Share, and, in exchange for the transfer of the
Assets, Large Cap Growth shall simultaneously issue and deliver
to the Acquired Fund the number of full Large Cap Growth Shares
so determined that are allocable to all shares held by or for
those stockholders of the Acquired Fund on a stockholder by
stockholder basis plus fractional Large Cap Growth Shares,
rounded to the third decimal place or such other decimal place as
the parties may agree to in writing;
(2) The NAV of the Large Cap Growth Shares to be delivered to the
Acquired Fund shall be determined as of the Valuation Time in
accordance with Large Cap Growth's then applicable valuation
procedures, and the net value of the Assets to be conveyed to
Large Cap Growth shall be determined as of the Valuation Time in
accordance with the then applicable valuation procedures of the
Acquired Fund; and
(3) The portfolio securities of the Acquired Fund shall be made
available by the Acquired Fund to State Street Bank & Trust
Company, as custodian for Large Cap Growth (the "Custodian"), for
examination no later than five business days preceding the
Valuation Time. On the Closing Date, such portfolio securities
and all the Acquired Fund's cash shall be delivered by the
Acquired Fund to the Custodian for the account of Large Cap
Growth, such portfolio securities to be duly endorsed in proper
form for transfer in such manner and condition as to constitute
good delivery thereof in accordance with the custom of brokers
or, in the case of portfolio securities held in the U.S. Treasury
Department's book-entry system or by The Depository Trust
Company, Participants Trust Company or other third party
depositories, by transfer to the account of the Custodian in
accordance with Rule 17f-4, Rule 17f-5 or Rule 17f-7, as the case
may be, under the 1940 Act and accompanied by all necessary
federal and state stock transfer stamps or a check for the
appropriate purchase price thereof. The cash delivered shall be
in the form of currency or certified or official bank checks,
payable to the order of the Custodian or shall be wired to an
account pursuant to instructions provided by Large Cap Growth.
(f) Promptly after the Closing Date, the Acquired Fund will deliver to
Large Cap Growth a Statement of Assets and Liabilities of the Acquired
Fund as of the Closing Date.
5. Liquidation and Dissolution of the Acquired Fund, Registration of Large Cap
Growth Shares and Access to Record
The Acquired Fund and Large Cap Growth also shall take the following steps,
as applicable:
(a) At or as soon as reasonably practical after the Effective Time, the
Acquired Fund shall liquidate and dissolve by transferring pro rata to
its Stockholders of record, the Large Cap Growth Shares it receives
pursuant to Section 4(e)(1) of this Plan. Large Cap Growth shall
establish accounts on its share records and note on such accounts the
names of the former Acquired Fund Stockholders and the amounts of
Large Cap Growth Shares that former Acquired Fund Stockholders are due
based on their respective holdings of shares of the Acquired Fund as
of the close of business on the Closing Date. Large Cap Growth shall
not issue certificates representing Large Cap Growth Shares in
connection with such exchange. All issued and outstanding shares in
connection with such exchange will be simultaneously cancelled on the
books of the Acquired Fund. Ownership of Large Cap Growth Shares will
be shown on the books of Large Cap Growth's transfer agent.
Following distribution by the Acquired Fund to its Stockholders of all
Large Cap Growth Shares delivered to the Acquired Fund, the Acquired
Fund shall wind up its affairs and shall take all steps as are
necessary and proper to dissolve as soon as is reasonably possible
after the Effective Time.
(b) At and after the Closing Date, the Acquired Fund shall provide Large
Cap Growth and its transfer agent with immediate access to: (i) all
records containing the names, addresses and taxpayer identification
numbers of all of the Acquired Fund's Stockholders and the number and
percentage ownership of the outstanding shares of the Acquired Fund
owned by Stockholders as of the Effective Time, and (ii) all original
documentation (including all applicable Internal Revenue Service
forms, certificates, certifications and correspondence) relating to
the Acquired Fund Stockholders' taxpayer identification numbers and
their liability for or exemption from back-up withholding. The
Acquired Fund shall preserve and maintain, or shall direct its service
providers to preserve and maintain, records with respect to the
Acquired Fund as required by Section 31 of, and Rules 31a-1 and 31a-2
under, the 1940 Act.
6. Certain Representations and Warranties of the Acquired Fund
The Acquired Fund represents and warrants to Large Cap Growth as follows:
(a) The Acquired Fund is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Maryland. The
Acquired Fund is registered with the SEC as a closed-end management
investment company under the 1940 Act and is duly registered with the
SEC under the 1934 Act, and such registrations will be in full force
and effect as of the Effective Time.
(b) The Acquired Fund has the power and all necessary federal, state and
local qualifications and authorizations to own all of the Assets, to
carry on its business, to enter into this Plan and to consummate the
transactions contemplated herein.
(c) The Board of Directors of the Acquired Fund has duly authorized the
execution and delivery of this Plan and the transactions contemplated
herein. Duly authorized officers of the Acquired Fund have executed
and delivered the Plan. The Plan represents a valid and binding
contract, enforceable in accordance with its terms, subject as to
enforcement to bankruptcy, insolvency, reorganization, arrangement,
moratorium, and other similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
The execution and delivery of this Plan does not, and, subject to the
approval of Stockholders referred to in Section 3 hereof, the
consummation of the transactions contemplated by this Plan will not,
violate the Acquired Fund's Charter, its Bylaws or any material
agreement to which the Acquired Fund is subject. Except for the
approval of its Stockholders, the Acquired Fund does not need to take
any other action to authorize its officers to effectuate this Plan and
the transactions contemplated herein.
(d) The Acquired Fund has qualified as a regulated investment company
under Part I of Subchapter M of Subtitle A, Chapter 1, of the Code, in
respect of each taxable year since the commencement of its operations
and intends to continue to qualify as a regulated investment company
for its taxable year ending upon its liquidation.
(e) The information pertaining to the Acquired Fund included within the
N-14 Registration Statement when filed with the SEC, when Part A of
the N-14 Registration Statement is distributed to Stockholders, at the
time of the Stockholder meeting of the Acquired Fund for approval of
the Acquisition and at the Effective Time, insofar as it relates to
the Acquired Fund, shall (i) comply in all material respects with the
applicable provisions of the 1933 Act, the 1934 Act and the 1940 Act,
and the rules and regulations thereunder and applicable state
securities laws, and (ii) not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein not
misleading.
(f) The Acquired Fund has duly authorized and validly issued all of its
issued and outstanding shares of common stock, and all such shares are
fully paid and non-assessable and were offered for sale and sold in
conformity with the registration requirements of all applicable
federal and state securities laws. There are no outstanding options,
warrants or other rights to subscribe for or purchase any of the
shares of the Acquired Fund, nor are there any securities convertible
into shares of the Acquired Fund.
(g) The Acquired Fund shall operate its business in the ordinary course
between the date hereof and the Effective Time. Such ordinary course
of business will include the declaration and payment of customary
dividends and distributions and any other dividends and distributions
referred to in Section 4(b) hereof.
(h) At the Effective Time, the Acquired Fund will have good and marketable
title to the Assets and full right, power and authority to assign,
transfer, deliver and convey the Assets.
(i) The Financial Statements of the Acquired Fund, a copy of which has
been previously delivered to Large Cap Growth, fairly present the
financial position of the Acquired Fund as of the Acquired Fund's most
recent fiscal year-end and the results of the Acquired Fund's
operations and changes in the Acquired Fund's net assets for the
periods indicated.
(j) To the knowledge of the Acquired Fund, the Acquired Fund has no
liabilities, whether or not determined or determinable, other than the
Liabilities disclosed or provided for in its Financial Statements or
Liabilities incurred in the ordinary course of business subsequent to
the date of the most recent Financial Statement referencing
Liabilities.
(k) To the knowledge of the Acquired Fund, except as has been disclosed in
writing to Large Cap Growth, no claims, actions, suits, investigations
or proceedings of any type are pending or threatened against the
Acquired Fund or any of its properties or assets or any person whom
the Acquired Fund may be obligated to indemnify in connection with
such litigation, proceeding or investigation. Subject to the
foregoing, there are no facts that the Acquired Fund has reason to
believe are likely to form the basis for the institution of any such
claim, action, suit, investigation or proceeding against the Acquired
Fund. The Acquired Fund is not a party to nor subject to the
provisions of any order, decree or judgment of any court or
governmental body that adversely affects, or is reasonably likely to
adversely affect, its financial condition, results of operations, or
the Assets or its ability to consummate the transactions contemplated
by the Plan.
(l) Except for agreements entered into or granted in the ordinary course
of its business, in each case under which no material default exists,
and this Plan, the Acquired Fund is not a party to or subject to any
material contract or other commitments, which if terminated, may
result in material liability to the Acquired Fund or under which
(whether or not terminated) any material payment for periods
subsequent to the Closing Date will be due from the Acquired Fund.
(m) The Acquired Fund has filed its federal income tax returns, copies of
which have been previously made available to Large Cap Growth, for all
taxable years for which such returns are due and has paid all taxes
payable pursuant to such returns. All of the Acquired Fund's tax
liabilities will have been adequately provided for on its books. No
such return is currently under audit and no unpaid assessment has been
asserted with respect to such returns. To the best of the Acquired
Fund's knowledge, it will not have any tax deficiency or liability
asserted against it or question with respect thereto raised, and it
will not be under audit by the Internal Revenue Service or by any
state or local tax authority for taxes in excess of those already
paid. The Acquired Fund will timely file its federal income tax return
for each subsequent taxable year including its current taxable year.
(n) For federal income tax purposes, the Acquired Fund qualifies as a
"regulated investment company," and the provisions of Sections 851
through 855 of the Code apply to the Acquired Fund for the remainder
of its current taxable year beginning October 1, 2006, and will
continue to apply through the Closing Date.
(o) Since the date of the Financial Statements of the Acquired Fund, there
has been no material adverse change in its financial condition,
results of operations, business, or Assets. For this purpose, negative
investment performance shall not be considered a material adverse
change.
(p) The Acquired Fund's investment operations from inception to the date
hereof have been in compliance in all material respects with the
investment policies and investment restrictions set forth in its
prospectus or prospectuses and statement or statements of additional
information as in effect from time to time, except as previously
disclosed in writing to the Large Cap Growth.
(q) The Large Cap Growth Shares to be issued to the Acquired Fund pursuant
to paragraph 4(e)(1) will not be acquired for the purpose of making
any distribution thereof other than to the Acquired Fund Stockholders
as provided in paragraph 4(e)(1).
(r) The Acquired Fund, or its agents, (i) holds a valid Form W-8Ben,
Certificate of Foreign Status of Beneficial Owner for United States
Withholding (or other appropriate series of Form W-8, as the case may
be) or Form W-9, Request for Taxpayer Identification Number and
Certification, for each Acquired Fund Stockholder of record, which
Form W-8 or Form W-9 can be associated with reportable payments made
by the Acquired Fund to such Stockholder, and/or (ii) has otherwise
timely instituted the appropriate backup withholding procedures with
respect to such Stockholder as provided by Section 3406 of the Code
and the regulations thereunder.
7. Certain Representations and Warranties of Large Cap Growth
Large Cap Growth represents and warrants to the Acquired Fund as follows:
(a) Large Cap Growth is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Maryland. Large
Cap Growth is registered with the SEC as an open-end management
investment company under the 1940 Act and is duly registered with the
SEC under the 1934 Act, and such registrations will be in full force
and effect as of the Effective Time.
(b) Large Cap Growth shall operate its business in the ordinary course
between the date hereof and the Effective Time. Such ordinary course
of business will include the declaration and payment of customary
dividends and distributions.
(c) Large Cap Growth has the power and all necessary federal, state and
local qualifications and authorizations to own all of its assets, to
carry on its business, to enter into this Plan and to consummate the
transactions contemplated herein.
(d) The Board of Directors of Large Cap Growth has duly authorized
execution and delivery of this Plan and the transactions contemplated
herein. Duly authorized officers of Large Cap Growth have executed and
delivered the Plan. The Plan represents a valid and binding contract,
enforceable in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization, arrangement, moratorium and
other similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles. The execution and
delivery of this Plan does not, and the consummation of the
transactions contemplated by this Plan will not violate the Charter of
Large Cap Growth, its Bylaws or any material agreement to which Large
Cap Growth is subject. Except for the approval of its Board, Large Cap
Growth does not need to take any other action to authorize its
officers to effectuate the Plan and the transactions contemplated
herein.
(e) Large Cap Growth has qualified as a regulated investment company under
Part I of Subchapter M of Subtitle A, Chapter 1, of the Code, in
respect of each taxable year since the commencement of its operations
and qualifies and intends to continue to qualify as a regulated
investment company for its current taxable year.
(f) The N-14 Registration Statement, when filed with the SEC, when Part A
of the N-14 Registration Statement is distributed to Stockholders, at
the time of the Stockholder meeting of the Acquired Fund for approval
of the Acquisition and at the Effective Time, insofar as it relates to
Large Cap Growth, shall (i) comply in all material respects with the
applicable provisions of the 1933 Act, the 1934 Act and the 1940 Act,
and the rules and regulations thereunder and applicable state
securities laws and (ii) not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading.
(g) Large Cap Growth has duly authorized and validly issued all issued and
outstanding Large Cap Growth Shares, and all such shares are fully
paid and non-assessable and were offered for sale and sold in
conformity with the registration requirements of all applicable
federal and state securities laws. Large Cap Growth has duly
authorized the Large Cap Growth Shares referred to in Section 4(e)
hereof to be issued and delivered to the Acquired Fund as of the
Effective Time. When issued and delivered, such Large Cap Growth
Shares shall be validly issued, fully paid and non-assessable, and no
Stockholder of Large Cap Growth shall have any preemptive right of
subscription or purchase in respect of any such share. There are no
outstanding options, warrants or other rights to subscribe for or
purchase any Large Cap Growth Shares, nor are there any securities
convertible into Large Cap Growth Shares.
(h) To the knowledge of Large Cap Growth, except as has been disclosed in
writing to the Acquired Fund, no claims, actions, suits,
investigations or proceedings of any type are pending or threatened
against Large Cap Growth or any of its properties or assets or any
person whom Large Cap Growth may be obligated to indemnify in
connection with such litigation, proceeding or investigation. Subject
to the foregoing, there are no facts that Large Cap Growth currently
has reason to believe are likely to form the basis for the institution
of any such claim, action, suit, investigation or proceeding against
Large Cap Growth. Large Cap Growth is not a party to or subject to the
provisions of any order, decree or judgment of any court or
governmental body that adversely affects, or is reasonably likely to
adversely affect its financial condition, results of operations, its
assets or its ability to consummate the transactions contemplated by
this Plan.
(i) Except for agreements entered into or granted in the ordinary course
of its business, in each case under which no material default exists,
Large Cap Growth is not a party to or subject to any material
contract, debt instrument, employee benefit plan, lease, franchise,
license or permit of any kind or nature whatsoever.
(j) Large Cap Growth has filed its federal income tax returns, copies of
which have been previously made available to the Acquired Fund, for
all taxable years for which such returns are due and has paid all
taxes payable pursuant to such returns. All of Large Cap Growth's tax
liabilities will have been adequately provided for on its books. No
such return is currently under audit and no unpaid assessment has been
asserted with respect to such returns. To the best of Large Cap
Growth's knowledge, it will not have any tax deficiency or liability
asserted against it or question with respect thereto raised, and it
will not be under audit by the Internal Revenue Service or by any
state or local tax authority for taxes in excess of those already
paid. Large Cap Growth will timely file its federal income tax return
for each subsequent taxable year including its current taxable year.
(k) For federal income tax purposes, Large Cap Growth qualifies as a
"regulated investment company," and the provisions of Sections 851
through 855 of the Code apply to Large Cap Growth for the remainder of
its current taxable year beginning August 1, 2006, and will continue
to apply through the Closing Date.
(l) The Financial Statements of Large Cap Growth, a copy of which has been
previously delivered to the Acquired Fund, fairly present the
financial position of Large Cap Growth's most recent fiscal year-end
and the results of Large Cap Growth's operations and changes in Large
Cap Growth's net assets for the period indicated.
(m) Since the date of the Financial Statements of Large Cap Growth, there
has been no material adverse change in its financial condition,
results of operations, business or assets. Negative investment
performance shall not be considered a material adverse change.
(n) Large Cap Growth's investment operations from inception to the date
hereof have been in compliance in all material respects with the
investment policies and investment restrictions set forth in its
prospectus or prospectuses and statement or statements of additional
information as in effect from time to time, except as previously
disclosed in writing to the Acquired Fund.
(o) Large Cap Growth will use all reasonable efforts to obtain the
approvals and authorizations required by the 1933 Act, the 1940 Act
and such other state securities laws as it may deem appropriate in
order to continue its operations after the Closing Date.
8. Conditions to the Obligations of Large Cap Growth and the Acquired Fund
The obligations of Large Cap Growth and the Acquired Fund with respect to
the Acquisition shall be subject to the following conditions precedent:
(a) The Stockholders of the Acquired Fund shall have approved the
Acquisition in the manner required by the Charter of the Acquired
Fund, its Bylaws and applicable law. If Stockholders of the Acquired
Fund fail to approve the Acquisition as required, that failure shall
release the Funds of their obligations under this Plan.
(b) Large Cap Growth and the Acquired Fund shall have delivered to the
other party a certificate dated as of the Closing Date and executed in
its name by its Secretary or an Assistant Secretary, in a form
reasonably satisfactory to the receiving party, stating that the
representations and warranties of Large Cap Growth or the Acquired
Fund, as applicable, in this Plan that apply to the Acquisition are
true and correct in all material respects at and as of the Valuation
Time.
(c) Large Cap Growth and the Acquired Fund shall have performed and
complied in all material respects with each of its representations and
warranties required by this Plan to be performed or complied with by
it prior to or at the Valuation Time and the Effective Time.
(d) There has been no material adverse change in the financial condition,
results of operations, business, properties or assets of Large Cap
Growth or the Acquired Fund since the date of the most recent
Financial Statement. Negative investment performance shall not be
considered a material adverse change.
(e) Large Cap Growth and the Acquired Fund shall have received an opinion
of Seward & Kissel LLP reasonably satisfactory to each of them,
substantially to the effect that for federal income tax purposes:
(1) the Acquisition will constitute a "reorganization" within the
meaning of Section 368(a) of the Code and that Large Cap Growth
and the Acquired Fund will each be "a party to a reorganization"
within the meaning of Section 368(b) of the Code;
(2) a Stockholder of the Acquired Fund will recognize no gain or loss
on the exchange of the Stockholder's shares of the Acquired Fund
solely for Large Cap Growth Shares;
(3) neither the Acquired Fund nor Large Cap Growth will recognize any
gain or loss upon the transfer of all of the Assets to Large Cap
Growth in exchange for Large Cap Growth Shares and the assumption
by Large Cap Growth of the Liabilities pursuant to this Plan or
upon the distribution of Large Cap Growth Shares to Stockholders
of the Acquired Fund in exchange for their respective shares of
the Acquired Fund;
(4) the holding period and tax basis of the Assets acquired by Large
Cap Growth will be the same as the holding period and tax basis
that the Acquired Fund had in such Assets immediately prior to
the Acquisition;
(5) the aggregate tax basis of Large Cap Growth Shares received in
connection with the Acquisition by each Stockholder of the
Acquired Fund (including any fractional share to which the
Stockholder may be entitled) will be the same as the aggregate
tax basis of the shares of the Acquired Fund surrendered in
exchange therefore, increased by any gain recognized on the
exchange;
(6) the holding period of Large Cap Growth Shares received in
connection with the Acquisition by each Stockholder of the
Acquired Fund (including any fractional share to which the
Stockholder may be entitled) will include the holding period of
the shares of the Acquired Fund surrendered in exchange therefor,
provided that such Acquired Fund shares constitute capital assets
in the hands of the Stockholder as of the Closing Date;
(7) Large Cap Growth will succeed to the capital loss carryovers of
the Acquired Fund, if any, under Section 381 of the Code, but the
use by Large Cap Growth of any such capital loss carryovers (and
of capital loss carryovers of Large Cap Growth) may be subject to
limitation under Section 383 of the Code; and
(8) any gain or loss realized by a Stockholder of the Acquired Fund
upon the sale of a fractional share of Large Cap Growth to which
the Stockholder is entitled will be recognized to the Stockholder
and measured by the difference between the amount of cash
received and the basis of the fractional share and, provided that
the Acquired Fund shares surrendered constitute capital assets in
the hands of the Stockholder, will be a capital gain or loss.
The opinion will be based on certain factual certifications made by
officers of the Funds and will also be based on customary assumptions
and subject to certain qualifications. The opinion is not a guarantee
that the tax consequences of the Acquisition will be as described
above.
Notwithstanding this subparagraph (e), Seward & Kissel LLP will
express no view with respect to the effect of the Acquisition on
any transferred asset as to which any unrealized gain or loss is
required to be recognized at the end of a taxable year (or on the
termination or transfer thereof) under federal income tax
principles. Each Fund shall agree to make and provide additional
factual representations to Seward & Kissel LLP with respect to
the Funds, that are reasonably necessary to enable Seward &
Kissel LLP to deliver the tax opinion. Notwithstanding anything
in this Plan to the contrary, neither Fund may waive in any
material respect the conditions set forth under this subparagraph
(e).
(f) The N-14 Registration Statement shall have become effective under
the 1933 Act as to the Large Cap Growth Shares, and the SEC shall
not have instituted and, to the knowledge of Large Cap Growth, is
not contemplating instituting any stop order suspending the
effectiveness of the N-14 Registration Statement.
(g) No action, suit or other proceeding shall be threatened or
pending before any court or governmental agency in which it is
sought to restrain or prohibit, or obtain damages or other relief
in connection with, the Acquisition.
(h) The SEC shall not have issued any unfavorable advisory report
under Section 25(b) of the 1940 Act nor instituted any proceeding
seeking to enjoin consummation of the Acquisition under Section
25(c) of the 1940 Act.
(i) Neither party shall have terminated this Plan with respect to the
Acquisition pursuant to Section 13 of this Plan.
9. Conditions to the Obligations of the Acquired Fund
The obligations of the Acquired Fund with respect to the Acquisition shall
be subject to the following conditions precedent:
(a) The Acquired Fund shall have received an opinion of Seward & Kissel
LLP, counsel to Large Cap Growth, in form and substance reasonably
satisfactory to the Acquired Fund and dated as of the Closing Date,
substantially to the effect that:
(1) Large Cap Growth is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Maryland and is an open-end, management investment company
registered under the 1940 Act and duly registered under the 1934
Act;
(2) This Plan has been duly authorized, executed and delivered by
Large Cap Growth and, assuming the N-14 Registration Statement
referred to in Section 2 of this Plan does not contain any
material misstatements or omissions, and assuming due
authorization, execution and delivery of this Plan by the
Acquired Fund, represents a legal, valid and binding contract,
enforceable in accordance with its terms, subject to the effect
of bankruptcy, insolvency, moratorium, fraudulent conveyance and
transfer and similar laws relating to or affecting creditors'
rights generally and court decisions with respect thereto, and
further subject to the application of equitable principles in any
proceeding, whether at law or in equity or with respect to the
enforcement of provisions of the Plan and the effect of judicial
decisions which have held that certain provisions are
unenforceable when their enforcement would violate an implied
covenant of good faith and fair dealing or would be commercially
unreasonable or when default under the Plan is not material;
(3) The Large Cap Growth Shares to be delivered as provided for by
this Plan are duly authorized and upon delivery will be validly
issued, fully paid and non-assessable by Large Cap Growth;
(4) The execution and delivery of this Plan did not, and the
consummation of the Acquisition will not, violate the Charter of
Large Cap Growth, its Bylaws or any agreement of Large Cap Growth
known to such counsel, after reasonable inquiry; and
(5) To the knowledge of such counsel, no consent, approval,
authorization or order of any federal or state court or
administrative or regulatory agency, other than the acceptance of
record of Articles of Transfer by the SDAT, is required for Large
Cap Growth to enter into this Plan or carry out its terms, except
those that have been obtained under the 1933 Act, the 1934 Act,
the 1940 Act and the rules and regulations under those Acts or
that may be required under state securities laws or subsequent to
the Effective Time or when the failure to obtain the consent,
approval, authorization or order would not have a material
adverse effect on the operation of Large Cap Growth.
In rendering such opinion, Seward & Kissel LLP may (i) rely on the
opinion of Venable LLP as to matters of Maryland law to the extent set
forth in such opinion, (ii) make assumptions regarding the
authenticity, genuineness and/or conformity of documents and copies
thereof without independent verification thereof, (iii) limit such
opinion to applicable federal and state law, (iv) define the word
"knowledge" and related terms to mean the knowledge of attorneys then
with such firm who have devoted substantive attention to matters
directly related to this Plan and (v) rely on certificates of officers
or directors of Large Cap Growth as to factual matters.
(b) The Acquired Fund shall have received a letter from AllianceBernstein
L.P. (the "Adviser") with respect to insurance matters in form and
substance satisfactory to the Acquired Fund.
10. Conditions to the Obligations of Large Cap Growth
The obligations of Large Cap Growth with respect to the Acquisition shall
be subject to the following conditions precedent:
(a) Large Cap Growth shall have received an opinion of Seward & Kissel
LLP, counsel to the Acquired Fund, in form and substance reasonably
satisfactory to Large Cap Growth and dated as of the Closing Date,
substantially to the effect that:
(1) The Acquired Fund is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Maryland and is a closed-end management investment company
registered under the 1940 act and duly registered under the 1934
Act;
(2) This Plan has been duly authorized, executed and delivered by the
Acquired Fund and, assuming the N-14 Registration Statement
referred to in Section 2 of this Plan does not contain any
material misstatements or omissions, and assuming due
authorization, execution and delivery of this Plan by Large Cap
Growth, represents a legal, valid and binding contract,
enforceable in accordance with its terms, subject to the effect
of bankruptcy, insolvency, moratorium, fraudulent conveyance and
transfer and similar laws relating to or affecting creditors'
rights generally and court decisions with respect thereto, and
further subject to the application of equitable principles in any
proceeding, whether at law or in equity or with respect to the
enforcement of provisions of the Plan and the effect of judicial
decisions which have held that certain provisions are
unenforceable when their enforcement would violate an implied
covenant of good faith and fair dealing or would be commercially
unreasonable or when default under the Plan is not material;
(3) The execution and delivery of this Plan did not, and the
consummation of the Acquisition will not, violate the Charter of
the Acquired Fund, its Bylaws or any agreement of the Acquired
Fund known to such counsel, after reasonable inquiry, and no
approval of the Plan by the Stockholders of Large Cap Growth is
required under its Charter, Bylaws or applicable law; and
(4) To the knowledge of such counsel, no consent, approval,
authorization or order of any federal or state court or
administrative or regulatory agency, other than the acceptance of
record of Articles of Transfer by the SDAT, is required for the
Acquired Fund to enter into the Plan or carry out its terms,
except those that have been obtained under the 1933 Act, the 1934
Act, the 1940 Act and the rules and regulations under those Acts
or that may be required under state securities laws or subsequent
to the Effective Time or when the failure to obtain the consent,
approval, authorization or order would not have a material
adverse effect on the operation of the Acquired Fund.
In rendering such opinion, Seward & Kissel LLP may (i) rely on the opinion of
Venable LLP as to matters of Maryland law, (ii) make assumptions regarding the
authenticity, genuineness and/or conformity of documents and copies thereof
without independent verification thereof, (iii) limit such opinion to applicable
federal and state law, (iv) define the word "knowledge" and related terms to
mean the knowledge of attorneys then with such firm who have devoted substantive
attention to matters directly related to this Plan and (v) rely on certificates
of officers or directors of the Acquired Fund as to factual matters.
(b) Large Cap Growth shall have received a letter from the Adviser
agreeing to indemnify Large Cap Growth in respect of certain
liabilities of the Acquired Fund in form and substance satisfactory to
Large Cap Growth.
11. Closing
(a) The Closing shall be held at the offices of the Funds, 1345 Avenue of
the Americas, New York, New York 10105, or at such other time or place
as the parties may agree.
(b) In the event that at the Valuation Time (a) the NYSE shall be closed
to trading or trading thereon shall be restricted, or (b) trading or
the reporting of trading on said Exchange or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of
the Acquired Fund or the Large Cap Growth is impracticable, the
Closing Date shall be postponed until the first business day after the
day when trading shall have been fully resumed and reporting shall
have been restored; provided that if trading shall not be fully
resumed and reporting restored within three business days of the
Valuation Time, this Plan may be terminated by either the Acquired
Fund or Large Cap Growth upon the giving of written notice to the
other party.
(c) Large Cap Growth will provide to the Acquired Fund evidence
satisfactory to the Acquired Fund that Large Cap Growth Shares
issuable pursuant to the Acquisition have been credited to the
Acquired Fund's account on the books of Large Cap Growth. After the
Closing Date, the Large Cap Growth will provide to the Acquired Fund
evidence satisfactory to the Acquired Fund that such Shares have been
credited pro rata to open accounts in the names of the Acquired Fund
Stockholders.
(d) At the Closing, each party shall deliver to the other such bills of
sale, instruments of assumption of liabilities, checks, assignments,
stock certificates, receipts or other documents as such other party or
its counsel may reasonably request in connection with the transfer of
assets, assumption of liabilities and liquidation contemplated by the
Plan.
12. Survival of Representations and Warranties
No representations, warranties or covenants in or pursuant to this Plan
(including certificates of officers) hereto shall survive the completion of the
transactions contemplated herein.
13. Termination of Plan
A majority of either Fund's Board of Directors may terminate this Plan with
respect to that Fund at any time before the applicable Effective Time if: (i)
the Fund's conditions precedent set forth in Sections 8, 9 or 10 as appropriate,
are not satisfied; or (ii) the Board of Directors determines that the
consummation of the Acquisition is not in the best interests of the Fund or its
Stockholders and gives notice of such termination to the other party.
14. Governing Law
This Plan and the transactions contemplated hereby shall be governed,
construed and enforced in accordance with the laws of the State of New York,
except to the extent preempted by federal law, without regard to conflicts of
law principles.
15. Brokerage Fees
Each party represents and warrants that there are no brokers or finders
entitled to receive any payments in connection with the transactions provided
for in the Plan.
16. Amendments
The parties may, by agreement in writing authorized by their respective
Board of Directors, amend this Plan at any time before or after the Stockholders
of the Acquired Fund approve the Acquisition. However, after Stockholders of the
Acquired Fund approve the Acquisition, the parties may not amend this Plan in a
manner that materially alters the obligations of the other party. This Section
shall not preclude the parties from changing the Closing Date or the Effective
Time by mutual agreement.
17. Waivers
At any time prior to the Closing Date, either party may by written
instrument signed by it (i) waive the effect of any inaccuracies in the
representations and warranties made to it contained herein and (ii) waive
compliance with any of the agreements, covenants or conditions made for its
benefit contained herein. Any waiver shall apply only to the particular
inaccuracy or requirement for compliance waived, and not any other or future
inaccuracy or lack of compliance.
18. Indemnification of Directors
Large Cap Growth agrees that all rights to indemnification and all
limitations of liability existing in favor of the Acquired Fund's current and
former Directors and officers, acting in their capacities as such, under the
Acquired Fund's Articles of Incorporation and Bylaws as in effect as of the date
of this Plan shall survive the Acquisition as obligations of the Large Cap
Growth and shall continue in full force and effect, without any amendment
thereto, and shall constitute rights which may be asserted against Large Cap
Growth, its successors or assigns.
19. Cooperation and Further Assurances
Each party will cooperate with the other in fulfilling its obligations
under this Plan and will provide such information and documentation as is
reasonably requested by the other in carrying out the Plan's terms. Each party
will provide such further assurances concerning the performance of its
obligations hereunder and execute all documents for or in connection with the
consummation of the Acquisition as, with respect to such assurances or
documents, the other shall deem necessary or appropriate.
20. Updating of N-14 Registration Statement
If at any time prior to the Effective Time, a party becomes aware of any
untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements made not
misleading in the N-14 Registration Statement, the party discovering the item
shall notify the other party and the parties shall cooperate in promptly
preparing, filing and clearing with the SEC and, if appropriate, distributing to
Stockholders appropriate disclosure with respect to the item.
21. Limitation on Liabilities
The obligations of the Acquired Fund and Large Cap Growth shall not bind
any of the directors, Stockholders, nominees, officers, agents, employees or
agents of the Acquired Fund or Large Cap Growth personally, but shall bind only
the Acquired Fund or Large Cap Growth, as appropriate. The execution and
delivery of this Plan by an officer of either party shall not be deemed to have
been made by the officer individually or to impose any liability on the officer
personally, but shall bind only the Acquired Fund or Large Cap Growth, as
appropriate.
22. Termination of the Acquired Fund
If the parties complete the Acquisition, the Acquired Fund shall terminate
its registration under the 1940 Act, the 1933 Act, and the 1934 Act and
liquidate and dissolve.
23. Notices
Any notice, report, statement, certificate or demand required or permitted
by any provision of the Plan shall be in writing and shall be given in person or
by telecopy, certified mail or overnight express courier to:
For the Acquired Fund:
Alliance All-Market Advantage Fund, Inc.
1345 Avenue of the Americas
New York, New York 10105
Attention: Secretary
For Large Cap Growth:
AllianceBernstein Large Cap Growth Fund, Inc.
1345 Avenue of the Americas
New York, New York 10105
Attention: Secretary
24. Expenses
The Acquisition expenses shall be paid by AMA.
25. General
This Plan supersedes all prior agreements between the parties with respect
to the subject matter hereof and may be amended only in writing signed by both
parties. The headings contained in this Plan are for reference only and shall
not affect in any way the meaning or interpretation of this Plan. Whenever the
context so requires, the use in the Plan of the singular will be deemed to
include the plural and vice versa. Nothing in this Plan, expressed or implied,
confers upon any other person any rights or remedies under or by reason of this
Plan. Neither party may assign or transfer any right or obligation under this
Plan without the written consent of the other party.
In Witness Whereof, the parties hereto have executed this Plan as of the
day and year first above written.
Alliance All-Market Advantage Fund, Inc.
Attest:
_____________________________________________ By: ____________________________
Name: ______________________ Name: ______________________
Title: ______________________ Title: _____________________
AllianceBernstein Large Cap Growth Fund, Inc.
Attest:
____________________________________________ By: ____________________________
Name: ______________________ Name: ______________________
Title: ______________________ Title: _____________________
APPENDIX I
CAPITALIZATION
The following table sets forth (i) the capitalization of the Funds and (ii)
the pro forma capitalization of the combined Fund as adjusted giving effect to
the proposed acquisition of assets at net asset value as of June 30, 2007:
Large Cap Pro Forma Combined Fund
AMA Growth Adjustments (pro forma)
----------- -------------- ----------- --------------
Total Net Assets $48,775,086 $1,128,777,343 -- $1,177,552,429
Shares Outstanding 3,700,669 51,791,954 (1,462,265) 54,030,358
NAV Per Share $13.18 $21.79 -- $21.79
APPENDIX J
TRADING HISTORY AND SHARE PRICE DATA
Shares of each of the Funds are traded on the NYSE under the following
symbols: AMA - "AMO". Shares of closed-end management companies frequently trade
at discounts from their NAVs. With the exception of the period between October
2005 and January 2006, when the Fund's shares traded at a discount, AMA's shares
have generally traded at a premium during the past three years. The following
table sets forth the Fund's fiscal quarter within the two most recent fiscal
years and the Fund's fiscal quarter since the beginning of the current fiscal
year: (a) the per share high and low sales prices as reported by the NYSE; (b)
the NAV per share, based on the Fund's computation as of 4:00 p.m. on the last
NYSE business day for the week corresponding to the dates on which the
respective high and low prices were recorded; and (c) the discount or premium to
NAV represented by the high and low sales prices shown. The range of NAVs and of
premiums and discounts for the shares during the periods shown may be broader
than is shown in this table. On August 27, 2007, the closing price per share was
$12.50, the NAV per share was $13.01 and the discount to NAV was (3.92)%.
AMA (Discount) or
FYE: Corresponding Premium to
September 30 Sales Price Net Asset Value Net Asset Value
- ---------------- ---------------------------- ---------------------------- -----------------------
Quarter Ended High Low High Low High Low
- ---------------- ------------- ------------- ------------- ------------- ---------- -----------
12/31/04 $ 15.29 $ 13.82 $ 14.16/13.88* $ 13.00 8.36/7.45%* 10.12%
3/31/05 $ 15.04 $ 13.58 $ 13.41 $ 12.38 12.16% 10.14%
6/30/05 $ 14.90 $ 13.15 $ 13.59 $ 12.42 10.04% 5.96%
9/30/05 $ 14.79 $ 14.10 $ 13.63 $ 13.12 9.47% 7.47%
12/31/05 $ 15.20 $ 13.50 $ 15.21 $ 13.49 1.40% 0.30%
3/31/06 $ 16.20 $ 14.46 $ 14.79 $ 15.24 9.98% (2.82)%
6/30/06 $ 15.35 $ 14.00 $ 14.58 $ 13.04/12.97* 3.90% 10.50/8.78%*
9/30/06 $ 14.74 $ 13.90 $ 12.96 $ 12.10/12.78* 12.78% 12.28/8.76%*
12/31/06 $ 15.02 $ 14.07 $ 13.09 $ 12.96 15.25% 9.07%
3/30/07 $ 14.77 $ 14.01 $ 13.31 $ 12.80 11.22% 8.77/8.19%*
6/30/07 $ 14.45 $ 13.71 $ 13.62 $ 13.51 5.84% 6.81%
- -------------
*Two different days of the quarter had the same high or low sales prices.
APPENDIX K
LEGAL PROCEEDINGS
On October 2, 2003, a purported class action complaint entitled Hindo, et
al. v. AllianceBernstein Growth & Income Fund, et al. ("Hindo Complaint") was
filed against the Adviser, AllianceBernstein Holding L.P. ("Holding"),
AllianceBernstein Corporation, AXA Financial, Inc., the AllianceBernstein Funds,
certain officers of the Adviser ("AllianceBernstein defendants"), and certain
other unaffiliated defendants, as well as unnamed Doe defendants. The Hindo
Complaint was filed in the United States District Court for the Southern
District of New York by alleged shareholders of two of the AllianceBernstein
Mutual Funds. The Hindo Complaint alleges that certain of the AllianceBernstein
defendants failed to disclose that they improperly allowed certain hedge funds
and other unidentified parties to engage in "late trading" and "market timing"
of AllianceBernstein Mutual Fund securities, violating Sections 11 and 15 of the
Securities Act, Sections 10(b) and 20(a) of the Exchange Act and Sections 206
and 215 of the Advisers Act. Plaintiffs seek an unspecified amount of
compensatory damages and rescission of their contracts with the Adviser,
including recovery of all fees paid to the Adviser pursuant to such contracts.
Following October 2, 2003, additional lawsuits making factual allegations
generally similar to those in the Hindo Complaint were filed in various federal
and state courts against the Adviser and certain other defendants. All state
court actions against the Adviser wither were voluntarily dismissed or removed
to federal court. On February 20, 2004, the Judicial Panel on Multidistrict
Litigation transferred all actions to the United States District Court for the
District of Maryland (the "Mutual Fund MDL"). On September 29, 2004, plaintiffs
filed consolidated amended complaints with respect to four claim types: mutual
fund shareholder claims; mutual fund derivative claims; derivative claims
brought on behalf of Holding; and claims brought under ERISA by participants in
the Profit Sharing Plan for Employees of the Adviser. All four complaints
include substantially identical factual allegations, which appear to be based in
large part on the SEC Order and the NYAG Order.
On April 21, 2006, the Adviser and attorneys for the plaintiffs in the
mutual fund shareholder claims, mutual fund derivative claims, and ERISA claims
entered into a confidential memorandum of understanding ("MOU") containing their
agreement to settle these claims. The agreement will be documented by a
stipulation of settlement and will be submitted for court approval at a later
date. The settlement amount ($30 million), which we previously accrued and
disclosed, has been disbursed. The derivative claims brought on behalf of
Holding, in which plaintiffs seek an unspecified amount of damages, remain
pending.
On April 11, 2005, a complaint entitled The Attorney General of the State
of West Virginia v. AIM Advisors, Inc., et al. ("WVAG Complaint") was filed
against the Adviser, Holding, and various unaffiliated defendents. The WVAG
Complaint was filed in the Circuit Court of Marshall County, West Virginia by
the Attorney General of the State of West Virginia. The WVAG Complaint makes
factual allegations generally similar to those in the Hindo Complaint. On
October 19, 2005, the WVAG Complaint was transferred to the Mutual Fund MDL. On
August 30, 2005, the WV Securities Commissioner signed a Summary Order to Cease
and Desist, and Notice of Right to Hearing addressed to the Adviser and Holding.
The Summary Order claims that the Adviser and Holding violated the West Virginia
Uniform Securities Act, and makes factual allegations generally similar to those
in the SEC Order and the NYAG Order. On January 25, 2006, the Adviser and
Holding moved to vacate the Summary Order. In early September 2006, the court
denied this motion, and the Supreme Court of Appeals in West Virginia denied the
defendants' petition for appeal. On September 22, 2006, the Adviser and Holding
filed an answer and moved to dismiss the Summary Order with the WV Securities
Commissioner.
It is possible that these matters and/or other developments resulting from
these matters could result in increased redemptions of the affected funds'
shares or other adverse consequences to these funds. This may require the funds
to sell investments held by those funds to provide for sufficient liquidity and
could also have an adverse effect on the investment performance of the funds.
However, the Adviser believes that these matters are not likely to have a
material adverse effect on its ability to perform advisory services relating to
the funds.
APPENDIX L
SHARE OWNERSHIP INFORMATION
Shares Outstanding
As of August 10, 2007 each Fund had the following number of shares of
common stock outstanding.
Number of Outstanding
Fund Shares of
Common Stock
- ----------------------------------------------------- ---------------------
AMA 3,703,216
Large Cap Growth - Class A 50,877,418
Ownership of Shares
As of August 10, 2007, the directors and officers of each Fund as a group
beneficially owned less than 1% of the outstanding shares of common stock of
that Fund. To the knowledge of AMA, no person owned either of record or
beneficially, 5% or more of the outstanding shares of the Fund. To the knowledge
of Large Cap Growth, the following persons owned, either of record or
beneficially, 5% or more of the outstanding shares of Class A shares of Large
Cap Growth.
- ----------------------------------------------------------------------------------------
Percentage of
Name and Address of Number of Outstanding Outstanding Shares
Fund and Class Shareholder Shares of Class Owned of Class Owned
- ----------------------------------------------------------------------------------------
AMA N/A
- ----------------------------------------------------------------------------------------
Large Cap CITIGROUP GLOBAL MARKETS 2,927,652.636 5.76%
Growth-Class A HOUSE ACCOUNT
ATTN CINDY TEMPESTA
333 W 34TH ST FL 3
NEW YORK NY 10001-2402
- ----------------------------------------------------------------------------------------
PERSHING LLC 3,475,616.129 6.84%
PO BOX 2052
JERSEY CITY NJ 07303-2052
- ----------------------------------------------------------------------------------------
MLPF&S FOR THE SOLE 6,386,745.937 12.56%
BENEFIT OF ITS CUSTOMERS
ATTN FUND ADMIN
4800 DEER LAKE DR EAST
2ND FLR
JACKSONVILLE FL 32246-6484
- ----------------------------------------------------------------------------------------
The following table shows the percentage of combined Fund's shares to be
owned by the above listed shareholders, if the Acquisition had been consummated
as of August 10, 2007.
- ----------------------------------------------------------------------------------------
Percentage of
Outstanding Shares
Name and Address of of Combined Fund
Fund and Class Shareholder Combined Fund Class Class Owned
- ----------------------------------------------------------------------------------------
AMA N/A
- ----------------------------------------------------------------------------------------
Large Cap CITIGROUP GLOBAL MARKETS Class A 5.42%
Growth-Class A HOUSE ACCOUNT
ATTN CINDY TEMPESTA
333 W 34TH ST FL 3
NEW YORK NY 10001-2402
- ----------------------------------------------------------------------------------------
PERSHING LLC Class A 6.43%
PO BOX 2052
JERSEY CITY NJ 07303-2052
- ----------------------------------------------------------------------------------------
MLPF&S FOR THE SOLE Class A 11.82%
BENEFIT OF ITS CUSTOMERS
ATTN FUND ADMIN
4800 DEER LAKE DR EAST
2ND FLR
JACKSONVILLE FL 32246-6484
- ----------------------------------------------------------------------------------------
APPENDIX M
FINANCIAL HIGHLIGHTS TABLE
The financial highlights table is intended to help you understand each
Fund's financial performance for the past 5 years. Certain information reflects
financial results for a single share of each Fund. The total returns in the
table represent the rate that an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). Except as otherwise indicated, this information for the most
recently completed fiscal year has been audited by KPMG LLP and this information
for the prior four years has been audited by PricewaterhouseCoopers LLP, the
independent registered public accounting firms for the Funds, whose reports,
along with each Fund's financial statements, are included in each Fund's annual
report, which is available upon request.
Large Cap Growth - CLASS A
--------------------------
Six Months
Ended December 1,
January 31, Year Ended July 31, 2002 to
2007 --------------------------------------------------- July 31,
(unaudited) 2006 2005 2004 2003(a)
====================================================================================================
Net asset value, beginning
of period $18.56 $19.15 $16.28 $15.58 $15.07
----------- ------------- ------------- ------------- -------------
Income From Investment
Operations
Net investment loss (b) (.08) (.19) (.14)(c) (.15)(c)(d) (.10)
Net realized and unrealized
gain (loss) on
investment transactions 2.45 (.40) 3.01 .85 .61
----------- ------------- ------------- ------------- -------------
Net increase (decrease) in
net asset value from
operations 2.37 (.59) 2.87 .70 .51
----------- ------------- ------------- ------------- -------------
Less: Distributions
Distributions from net
realized gain on
investment transactions -0- -0- -0- -0- -0-
Distributions in excess of
net realized gain on
investment transactions -0- -0- -0- -0- -0-
----------- ------------- ------------- ------------- -------------
Total distributions -0- -0- -0- -0- -0-
----------- ------------- ------------- ------------- -------------
Net asset value, end of
period $20.93 $18.56 $19.15 $16.28 $15.58
=========== ============= ============= ============= =============
Total Return
Total investment return
based on net assets
value (e) 12.77% (3.08)% 17.63% 4.49% 3.38%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $1,170,486 $1,107,602 $1,348,678 $1,550,292 $1,757,243
Ratio to average net assets
of:
Expenses, net of
waivers/
reimbursements 1.56%(f)(g) 1.54%(h) 1.50% 1.58% 1.89%(f)
Expenses, before
waivers/
reimbursements 1.56%(f)(g) 1.54%(h) 1.53% 1.76% 1.89%(f)
Net investment loss (.75)%(f) (.92)%(h) (.82)%(c) (.90)%(c)(d) (1.08)%(f)
Portfolio turnover rate 44% 68% 56% 61% 60%
Year Ended November 30,
------------------------------
2002 2001
==============================
Net asset value, beginning
of period $20.24 $29.51
------------ -------------
Income From Investment
Operations
Net investment loss (b) (.19) (.19)
Net realized and unrealized
gain (loss) on
investment transactions (4.98) (6.43)
------------ -------------
Net increase (decrease) in
net asset value from
operations (5.17) (6.62)
------------ -------------
Less: Distributions
Distributions from net
realized gain on
investment transactions -0- (2.38)
Distributions in excess of
net realized gain on
investment transactions -0- (.27)
------------ -------------
Total distributions -0- (2.65)
------------ -------------
Net asset value, end of
period $15.07 $20.24
============ =============
Total Return
Total investment return
based on net assets
value (e) (25.54)% (24.90)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $2,098,623 $3,556,040
Ratio to average net assets
of:
Expenses, net of
waivers/
reimbursements 1.73% 1.53%
Expenses, before
waivers/
reimbursements 1.73% 1.53%
Net investment loss (1.09)% (.83)%
Portfolio turnover rate 93% 135%
- ----------
(a) The Fund changed its fiscal year end from November 30 to July 31.
(b) Based on average shares outstanding.
(c) Net of fees and expenses waived/reimbursed by the Adviser.
(d) Net of fees and expenses waived/reimbursed by the Transfer Agent.
(e) Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or
contingent deferred sales charges are not reflected in the calculation of
total investment return. Total return does not reflect the deduction of
taxes that a shareholder would pay on Fund distributions or the redemption
of Fund shares. Total investment return calculated for a period of less
than one year is not annualized.
(f) Annualized.
(g) Ratio reflects expenses grossed up for expense offset arrangement with the
Transfer Agent. For the six months ended January 31, 2007, the net expense
ratio was 1.53% on Class A.
(h) The ratio includes expenses attributable to costs of proxy solicitation.
AMA
---
Six Months
Ended March Year Ended September 30,
31, 2007 --------------------------------------------------------------------------
(unaudited) 2006 2005 2004 2003 2002
============================================================================================
Net asset value, beginning
of period $12.83 $14.06 $12.85 $13.69 $13.65 $19.68
---------- ---------- ---------- ---------- ---------- ----------
Income From Investment
Operations
Net investment loss (a) (.09)(b) (.21)(b) (.10)(b) (.18) (.22) (.26)
Net realized and unrealized
gain (loss) on
investment transactions .75 .38 2.62 .76 1.58 (3.82)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in
net asset value from
operations .66 .17 2.52 .58 1.36 (4.08)
---------- ---------- ---------- ---------- ---------- ----------
Less: Distributions
Distributions from net
realized gain on
investments (.65) (1.38) (.44) (1.21) -0 -0
Tax return of capital -0- (.02) (.87) (.21) (1.32) (1.95)
---------- ---------- ---------- ---------- ---------- ----------
Total distributions (.65) (1.40) (1.31) (1.42) (1.32) (1.95)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of
period $12.84 $12.83 $14.06 $12.85 $13.69 $13.65
========== ========== ========== ========== ========== ==========
Market value, end of period $14.20 $14.36 $14.15 $14.19 $14.30 $13.45
---------- ---------- ---------- ---------- ---------- ----------
Premium/(Discount) 10.59% 11.93% .64% 10.43% 4.46% (1.47)%
Total Return
Total investment return
based on net assets
value (c)
Market Value 3.65% 11.86% 9.72% 9.39% 16.93% (24.59)%
Net asset value 4.90% .58% 20.39% 3.74% 10.42% (22.64)%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted) $47,462 $47,369 $51,727 $47,018 $49,797 $49,534
Ratio to average net assets
of:
Expenses, before waivers 2.20%(d) 2.38% 1.79% 1.74% 2.28% 2.06%
Expenses, net of waivers 2.12%(d) 2.28% 1.73% 1.73% 2.28% 2.06%
Net investment loss (1.37)%(b)(d) (1.53)%(b) (.78)%(b) (1.30)% (1.58)% (1.38)%
Portfolio turnover rate 62% 134% 189% 336% 294% 215%
- ----------
(a) Based on average shares outstanding.
(b) Net of waivers/reimbursement by the Adviser.
(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 investment return
calculated for a period of less than one year is not annualized.
(d) Annualized.
SK 00250 0205 796184 v6
FORM OF PROXY CARD
Vote by Touch-Tone Phone or by Mail!!
CALL: To vote by phone call toll-free 1-800-[___]-[____] and
Follow the recorded instructions.
MAIL: Return the signed Proxy Card in the enclosed envelope.
PROXY IN CONNECTION WITH THE SPECIAL MEETING OF
SHAREHOLDERS TO BE HELD NOVEMBER 9, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE FUND
Alliance All-Market Advantage Fund, Inc.
The undersigned hereby appoints Christina A. Morse and Carol H. Rappa, or either
of them, as proxies for the undersigned, each with full power of substitution,
to attend the Meeting of Shareholders (the "Meeting") of Alliance All-Market
Advantage Fund, Inc. (the "Fund"), to be held at 4:00 p.m., Eastern Time, on
Friday, November 9, 2007 at the offices of the Fund at 1345 Avenue of the
Americas, [____] Floor, New York, New York 10105, and at any postponement or
adjournment thereof, to cast on behalf of the undersigned all votes that the
undersigned is entitled to cast at the Meeting and otherwise to represent the
undersigned at the Meeting with all powers possessed by the undersigned if
personally present at the Meeting. The undersigned hereby acknowledges receipt
of the Notice of Meeting and accompanying Prospectus/Proxy Statement, revokes
any proxy previously given with respect to the Meeting and instructs said
proxies to vote said shares as indicated on the reverse side of this Proxy Card.
IF THIS PROXY CARD IS PROPERLY EXECUTED, THE VOTES ENTITLED TO BE CAST BY THE
UNDERSIGNED WILL BE CAST AS SPECIFIED. IF THIS PROXY CARD IS PROPERLY EXECUTED
BUT NO SPECIFICATION IS MADE FOR THE PROPOSAL, THE VOTES ENTITLED TO BE CAST BY
THE UNDERSIGNED WILL BE CAST "FOR" THE PROPOSAL AS DESCRIBED IN THE
PROSPECTUS/PROXY STATEMENT. ADDITIONALLY, THE VOTES ENTITLED TO BE CAST BY THE
UNDERSIGNED WILL BE CAST IN THE DISCRETION OF THE PROXYHOLDER ON ANY OTHER
MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
PLEASE VOTE, DATE AND SIGN ON THE REVERSE SIDE AND RETURN THIS PROXY CARD
PROMPTLY IN THE ENCLOSED ENVELOPE.
[x] Please mark votes as in this example.
- --------------------------------------------------------------------------------
THE PROPOSAL Acquisition by AllianceBernstein Large Cap Growth Fund, Inc. of all
of the assets and the assumption of all of the liabilities of the Fund in
exchange for shares of AllianceBernstein Large Cap Growth Fund, Inc.
FOR AGAINST ABSTAIN
[_] [_] [_]
To vote and otherwise represent the undersigned on any other matter that may
properly come before the Meeting, any postponement or adjournment thereof,
including any matter incidental to the conduct of the Meeting, in the discretion
of the Proxy holder(s).
Please check here if you plan to attend the Meeting.
[_] I WILL ATTEND THE MEETING.
Please be sure to sign your name(s) exactly as it appears on this Proxy Card.
______________________________________
Signature(s) of Shareholder(s)
Date: __________________________, 2007
______________________________________
Signature(s) of Shareholder(s)
Date: __________________________, 2007
IMPORTANT: Please sign legibly and exactly as the name appears on this Proxy
Card. Joint owners must EACH sign the Proxy Card. When signing as executor,
administrator, attorney, trustee or guardian, or as custodian for a minor,
please give the FULL title of such. If a corporation, please give the FULL
corporate name and indicate the signer's office. If a partner, please sign in
the partnership name.
***PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE***
SK 00250 0205 806830
ALLIANCE ALL-MARKET ADVANTAGE FUND, INC.
1345 Avenue of the Americas
New York, New York
Toll Free (800) 221-5672
================================================================================
STATEMENT OF ADDITIONAL INFORMATION
[__________], 2007
This Statement of Additional Information (the "SAI") relates to the
proposed acquisition (the "Acquisition") of all of the assets and liabilities of
Alliance All-Market Advantage Fund, Inc. (the "Fund") by AllianceBernstein Large
Cap Growth Fund, Inc. ("LCGF").
This SAI contains information which may be of interest to stockholders but
which is not included in the Prospectus/Proxy Statement dated [________], 2007
(the "Prospectus/Proxy Statement") of LCGF which relates to the Acquisition. As
described in the Prospectus/Proxy Statement, the Acquisition would involve the
transfer by the Fund of all the assets of the Fund in exchange for shares of
LCGF and the assumption by LCGF of all the liabilities of the Fund. The Fund
would distribute the LCGF shares it receives to its stockholders in complete
liquidation and dissolution of the Fund. LCGF will be the survivor for
accounting purposes.
This SAI is not a prospectus and should be read in conjunction with the
Prospectus/Proxy Statement. The Prospectus/Proxy Statement has been filed with
the Securities and Exchange Commission (the "SEC") and is available upon request
and without charge by writing to the Fund at 1345 Avenue of the Americas, New
York, New York 10105, or by calling 1-800-221-5672.
TABLE OF CONTENTS
Page
ADDITIONAL INFORMATION ABOUT LCGF...........................................[__]
DESCRIPTION OF THE FUND.....................................................[__]
RISK FACTORS AND SPECIAL CONSIDERATIONS.....................................[__]
MANAGEMENT OF THE FUND......................................................[__]
VALUATION OF PORTFOLIO SECURITIES...........................................[__]
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN................................[__]
DESCRIPTION OF COMMON STOCK.................................................[__]
PORTFOLIO TRANSACTIONS......................................................[__]
DISTRIBUTIONS...............................................................[__]
TAXATION....................................................................[__]
CODE OF ETHICS AND PROXY VOTING.............................................[__]
LEGAL MATTERS...............................................................[__]
FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM....................................................[__]
APPENDIX A..................................................................[__]
ADDITIONAL INFORMATION ABOUT LCGF
Further information about LCGF is contained in its Statement of Additional
Information dated November 1, 2006, as amended November 6, 2006 and December 4,
2006, which is available upon request and without charge by writing to LCGF at
1345 Avenue of the Americas, New York, New York 10105, or by calling
1-800-221-5672.
DESCRIPTION OF THE FUND
The Fund is a diversified closed-end investment company registered under
the Investment Company Act of 1940, as amended ("1940 Act"). The Fund's
investment objective is to provide long-term growth of capital through all
market conditions. Consistent with the investment style of AllianceBernstein
L.P.'s (the "Adviser") 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. 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 make
substantial use of options, including purchasing and writing call and put
options, and may engage in short selling and may use certain other investment
practices, including 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
normally consist of the equity securities of the approximately 25 companies that
are most highly regarded by the Adviser's Large Cap Growth Group. These Core
Portfolio companies will be predominantly U.S. companies. The balance of the
portion of the Fund's portfolio that is invested in equity securities 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 40-60 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.
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 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:
o engage in short sales of securities with respect to up to 30% of its
total assets;
o invest up to 20% of its total assets in convertible securities of
companies whose common stocks are eligible for purchase by the Fund;
o 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;
o 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;
o 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;
o 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;
o purchase and sell stock index futures for hedging purposes against
movements in the equity markets;
o purchase and write put and call options on foreign currencies;
o purchase or sell forward foreign currency exchange contracts;
o enter into forward commitments for the purchase or sale of securities
up to 30% of its total assets;
o enter into reverse repurchase agreements and dollar rolls;
o enter into standby commitment agreements;
o enter into currency swaps for hedging purposes;
o make secured loans of its securities of up to 30% of its total assets;
and
o enter into repurchase agreements.
There can be no assurance that at any given time the Fund will engage in any of
these practices even if they are available or, if the Fund does utilize a
particular practice, that its use will achieve the desired result.
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
Convertible Securities
Convertible securities include bonds, debentures, corporate notes and
preferred stocks. Convertible securities are instruments that are convertible at
a stated exchange rate into common stock. Prior to their conversion, convertible
securities have the same general characteristics as non-convertible securities
that provide a stable stream of income with generally higher yields than those
of equity securities of the same or similar issuers. The market value of
convertible securities tends to decrease as interest rates rise and, conversely,
to increase as interest rates decline. 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 price of the underlying common stock. Convertible debt securities that
are rated Baa3 or lower by Moody's or BBB- or lower by S&P, or Fitch and
comparable unrated securities as determined by the Adviser may share some or all
of the risk of non-convertible debt securities with those ratings.
When the market price of the common stock underlying a convertible security
increases, the price of the convertible security increasingly reflects the value
of the underlying common stock and may rise accordingly. As the market price of
the underlying common stock declines, the convertible security tends to trade
increasingly on a yield basis, and thus may not depreciate to the same extent as
the underlying common stock. Convertible securities rank senior to common stocks
in an issuer's capital structure. They are consequently of higher quality and
entail less risk than the issuer's common stock, although the extent to which
such risk is reduced depends in large measure upon the degree to which the
convertible security sells above its value as a fixed-income security.
Depositary Receipts
In addition to purchasing corporate securities of non-U.S. issuers in
overseas securities markets, the Fund may invest in American Depositary Receipts
("ADRs"), European Depositary Receipts ("EDRs"), Global Depositary Receipts
("GDRs") or other securities representing securities of companies based in
countries other than the United States. Transactions in these securities may not
necessarily be settled in the same currency as transactions in the securities
into which they represent. Generally, ADRs, in registered form, are designed for
use in the U.S. securities markets, EDRs, in bearer form, are designed for use
in European securities markets and GDRs, in bearer form, are designed for use in
two or more securities markets, such as Europe and Asia.
Derivatives
The Fund may, but is not required to, use derivatives for risk management
purposes or as part of its investment practices. Derivatives are financial
contracts whose value depends on, or is derived from, the value of an underlying
asset, reference rate or index. These assets, rates, and indices may include
bonds, stocks, mortgages, commodities, interest rates, currency exchange rates,
bond indices and stock indices. Derivatives may be (i) standardized,
exchange-traded contracts or (ii) customized, privately-negotiated contracts.
Exchange-traded derivatives tend to be more liquid and subject to less credit
risk than those that are privately negotiated. The Fund may use derivatives to
earn income and enhance returns, to hedge or adjust the risk profile of a
portfolio and either to replace more traditional direct investments or to obtain
exposure to otherwise inaccessible markets.
The four principal types of derivatives, which include options, futures,
forwards and swaps, as well as the methods in which they may be used by the Fund
are described below.
Options. An option, which may be standardized and exchange-traded, or
customized and privately negotiated, is an agreement that, for a premium payment
or fee, gives the option holder (the buyer) the right but not the obligation to
buy or sell the underlying asset (or settle for cash an amount based on an
underlying asset, rate or index) at a specified price (the exercise price)
during a period of time or on a specified date. A call option entitles the
holder to purchase, and a put option entitles the holder to sell, the underlying
asset (or settle for cash an amount based on an underlying asset, rate or
index). Likewise, when an option is exercised the writer of the option is
obligated to sell (in the case of a call option) or to purchase (in the case of
a put option) the underlying asset (or settle for cash an amount based on an
underlying asset, rate or index). Investments in options are considered
speculative. The Fund may lose the premium paid for them if the price of the
underlying security or other asset decreased or remained the same (in the case
of a call option) or increased or remained the same (in the case of a put
option). If a put or call option purchased by the Fund were permitted to expire
without being sold or exercised, its premium would represent a loss to the Fund.
Futures. A futures contract is an agreement that obligates the buyer to buy
and the seller to sell a specified quantity of an underlying asset (or settle
for cash the value of a contract based on an underlying asset, rate or index) at
a specific price on the contract maturity date. Futures contracts are
standardized, exchange-traded instruments and are fungible (i.e., considered to
be perfect substitutes for each other). This fungibility allows futures
contracts to be readily offset or cancelled through the acquisition of equal but
opposite positions, which is the primary method in which futures contracts are
liquidated. A cash-settled futures contract does not require physical delivery
of the underlying asset but instead is settled for cash equal to the difference
between the values of the contract on the date it is entered into and its
maturity date.
Forward Contracts. A forward contract is a customized, privately negotiated
agreement for one party to buy, and the other party to sell, a specific quantity
of an underlying commodity or other tangible asset for an agreed-upon price at a
future date. A forward contract generally is settled by physical delivery of the
commodity or other tangible asset underlying the forward contract to an agreed
upon location at a future date (rather than settled by cash) or will be rolled
forward into a new forward contract. Non-deliverable forwards ("NDFs") specify a
cash payment upon maturity. NDFs are normally used when the market for physical
settlement of the currency is underdeveloped, heavily regulated or highly taxed.
Swaps. A swap is a customized, privately negotiated agreement that
obligates two parties to exchange a series of cash flows at specified intervals
(payment dates) based upon or calculated by reference to changes in specified
prices or rates (interest rates in the case of interest rate swaps, currency
exchange rates in the case of currency swaps) for a specified amount of an
underlying asset (the "notional" principal amount). The payment flows are netted
against each other, with the difference being paid by one party to the other.
Except for currency swaps, the notional principal amount is used solely to
calculate the payment streams but is not exchanged. With respect to currency
swaps, actual principal amounts of currencies may be exchanged by the
counterparties at the initiation, and again upon the termination, of the
transaction. Swap transactions also include credit default swaps in which one
party pays a periodic fee, typically expressed in basis points on a notational
amount, in return for a contingent payment by the counterparty following a
credit event in a specific debt obligation or obligations. A credit event is
typically a default and the contingent payment may be a cash settlement or by
physical delivery of the reference obligation in return for payment of its face
amount.
Use of Options, Futures, Forwards and Swaps by the Fund.
--------------------------------------------------------
Options on Securities. The Fund may write and purchase call and put options
on securities. In purchasing an option on securities, the Fund would be in a
position to realize a gain if, during the option period, the price of the
underlying securities 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 not greater than the premium paid for the option. Thus,
the Fund would realize a loss if the price of the underlying security declined
or remained the same (in the case of a call) or increased or remained the same
(in the case of a put) or otherwise did not increase (in the case of a put) or
decrease (in the case of a call) by more than the amount of the premium. If a
put or call option purchased by the Fund were permitted to expire without being
sold or exercised, its premium would represent a loss to the Fund.
The Fund may write a put or call option in return for a premium, which is
retained by the Fund whether or not the option is exercised. The Fund will not
write uncovered call or put options on securities. 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 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 the call option it has written. A put
option written by the Fund is covered if the Fund holds a put option on the
underlying securities with an exercise price equal to or greater than the put
option it has written.
The Fund may also write combinations of put and call options on the same
security, known as "straddles," with the same exercise and expiration date. By
writing a straddle, the Fund undertakes a simultaneous obligation to sell and
purchase the same security in the event that one of the options is exercised. If
the price of the security subsequently rises above the exercise price, the call
will likely be exercised and the Fund will be required to sell the underlying
security at or below market price. This loss may be offset, however, in whole or
part, by the premiums received on the writing of the two options. Conversely, if
the price of the security declines by a sufficient amount, the put will likely
be exercised. The writing of straddles will likely be effective, therefore, only
where the price of the security remains stable and neither the call nor the put
is exercised. In those instances where one of the options is exercised, the loss
on the purchase or sale of the underlying security may exceed the amount of the
premiums received.
By writing a call option, the Fund limits its opportunity to profit from
any increase in the market value of the underlying security above the exercise
price of the option. By writing a put option, the Fund assumes the risk that it
may be required to purchase the underlying security for an exercise price above
its then current market value, resulting in a capital loss unless the security
subsequently appreciates in value. Where options are written for hedging
purposes, such transactions constitute only a partial hedge against declines in
the value of portfolio securities or against increases in the value of
securities to be acquired, up to the amount of the premium. The Fund may
purchase put options to hedge against a decline in the value of portfolio
securities. If such decline occurs, the put options will permit the Fund to sell
the securities at the exercise price or to close out the options at a profit. By
using put options in this way, the Fund will reduce any profit it might
otherwise have realized on the underlying security by the amount of the premium
paid for the put option and by transaction costs.
The Fund may purchase call options to hedge against an increase in the
price of securities that the Fund anticipates purchasing in the future. If such
increase occurs, the call option will permit the Fund to purchase the securities
at the exercise price, or to close out the options at a profit. The premium paid
for the call option plus any transaction costs will reduce the benefit, if any,
realized by the Fund upon exercise of the option, and, unless the price of the
underlying security rises sufficiently, the option may expire worthless to the
Fund and the Fund will suffer a loss on the transaction to the extent of the
premium paid.
The Fund may 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. The Fund will effect such transactions only with investment
dealers and other financial institutions (such as commercial banks or savings
and loan institutions) deemed creditworthy by the Adviser, and the Adviser has
adopted procedures for monitoring the creditworthiness of such entities.
Options on Securities Indices. An option on a securities index is similar
to an option on a security except that, rather than taking or making 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 the case of a call) or
less than (in the case of a put) the exercise price of the option.
The Fund may write (sell) call and put options and purchase call and put
options on securities indices.
If the Fund purchases put options on securities indices to hedge its
investments against a decline in the value of portfolio securities, it will seek
to offset a decline in the value of securities it owns through appreciation of
the put option. If the value of the Fund's investments does not decline as
anticipated, or if the value of the option does not increase, the Fund's loss
will be limited to the premium paid for the option. The success of this strategy
will largely depend on the accuracy of the correlation between the changes in
value of the index and the changes in value of the Fund's security holdings.
The purchase of call options on securities indices may be used by the Fund
to attempt to reduce the risk of missing a broad market advance, or an advance
in an industry or market segment, at a time when the Fund holds uninvested cash
or short-term debt securities awaiting investment. When purchasing call options
for this purpose, the Fund will also bear the risk of losing all or a portion of
the premium paid if the value of the index does not rise. The purchase of call
options on stock indices when the Fund is substantially fully invested is a form
of leverage, up to the amount of the premium and related transaction costs, and
involves risks of loss and of increased volatility similar to those involved in
purchasing call options on securities the Fund owns.
Futures Contracts. Futures contracts that the Fund may buy and sell may
include futures contracts on fixed-income or other securities, and contracts
based on interest rates, foreign currencies or financial indices, including any
index of U.S. Government securities.
Interest rate futures contracts are purchased or sold for hedging purposes
to attempt to protect against the effects of interest rate changes on the Fund's
current or intended investments in fixed-income securities. For example, if the
Fund owned long-term bonds and interest rates were expected to increase, that
Fund might sell interest rate futures contracts. Such a sale would have much the
same effect as selling some of the long-term bonds in that Fund's portfolio.
However, since the futures market is more liquid than the cash market, the use
of interest rate futures contracts as a hedging technique allows the Fund to
hedge its interest rate risk without having to sell its portfolio securities. If
interest rates were to increase, the value of the debt securities in the
portfolio would decline, but the value of that Fund's interest rate futures
contracts would be expected to increase at approximately the same rate, thereby
keeping the net asset value of that Fund from declining as much as it otherwise
would have. On the other hand, if interest rates were expected to decline,
interest rate futures contracts could be purchased to hedge in anticipation of
subsequent purchases of long-term bonds at higher prices. Because the
fluctuations in the value of the interest rate futures contracts should be
similar to those of long-term bonds, the Fund could protect itself against the
effects of the anticipated rise in the value of long-term bonds without actually
buying them until the necessary cash becomes available or the market has
stabilized. At that time, the interest rate futures contracts could be
liquidated and that Fund's cash reserves could then be used to buy long-term
bonds on the cash market.
The Fund may purchase and sell foreign currency futures contracts for
hedging purposes in order to protect against fluctuations in currency exchange
rates. Such fluctuations could reduce the dollar value of portfolio securities
denominated in foreign currencies, or increase the cost of foreign-denominated
securities to be acquired, even if the value of such securities in the
currencies in which they are denominated remains constant. The Fund may sell
futures contracts on a foreign currency, for example, when it holds securities
denominated in such currency and it anticipates a decline in the value of such
currency relative to the dollar. If such a decline were to occur, the resulting
adverse effect on the value of foreign-denominated securities may be offset, in
whole or in part, by gains on the futures contracts. However, if the value of
the foreign currency increases relative to the dollar, the Fund's loss on the
foreign currency futures contract may or may not be offset by an increase in the
value of the securities because a decline in the price of the security stated in
terms of the foreign currency may be greater than the increase in value as a
result of the change in exchange rates.
Conversely, the Fund could protect against a rise in the dollar cost of
foreign-denominated securities to be acquired by purchasing futures contracts on
the relevant currency, which could offset, in whole or in part, the increased
cost of such securities resulting from a rise in the dollar value of the
underlying currencies. When the Fund purchases futures contracts under such
circumstances, however, and the price in dollars of securities to be acquired
instead declines as a result of appreciation of the dollar, the Fund will
sustain losses on its futures position which could reduce or eliminate the
benefits of the reduced cost of portfolio securities to be acquired.
The Fund may also engage in currency "cross hedging" when, in the opinion
of the Adviser, the historical relationship among foreign currencies suggests
that the Fund may achieve protection against fluctuations in currency exchange
rates similar to that described above at a reduced cost through the use of a
futures contract relating to a currency other than the U.S. dollar or the
currency in which the foreign security is denominated. Such "cross hedging" is
subject to the same risks as those described above with respect to an
unanticipated increase or decline in the value of the subject currency relative
to the dollar.
Purchases or sales of stock or bond index futures contracts are used for
hedging purposes to attempt to protect the Fund's current or intended
investments from broad fluctuations in stock or bond prices. For example, the
Fund may sell stock or bond index futures contracts in anticipation of or during
a market decline to attempt to offset the decrease in market value of the Fund's
portfolio securities that might otherwise result. If such decline occurs, the
loss in value of portfolio securities may be offset, in whole or part, by gains
on the futures position. When the Fund is not fully invested in the securities
market and anticipates a significant market advance, it may purchase stock or
bond index futures contracts in order to gain rapid market exposure that may, in
whole or in part, offset increases in the cost of securities that the Fund
intends to purchase. As such purchases are made, the corresponding positions in
stock or bond index futures contracts will be closed out.
The Fund has claimed an exclusion from the definition of the term
"commodity pool operator" under the Commodity Exchange Act and therefore is not
subject to registration or regulation as a pool operator under that Act.
Options on Futures Contracts. Options on futures contracts are options that
call for the delivery of futures contracts upon exercise. Options on futures
contracts written or purchased by the Fund will be traded on U.S. exchanges and,
will be used only for hedging purposes.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the securities in the Fund's portfolio. If the
futures price at expiration of the option is below the exercise price, the Fund
will retain the full amount of the option premium, which provides a partial
hedge against any decline that may have occurred in the Fund's portfolio
holdings. The writing of a put option on a futures contract constitutes a
partial hedge against increasing prices of the securities or other instruments
required to be delivered under the terms of the futures contract. If the futures
price at expiration of the put option is higher than the exercise price, the
Fund will retain the full amount of the option premium, which provides a partial
hedge against any increase in the price of securities which the Fund intends to
purchase. If a put or call option the Fund has written is exercised, the Fund
will incur a loss which will be reduced by the amount of the premium it
receives. Depending on the degree of correlation between changes in the value of
its portfolio securities and changes in the value of its options on futures
positions, the Fund's losses from exercised options on futures may to some
extent be reduced or increased by changes in the value of portfolio securities.
The Fund may purchase options on futures contracts for hedging purposes
instead of purchasing or selling the underlying futures contracts. For example,
where a decrease in the value of portfolio securities is anticipated as a result
of a projected market-wide decline or changes in interest or exchange rates, the
Fund could, in lieu of selling futures contracts, purchase put options thereon.
In the event that such decrease were to occur, it may be offset, in whole or
part, by a profit on the option. If the anticipated market decline were not to
occur, the Fund will suffer a loss equal to the price of the put. Where it is
projected that the value of securities to be acquired by the Fund will increase
prior to acquisition due to a market advance or changes in interest or exchange
rates, the Fund could purchase call options on futures contracts, rather than
purchasing the underlying futures contracts. If the market advances, the
increased cost of securities to be purchased may be offset by a profit on the
call. However, if the market declines, the Fund will suffer a loss equal to the
price of the call, but the securities which the Fund intends to purchase may be
less expensive.
Credit Default Swap Agreements. The "buyer" in a credit default swap
contract is obligated to pay the "seller" a periodic stream of payments over the
term of the contract in return for a contingent payment upon the occurrence of a
credit event with respect to an underlying reference obligation. Generally, a
credit event means bankruptcy, failure to pay, obligation acceleration or
modified restructuring. The Fund may be either the buyer or seller in the
transaction. As a seller, the Fund receives a fixed rate of income throughout
the term of the contract, which typically is between one month and ten years,
provided that no credit event occurs. If a credit event occurs, the Fund
typically must pay the contingent payment to the buyer, which is typically the
"par value" (full notional value) of the reference obligation. The contingent
payment may be a cash settlement or by physical delivery of the reference
obligation in return for payment of the face amount of the obligation. If the
Fund is a buyer and no credit event occurs, the Fund will lose its periodic
stream of payments over the term of the contract. However, if a credit event
occurs, the buyer typically receives full notional value for a reference
obligation that may have little or no value.
Credit default swaps may involve greater risks than if the Fund had
invested in the reference obligation directly. Credit default swaps are subject
to general market risk, liquidity risk and credit risk. As noted above, if the
Fund is a buyer and no credit event occurs, it will lose its periodic stream of
payments over the term of the contract. In addition, the value of the reference
obligation received by the Fund as a seller if a credit event occurs, coupled
with the periodic payments previously received, may be less than the full
notional value it pays to the buyer, resulting in a loss of value to the Fund.
The Fund will not enter into a credit default swap if the swap provides for
settlement by physical delivery and such delivery would result in the Fund
investing in securities rated below BBB- or Baa3 or not maintaining an average
aggregate credit rating of at least A-.
Synthetic Foreign Equity Securities. The Fund may invest in a form of
synthetic foreign equity securities, referred to as international warrants or
local access products. International warrants are financial instruments issued
by banks or other financial institutions, which may or may not be traded on a
foreign exchange. International warrants are a form of derivative security that
may give holders the right to buy or sell an underlying security or a basket of
securities representing an index from or to the issuer for a particular price or
may entitle holders to receive a cash payment relating to the value of the
underlying security or index. International warrants are similar to options in
that they are exercisable by the holder for an underlying security or the value
of that security, but are generally exercisable over a longer term than typical
options. These types of instruments may be American style exercise, which means
that they can be exercised at any time on or before the expiration date of the
international warrant, or European style exercise, which means that they may be
exercised only on the expiration date. International warrants have an exercise
price, which is fixed when the warrants are issued.
The Fund normally will invest in covered warrants, which entitle the holder
to purchase from the issuer common stock of an international company or receive
a cash payment (generally in U.S. dollars). The cash payment is calculated
according to a predetermined formula. The Fund may invest in low exercise price
warrants, which are warrants with an exercise price that is very low relative to
the market price of the underlying instrument at the time of issue (e.g., one
cent or less). The buyer of a low exercise price warrant effectively pays the
full value of the underlying common stock at the outset. In the case of any
exercise of warrants, there may be a time delay between the time a holder of
warrants gives instructions to exercise and the time the price of the common
stock relating to exercise or the settlement date is determined, during which
time the price of the underlying security could change significantly. In
addition, the exercise or settlement date of the warrants may be affected by
certain market disruption events, such as difficulties relating to the exchange
of a local currency into U.S. dollars, the imposition of capital controls by a
local jurisdiction or changes in the laws relating to foreign investments. These
events could lead to a change in the exercise date or settlement currency of the
warrants, or postponement of the settlement date. In some cases, if the market
disruption events continue for a certain period of time, the warrants may become
worthless resulting in a total loss of the purchase price of the warrants.
The Fund will acquire covered warrants issued by entities deemed to be
creditworthy by the Adviser, who will monitor the creditworthiness of the
issuers on an on-going basis. Investments in these instruments involve the risk
that the issuer of the instrument may default on its obligation to deliver the
underlying security or cash in lieu thereof. These instruments may also be
subject to liquidity risk because there may be a limited secondary market for
trading the warrants. They are also subject, like other investments in foreign
securities, to foreign risk and currency risk.
International warrants also include equity warrants, index warrants, and
interest rate warrants. Equity warrants are generally issued in conjunction with
an issue of bonds or shares, although they also may be issued as part of a
rights issue or scrip issue. When issued with bonds or shares, they usually
trade separately from the bonds or shares after issuance. Most warrants trade in
the same currency as the underlying stock (domestic warrants), but also may be
traded in different currency (euro-warrants). Equity warrants are traded on a
number of foreign exchanges and in over-the-counter markets. Index warrants and
interest rate warrants are rights created by an issuer, typically a financial
institution, entitling the holder to purchase, in the case of a call, or sell,
in the case of a put, respectively, an equity index or a specific bond issue or
interest rate index at a certain level over a fixed period of time. Index
warrants transactions settle in cash, while interest rate warrants can typically
be exercised in the underlying instrument or settle in cash.
The Fund also may invest in long-term options of, or relating to,
international issuers. Long-term options operate much like covered warrants.
Like covered warrants, long-term options are call options created by an issuer,
typically a financial institution, entitling the holder to purchase from the
issuer outstanding securities of another issuer. Long-term options have an
initial period of one year or more, but generally have terms between three and
five years. Unlike U.S. options, long-term European options do not settle
through a clearing corporation that guarantees the performance of the
counterparty. Instead, they are traded on an exchange and subject to the
exchange's trading regulations.
Forward Commitments and When-Issued and Delayed Delivery Securities.
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, the Fund does not pay for the securities until they
are received, and the Fund is required to create a segregated account with its
custodian and to maintain in that account liquid assets in an amount equal to or
greater than, on a daily basis, the amount of the Fund's forward commitments and
"when-issued" or "delayed delivery" commitments.
The use of forward commitments enables the Fund to protect against
anticipated changes in exchange rates, interest rates and/or prices. For
instance, the Fund may enter into a forward contract 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"). In addition, 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 that Fund's 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"). If the Adviser were to forecast incorrectly the direction of
exchange rate movements, the Fund might be required to complete such when-issued
or forward transactions at prices inferior to the then current market values.
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 actually receiving securities or delivering them, as
the case may be. If the Fund chooses 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 incur a gain or 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.
At the time the Fund intends to enter into a forward commitment, it will
record the transaction and thereafter reflect the value of the security
purchased or, if a sale, the proceeds to be received, in determining its net
asset value. Any unrealized appreciation or depreciation reflected in such
valuation of a "when, as and if issued" security would be canceled in the event
that the required conditions did not occur and the trade was canceled.
The Fund will enter into forward commitments and make commitments to
purchase securities on a "when-issued" or "delayed delivery" basis only with the
intention of actually acquiring the securities. However, the Fund may sell these
securities before the settlement date if, in the opinion of the Adviser, it is
deemed advisable as a matter of investment strategy.
Although the Fund does not intend to enter into forward commitments for
speculative purposes and the Fund intends to adhere to the provisions of the SEC
policies, purchases of securities on such bases may involve more risk than other
types of purchases. For example, by committing to purchase securities in the
future, the Fund subjects itself to a risk of loss on such commitments as well
as on its portfolio securities. Also, the Fund may have to sell assets which
have been set aside in order to meet redemptions. In addition, if the Fund
determines it is advisable as a matter of investment strategy to sell the
forward commitment or "when-issued" or "delayed delivery" securities before
delivery, that Fund may incur a gain or loss because of market fluctuations
since the time the commitment to purchase such securities was made. Any such
gain or loss would be treated as a capital gain or loss for tax purposes. When
the time comes to pay for the securities to be purchased under a forward
commitment or on a "when-issued" or "delayed delivery" basis, the Fund will meet
its obligations from the then available cash flow or the sale of securities, or,
although it would not normally expect to do so, from the sale of the forward
commitment or "when-issued" or "delayed delivery" securities themselves (which
may have a value greater or less than the Fund's payment obligation). In
addition, no interest or dividends accrue to the purchaser prior to the
settlement date for securities purchased or sold under a forward commitment.
Illiquid Securities and Non-Publicly Traded Securities
The Fund will not invest in illiquid securities if immediately after such
investment more than 15% or such other amount permitted by guidance regarding
the 1940 Act of the Fund's net assets would be invested in such securities. For
this purpose, illiquid securities include, among others, (a) direct placements
or other securities which are subject to legal or contractual restrictions on
resale or for which there is no readily available market (e.g., trading in the
security is suspended or, in the case of unlisted securities, market makers do
not exist or will not entertain bids or offers), (b) options purchased by the
Fund over-the-counter and the cover for options written by the Fund
over-the-counter, and (c) repurchase agreements not terminable within seven
days. Securities that have legal or contractual restrictions on resale but have
a readily available market are not deemed illiquid for purposes of this
limitation.
Mutual funds do not typically hold a significant amount of restricted
securities (securities that are subject to restriction on resale to the general
public) or other illiquid securities because of the potential for delays on
resale and uncertainty in valuation. Limitations on resale may have an adverse
effect on the marketability of portfolio securities and a mutual fund might be
unable to dispose of restricted or other illiquid securities promptly or at
reasonable prices and might thereby experience difficulty satisfying redemptions
within seven days. A mutual fund may also have to take certain steps or wait a
certain amount of time in order to remove the restrictions for such restricted
securities in order to dispose of them, resulting in additional expense and
delay.
Rule 144A under the Securities Act of 1933, as amended (the "Securities
Act") allows a broader institutional trading market for securities otherwise
subject to restriction on resale to the general public. Rule 144A establishes a
"safe harbor" from the registration requirements of the Securities Act for
resales of certain securities to qualified institutional buyers. An insufficient
number of qualified institutional buyers interested in purchasing certain
restricted securities held by the Fund, however, could affect adversely the
marketability of such portfolio securities and the Fund might be unable to
dispose of such securities promptly or at reasonable prices.
The Adviser, acting under the supervision of the Board of Directors, will
monitor the liquidity of restricted securities in the Fund's portfolio that are
eligible for resale pursuant to Rule 144A. In reaching liquidity decisions, the
Adviser will consider, among others, the following factors: (1) the frequency of
trades and quotes for the security; (2) the number of dealers issuing quotations
to purchase or sell the security; (3) the number of other potential purchasers
of the security; (4) the number of dealers undertaking to make a market in the
security; (5) the nature of the security (including its unregistered nature) and
the nature of the marketplace for the security (e.g., the time needed to dispose
of the security, the method of soliciting offers and the mechanics of the
transfer); and (6) any applicable the SEC interpretation or position with
respect to such type of securities.
Investments in Other Investment Companies
The Fund may invest in other investment companies as permitted by the 1940
Act or the rules and regulations thereunder. The Fund intends to invest
uninvested cash balances in an affiliated money market fund as permitted by Rule
12d1-1 under the 1940 Act. If the Fund acquires shares in investment companies,
stockholders would bear, indirectly, the expenses of such investment companies
(which may include management and advisory fees), which are in addition to the
Fund's expenses. The Fund may also invest in exchange-traded funds, subject to
the restrictions and limitations of the 1940 Act.
Lending of Portfolio Securities
The Fund may seek to increase income by lending portfolio securities. A
principal 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 addition, the Fund may be exposed to the risk that
the sale of any collateral realized upon the borrower's default will not yield
proceeds sufficient to replace the loaned securities. In determining whether to
lend securities to a particular borrower, the Adviser will consider all relevant
facts and circumstances, including the creditworthiness of the borrower. The
loans would be made only to firms deemed by the Adviser to be of good standing,
and when, in the judgment of the Adviser, the consideration that can be earned
currently from securities loans of this type justifies the attendant risk. The
Fund may lend portfolio securities to the extent permitted under the 1940 Act or
the rules and regulations thereunder (as such statute, rules or regulations may
be amended from time to time) or by guidance regarding, interpretations of, or
exemptive orders under, the 1940 Act.
Under present regulatory policies, including those of the Board of
Governors of the Federal Reserve System and the SEC, such loans may be made only
to member firms of the NYSE and will be required to be secured continuously by
collateral in cash, cash equivalents, or U.S. Treasury Bills maintained on a
current basis at an amount at least equal to the market value of the securities
loaned. The Fund will have the right to call a loan and obtain the securities
loaned at any time on five days' notice. 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. Any such investment of cash collateral will be subject to
the Fund's investment risks.
The Fund will not, however, have the right to vote any securities having
voting rights during the existence of the loan. The Fund will have the right to
regain record ownership of loaned securities or equivalent securities in order
to exercise ownership 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.
Real Estate Investment Trusts
Real Estate Investment Trusts ("REITs") are pooled investment vehicles
which invest primarily in income producing real estate or real estate related
loans or interests. REITs are generally classified as equity REITs, mortgage
REITs or a combination of equity and mortgage REITs. Equity REITs invest the
majority of their assets directly in real property and derive income primarily
from the collection of rents. Equity REITs can also realize capital gains by
selling properties that have appreciated in value. Mortgage REITs invest the
majority of their assets in real estate mortgages and derive income from the
collection of interest payments. Similar to investment companies such as the
Fund, REITs are not taxed on income distributed to shareholders provided they
comply with several requirements of the United States Internal Revenue Code of
1986, as amended (the "Code"). The Fund will indirectly bear its proportionate
share of expenses incurred by REITs in which the Fund invests in addition to the
expenses incurred directly by the Fund.
Investing in REITs involves certain unique risks in addition to those risks
associated with investing in the real estate industry in general. Equity REITs
may be affected by changes in the value of the underlying property owned by the
REITs, while mortgage REITs may be affected by the quality of any credit
extended. REITs are dependent upon management skills, are not diversified, and
are subject to heavy cash flow dependency, default by borrowers and
self-liquidation.
Investing in REITs involves risks similar to those associated with
investing in small capitalization companies. REITs may have limited financial
resources, may trade less frequently and in a limited volume and may be subject
to more abrupt or erratic price movements than larger company securities.
Historically, small capitalization stocks, such as REITs, have had more price
volatility than larger capitalization stocks.
REITs are subject to the possibilities of failing to qualify for tax-free
pass-through of income under the Code and failing to maintain their exemptions
from registration under the 1940 Act. REITs (especially mortgage REITs) also are
subject to interest rate risks. When interest rates decline, the value of a
REIT's investment in fixed-rate obligations can be expected to rise. Conversely,
when interest rates rise, the value of a REIT's investment in fixed-rate
obligations can be expected to decline. In contrast, as interest rates on
adjustable rate mortgage loans are reset periodically, yields on a REIT's
investments in such loans will gradually align themselves to reflect changes in
market interest rates, causing the value of such investments to fluctuate less
dramatically in response to interest rate fluctuations than would investments in
fixed rate obligations.
Repurchase Agreements
A repurchase agreement is an agreement by which the Fund purchases a
security and obtains a simultaneous commitment from the seller to repurchase the
security at an agreed upon price and date, normally one day or a few days later.
The resale price is greater than the purchase price, reflecting an agreed-upon
"interest rate" that is effective for the period of time the buyer's money is
invested in the security, and which is related to the current market rate of the
purchased security rather than its coupon rate. During the term of the
repurchase agreement, the Fund monitors on a daily basis the market value of the
securities subject to the agreement and, if the market value of the securities
falls below the resale amount provided under the repurchase agreement, the
seller under the repurchase agreement is required to provide additional
securities equal to the amount by which the market value of the securities falls
below the resale amount. Because a repurchase agreement permits the Fund to
invest temporarily available cash on a fully-collateralized basis, repurchase
agreements permit the Fund to earn a return on temporarily available cash while
retaining "overnight" flexibility in pursuit of investments of a longer-term
nature. Repurchase agreements may exhibit the characteristics of loans by the
Fund.
The obligation of the seller under the repurchase agreement is not
guaranteed, and there is a risk that the seller may fail to repurchase the
underlying security, whether because of the seller's bankruptcy or otherwise. In
such event, the Fund would attempt to exercise its rights with respect to the
underlying security, including possible sale of the securities. The Fund may
incur various expenses in connection with the exercise of its rights and may be
subject to various delays and risks of loss, including (a) possible declines in
the value of the underlying securities, (b) possible reduction in levels of
income and (c) lack of access to the securities (if they are held through a
third-party custodian) and possible inability to enforce the Fund's rights. The
Fund's Board of Directors has established procedures, which are periodically
reviewed by the Board, pursuant to which the Adviser monitors the
creditworthiness of the dealers with which the Fund enters into repurchase
agreement transactions.
The Fund may enter into repurchase agreements pertaining to U.S. Government
Securities with member banks of the Federal Reserve System or "primary dealers"
(as designated by the Federal Reserve Bank of New York) in such securities.
There is no percentage restriction on the Fund's ability to enter into
repurchase agreements. Currently, the Fund intends to enter into repurchase
agreements only with its custodian and such primary dealers.
Rights and Warrants
The Fund may invest in rights or warrants which entitle the holder to buy
equity securities at a specific price for a specific period of time, but will do
so only if the equity securities themselves are deemed appropriate by the
Adviser for inclusion in the Fund's portfolio. 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
securities which may be purchased nor do they represent any rights in the assets
of the issuing company. Also, the value of a right or warrant does not
necessarily change with the value of the underlying securities and a right or
warrant ceases to have value if it is not exercised prior to the expiration
date.
Short Sales
A short sale is effected by selling a security that the Fund does not own,
or if the Fund does own such security, it is not to be delivered upon
consummation of the sale. A short sale is against the box to the extent that the
Fund contemporaneously owns or has the right to obtain securities identical to
those sold short without payment. Short sales may be used in some cases by the
Fund to defer the realization of gain or loss for federal income tax purposes on
securities then owned by the Fund. However, if the Fund has unrealized gain with
respect to a security and enters into a short sale with respect to such
security, the Fund generally will be deemed to have sold the appreciated
security and thus will recognize gain for tax purposes. See "Dividends,
Distributions and Taxes - United States Federal Income Taxation of the Fund -
Tax Straddles," below.
Standby Commitment Agreements
The Fund may from time to time enter into standby commitment agreements.
Such agreements commit the Fund, for a stated period of time, to purchase a
stated amount of a security which 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 or not the security ultimately is issued,
which is typically approximately 0.5% of the aggregate purchase price of the
security which 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 which are considered advantageous to the Fund
and which are unavailable on a firm commitment basis. 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.
There can be no assurance 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.
The purchase of a security subject to a standby commitment agreement and
the related commitment fee will be recorded on the date on which the security
can reasonably be expected to be issued and the value of the security will
thereafter be reflected in the calculation of the Fund's NAV. The cost basis of
the security will be adjusted by the amount of the commitment fee. In the event
the security is not issued, the commitment fee will be recorded as income on the
expiration date of the standby commitment.
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 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.
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
shorter- or longer-term periods.
Credit Risk
This is the risk that the issuer or the guarantor of a fixed-income
security, or the counterparty to a derivatives or other contract, will be unable
or unwilling to make timely payments of interest or principal, or to otherwise
honor its obligations. The issuer or guarantor may default causing a loss of the
full principal amount of a security and any accrued interest. The degree of risk
for a particular security may be reflected in its credit rating. Investments in
fixed-income securities with lower ratings tend to have a higher probability
that an issuer will default or fail to meet its payment obligations.
Interest Rate Risk
Changes in interest rates will affect the value of the Fund's investments
in fixed-income securities. When interest rates rise, the value of the Fund's
investments tends to fall and this decrease in value may not be offset by higher
interest income from new investments. Interest rate risk is generally greater
for a Fund that invests in fixed-income securities with longer maturities or
durations.
Foreign (Non-U.S.) Risk
The Fund's investments in foreign (non-U.S.) securities may experience more
rapid and extreme changes in value than investments in securities of U.S.
companies. The securities markets of many foreign countries are relatively
small, with a limited number of companies representing a small number of
securities. Foreign companies usually are not subject to the same degree of
regulation as a U.S. issuers. Reporting, accounting, and auditing standards of
foreign countries differ, in some cases significantly, from U.S. standards.
Nationalization, expropriation or confiscatory taxation, currency blockage,
political changes, or diplomatic development could adversely affect the Fund's
investments in a foreign country. These risks are heightened for emerging market
countries because there may be more economic, political and social instability,
and investments in companies in emerging markets may have more risk because
these securities may be more volatile and less liquid. To the extent the Fund
invests in a particular country or geographic region, the Fund may have more
significant risk due to market changes or other factors affecting that country
or region, including political instability and unpredictable economic
conditions.
Leverage Risk
Utilization of leverage, which is usually considered speculative, involves
certain risks to stockholders. These include a higher volatility of the NAV of
the common stock, caused by favorable or adverse changes in currency exchange
rates. In addition, fluctuations in the interest rates on the Fund's
indebtedness will affect the return to stockholders, with increases in such
rates decreasing such return.
To the extent that the current interest rate on the Fund's indebtedness
approaches the net return on the leveraged portion of the Fund's investment
portfolio, the benefit of leverage to stockholders will be reduced, and if the
current interest rate on the indebtedness were to exceed the net return on such
portion of the Fund's portfolio, the Fund's leverage would result in a lower
rate of return to stockholders and in a lower NAV than if the Fund were not
leveraged. In an extreme case, if the Fund's current investment income were not
sufficient to meet interest requirements on the indebtedness or if the Fund
failed to maintain the asset coverage required by the 1940 Act, it could be
necessary for the Fund to liquidated certain of its investments at a time when
it may be disadvantageous to do so, thereby reducing its NAV.
Derivatives Risk
Investment techniques employing such derivatives involve risks different
from, and, in certain cases, greater than, the risks presented by more
traditional investments. Following is a general discussion of important risk
factors and issues concerning the use of derivatives that investors should
understand in considering the proposed amendment of the Fund's investment
policies.
-- Market Risk. This is the general risk attendant to all investments
that the value of a particular investment will change in a way
detrimental to the Fund's interest.
-- Management Risk. Derivative products are highly specialized
instruments that require investment techniques and risk analyses
different from those associated with stocks and bonds. The use of a
derivative requires an understanding not only of the underlying
instrument but also of the derivative itself, without the benefit of
observing the performance of the derivative under all possible market
conditions. In particular, the use and complexity of derivatives
require the maintenance of adequate controls to monitor the
transactions entered into, the ability to assess the risk that a
derivative adds to the Fund's investment portfolio, and the ability to
forecast price, interest rate or currency exchange rate movements
correctly.
-- Credit Risk. This is the risk that a loss may be sustained by the
Fund as a result of the failure of another party to a derivative
(usually referred to as a "counterparty") to comply with the terms of
the derivative contract. The credit risk for exchange-traded
derivatives is generally less than for privately negotiated
derivatives, since the clearinghouse, which is the issuer or
counterparty to each exchange-traded derivative, provides a guarantee
of performance. This guarantee is supported by a daily payment system
(i.e., margin requirements) operated by the clearinghouse in order to
reduce overall credit risk. For privately negotiated derivatives,
there is no similar clearing agency guarantee. Therefore, the Fund
considers the creditworthiness of each counterparty to a privately
negotiated derivative in evaluating potential credit risk.
-- Liquidity Risk. Liquidity risk exists when a particular instrument
is difficult to purchase or sell. If a derivative transaction is
particularly large or if the relevant market is illiquid (as is the
case with many privately negotiated derivatives), it may not be
possible to initiate a transaction or liquidate a position at an
advantageous price.
-- Leverage Risk. Since many derivatives have a leverage component,
adverse changes in the value or level of the underlying asset, rate or
index can result in a loss substantially greater than the amount
invested in the derivative itself. In the case of swaps, the risk of
loss generally is related to a notional principal amount, even if the
parties have not made any initial investment. Certain derivatives have
the potential for unlimited loss, regardless of the size of the
initial investment.
-- Other Risks. Other risks in using derivatives include the risk of
mispricing or improper valuation of derivatives and the inability of
derivatives to correlate perfectly with underlying assets, rates and
indices. Many derivatives, in particular privately negotiated
derivatives, are complex and often valued subjectively. Improper
valuations can result in increased cash payment requirements to
counterparties or a loss of value to the Fund. Derivatives do not
always perfectly or even highly correlate or track the value of the
assets, rates or indices they are designed to closely track.
Consequently, the Fund's use of derivatives may not always be an
effective means of, and sometimes could be counterproductive to,
furthering the Fund's investment objective.
Management Risk
The Fund is subject to management risk because it is an actively managed
investment portfolio. The Adviser will apply its investment techniques and risk
analyses in making investment decisions for the Fund, but there can be no
guarantee that its decisions will produce the desired results.
Anti-takeover Provisions
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.
Repurchase of Shares
In recognition of the possibility that the Fund's shares might trade at a
discount to NAV, the Fund's Board has determined that it would be in the
interest of stockholders for the Fund to attempt to reduce or eliminate such a
market value discount should it exist. To that end, the Fund's Board presently
contemplates that the Fund may from time to time take action either to
repurchase in the open market or to make a tender offer for its own shares at
NAV. The Fund's Board presently intends each quarter to consider the making of a
tender offer. The Board may at any time, however, decide that the Fund should
not make a tender offer.
Subject to the Fund's fundamental policy with respect to borrowings, the
Fund may incur debt to finance repurchases and/or tender offers. Interest on any
such borrowing will reduce the Fund's net income.
There can be no assurance that repurchases and/or tender offers will result
in the Fund's shares trading at a price equal to their NAV. The Fund anticipates
that the market price of its shares will from time to time vary from NAV. The
market price of the Fund's shares will, among other things, be affected by the
relative demand for and supply of such 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 tender offers at NAV from time to time may reduce the spread that
might otherwise exist between market price and NAV. In the opinion of the
Adviser, sellers may be less inclined to accept a significant discount if they
have a reasonable expectation of being able to recover NAV in conjunction with a
possible tender offer.
Although the Fund's Board believes that share repurchases and tender offers
might, in certain circumstances have a favorable effect an the market price of
the Fund's shares, it should be recognized that the acquisition of shares by the
Fund would decrease the total assets of the Fund and therefore have the effect
of increasing the Fund's expense ratio. Even if a tender offer has been made, it
is a Board's policy, which may be changed by the Board, 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 shares is less than $5,000,000, the number of publicly held
shares falls below 600,000 or the number of round-lot holders fall below 1,200),
or (b) 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 policies and objective in order to repurchase shares; or (3) there
is, in the Board's judgment, any material (a) legal action or proceeding
instituted or threatened challenging such transactions or otherwise materially
adversely affecting the Fund, (b) suspension of or limitation on prices for
trading securities generally on the NYSE of 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 the 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. A Board may modify these conditions in light of experience.
Any tender offer made by the Fund will be at a price equal to the NAV per
share determined at the close of business on the day the offer terminates. Each
offer will be made and stockholders notified in accordance with the requirements
of the Securities Exchange Act of 1934, as amended and the 1940 Act, either by
publication or mailing or both. Each offering document will contain such
information as is prescribed by such laws and the rules and regulations
promulgated thereunder. When a tender offer is authorized to be made by the
Fund's Board, a stockholder wishing to accept the offer will be required to
tender all (but not less thin all) of the shares owned by such stockholder (or
attributed to the stockholder for federal income tax purposes under Section 318
of the Code). The Fund will purchase all shares tendered 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 the amount of $25.00, payable to the Fund, which
will be used to help defray the costs associated with effecting the tender
offer. This $25.00 fee will be imposed upon each tendering stockholder any of
whose tendered shares are purchased in the 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 exceed the aggregate of all such fees received
from those who tender offer their shares. Costs associated with the tender offer
will be charged against capital. During the period of the tender offer, the
Fund's stockholders will be able to obtain the Fund's current NAV by use of a
toll-free telephone number.
If the Fund must liquidate portfolio securities in order to purchase Fund
shares tendered, the Fund may realize gains and losses. If the portfolio
securities sold are "Section 998" items, the Fund's distributable net investment
income could be positively or adversely affected. 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.
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.
MANAGEMENT OF THE FUND
Directors and Officers
The Directors and principal officers of the Fund and their principal
occupations during the past five years are set forth below. Unless otherwise
specified, the address of each such person is 1345 Avenue of the Americas, New
York, NY 10105. Each Director and officer is affiliated as such with one or more
of the other registered investment companies sponsored by the Adviser.
Directors
The business and affairs of the Fund are managed under the direction of the
Board of Directors. Certain information concerning the Fund's Directors is set
forth below.
Number of
Portfolios
in
Alliance-
Bernstein
Fund Other
Name, Address*, Complex Directorships
Age and (First Year Principal Occupation(s) Overseen Held by
Elected**) During Past 5 Years by Director Director
- ---------------------- ---------------------------------------- ----------- -------------
DISINTERESTED
DIRECTORS
Chairman of the Board Investment Adviser and an Independent 111 None
William H. Foulk, Jr., #, ## Consultant. He was formerly Senior
75 Manager of Barrett Associates, Inc., a
(1994) registered investment adviser, with
which he had been associated since
prior to 2002. He was formerly Deputy
Comptroller and Chief Investment
Officer of the State of New York and,
prior thereto, Chief Investment
Officer of the New York Bank for
Savings.
David H. Dievler, # Independent Consultant. Until December 110 None
78 1994, he was Senior Vice President of
(1994) AllianceBernstein Corporation ("AB
Corp.") (formerly Alliance Capital
Management Corporation) responsible
for mutual fund administration. Prior
to joining AB Corp. in 1984, he was
Chief Financial Officer of Eberstadt
Asset Management since 1968. Prior to
that, he was a Senior Manager at Price
Waterhouse & Co. Member of the
American Institute of Certified Public
Accountants since 1953.
John H. Dobkin, # Consultant. Formerly, President of 109 None
65 Save Venice, Inc. (preservation
(1994) organization) from 2001-2002, Senior
Adviser from June 1999-June 2000 and
President of Historic Hudson Valley
(historic preservation) from December
1989-May 1999. Previously, Director of
the National Academy of Design and
during 1988-1992, Director and
Chairman of the Audit Committee of AB
Corp.
Michael J. Downey, # Consultant since January 2004. Formerly, 109 Asia Pacific Fund,
63 managing partner of Lexington Capital, Inc. and The
(2005) LLC (investment advisory firm) from Merger Fund
December 1997 until December 2003.
Prior thereto, Chairman and CEO of
Prudential Mutual Fund Management from
1987 to 1993.
D. James Guzy, # Chairman of the Board of PLX Technology 109 Intel Corporation
71 (semi-conductors) and of SRC Computers (semi-conductors)
(2005) Inc., with which he has been and Cirrus Logic
associated since prior to 2002. He is Corporation
also President of the Arbor Company (semi-conductors)
(private family investments).
Nancy P. Jacklin, # Formerly, U.S. Executive Director of 109 None
59 the International Monetary Fund
(2006) (December 2002-May 2006); Partner,
Clifford Chance (1992-2002); Sector
Counsel, International Banking and
Finance, and Associate General
Counsel, Citicorp (1985-1992);
Assistant General Counsel
(International), Federal Reserve Board
of Governors (1982-1985); and Attorney
Advisor, U.S. Department of the
Treasury (1973-1982). Member of the
Bar of the District of Columbia and of
New York; and member of the Council on
Foreign Relations.
Marshall C. Turner, Jr., # Consultant. Formerly, President and 109 Xilinx, Inc. (semi-
66 CEO, Toppan Photomasks, Inc. conductors), and
(2005) (semi-conductor manufacturing MEMC Electronics
services), 2005-2006, and Chairman and Materials, Inc.
CEO from 2003 until 2005, when the (semi-conductor
company was acquired and re-named from substrates)
Dupont Photomasks, Inc. Principal,
Turner Venture Associates (venture
capital and consulting), 1993-2003.
Earl D. Weiner, # Of Counsel, and Partner from 1976-2006, 109 None
68 of the law firm Sullivan & Cromwell
(2007) LLP, specializing in investment
management, corporate and securities
law; member of ABA Federal Regulation
of Securities Committee Task Force on
Fund Director's Guidebook.
INTERESTED
DIRECTOR
Marc O. Mayer***, Executive Vice President of the Adviser 109 SCB Partners Inc.
50 since 2001 and Executive Managing and SCB, Inc.
(2003) Director of AllianceBernstein
Investments, Inc. ("ABI") since 2003;
prior thereto, he was head of
AllianceBernstein Institutional
Investments, a unit of the Adviser,
from 2001-2003. Prior thereto, Chief
Executive Officer of Sanford C.
Bernstein & Co., LLC (institutional
research and brokerage arm of
Bernstein & Co., LLC), and its
predecessor since prior to 2002.
- ----------
* The address of each of the Fund's disinterested Directors is
AllianceBernstein L.P., c/o Philip Kirstein, 1345 Avenue of the Americas,
New York, NY 10105.
** There is no stated term of office for the Fund's Directors.
*** Mr. Mayer is an "interested person," as defined in Section 2(a)(19) of the
1940 Act, of the Fund due to his position as an Executive Vice President of
the Adviser.
# Member of the Audit Committee, the Governance and Nominating Committee, and
the Independent Directors Committee of the Fund.
## Member of the Fair Value Pricing Committee of the Fund.
+ If elected at the Meeting.
++ If elected at the Meeting, and if elected as a preferred stock director at
the Meeting.
Officers
Certain information concerning the Fund's officers is set forth below. The
Fund's officers are elected annually by the Board of Directors until his or her
successor is duly elected and qualifies.
Name, Address Principal Occupation During
and Age Position(s) Held with Fund Past 5 Years
- ------------------ -------------------------- ------------------------------
Marc O. Mayer President See biography above.
50
Philip L. Kirstein Senior Vice President and Senior Vice President and
62 Independent Compliance Independent Compliance Officer
Officer of the AllianceBernstein
Mutual Funds, with which he
has been associated since
October 2004. Prior thereto,
he was Of Counsel to
Kirkpatrick & Lockhart, LLP
from October 2003 to October
2004, and General Counsel of
Merrill Lynch Investment
Managers, L.P. since prior to
2002 until March 2003.
John A. Koltes Vice President Senior Vice President of the
65 Adviser*, with which he has
been associated since prior to
2002.
Michael J. Reilly Vice President Senior Vice President of the
43 Adviser*, with which he has
been associated since prior to
2002.
Joseph J. Mantineo Treasurer and Chief Senior Vice President of
48 Financial Officer AllianceBernstein Investor
Services, Inc. ("ABIS")*, with
which he has been associated
since prior to 2002.
Vincent S. Noto Controller Vice President of ABIS*, with
42 which he has been associated
since prior to 2002.
Emilie D. Wrapp Secretary Senior Vice President,
51 Assistant General Counsel and
Assistant Secretary of ABI*,
with which she has been
associated since prior to
2002.
- ----------
* An affiliate of the Fund.
The dollar range of the Fund's securities owned by each Director and the
aggregate dollar range of securities owned in the AllianceBernstein Fund Complex
are set forth below.
Aggregate Dollar
Range of Equity
Securities in the Funds
in the
Dollar Range of Equity AllianceBernstein
Securities in the Fund as of Fund Complex as of
August 10, 2007 December 31, 2006
---------------------------- -----------------------
David H. Dievler $10,001-$50,000 Over $100,000
John H. Dobkin $10,001-$50,000 Over $100,000
Michael J. Downey $0 Over $100,000
William H. Foulk, Jr. $10,001-$50,000 Over $100,000
D. James Guzy $0 $50,001 - $100,000
Nancy P. Jacklin $0 $50,001 - $100,000
Marshall C. Turner, Jr. $0 Over $100,000
Earl D. Weiner* $0 None
Marc O. Mayer $0 Over $100,000
- ----------
* Mr. Weiner was elected as a Director of the Fund effective January 1, 2007.
During the Fund's fiscal year ended in 2006, the Board of Directors met 11
times. The Fund does not have a policy that requires a Director to attend the
Fund's annual meeting of stockholders.
The Fund's Board of Directors has four standing committees: an Audit
Committee, a Governance and Nominating Committee, an Independent Directors
Committee, and a Fair Value Pricing Committee. The members of the Committees are
identified above in the table listing the Directors. The function of the Audit
Committee is to assist the Board in its oversight of the Fund's financial
reporting process. The members of the Audit Committee are "independent" as
required by applicable listing standards of the NYSE. During the Fund's fiscal
year ended in 2006, the Audit Committee met 4 times.
The Fund's Board of Directors has adopted a charter for its Governance and
Nominating Committee, a copy of which may be found on the Adviser's website,
http://www.alliancebernstein.com (click on US Investors & Financial
Advisors/Investor Solutions/Mutual Funds/Closed-End). Pursuant to the charter of
the Governance and Nominating Committee, the Governance and Nominating Committee
assists the Board in carrying out its responsibilities with respect to
governance of the Fund and identifies, evaluates and selects and nominates
candidates for the Board. It also may set standards or qualifications for
Directors. The Governance and Nominating Committee may consider candidates as
Directors submitted by current Directors, the Fund's investment adviser, Fund
stockholders and other appropriate sources.
The Governance and Nominating Committee will consider candidates submitted
by a stockholder or group of stockholders who have owned at least 5% of the
Fund's outstanding common stock for at least two years at the time of submission
and who timely provide specified information about the candidates and the
nominating stockholder or group. To be timely for consideration by the
Governance and Nominating Committee, the submission, including all required
information, must be submitted in writing to the attention of the Secretary at
the principal executive offices of the Fund not less than 120 calendar days
before the date of the proxy statement for the previous year's annual meeting of
stockholders. The Committee will consider only one candidate submitted by such a
stockholder or group for nomination for election at an annual meeting of
stockholders. The Committee will not consider self-nominated candidates.
The Governance and Nominating Committee will consider and evaluate
candidates submitted by stockholders on the basis of the same criteria as those
used to consider and evaluate candidates submitted from other sources. These
criteria include the candidate's relevant knowledge, experience, and expertise,
the candidate's ability to carry out his or her duties in the best interests of
the Fund and the candidate's ability to qualify as a disinterested Director.
During the Fund's fiscal year ended in 2006, the Governance and Nominating
Committee met 8 times.
The function of the Fund's Fair Value Pricing Committee is to consider, in
advance if possible, any fair valuation decision of the Adviser's Valuation
Committee relating to a security held by the Fund made under unique or highly
unusual circumstances not previously addressed by the Valuation Committee that
would result in a change in the Fund's net asset value ("NAV") by more than
$0.01 per share. During the Fund's fiscal year ended in 2006, the Fair Value
Pricing Committee did not meet.
The function of the Fund's Independent Directors Committee is to consider
and take action on matters that the Board or Committee believes should be
addressed in executive session of the disinterested Directors, such as review
and approval of the Advisory and Stockholder Inquiry Agency Agreements. During
the Fund's fiscal year ended in 2006, the Independent Directors Committee met 8
times.
The Board has adopted a process for stockholders to send communications to
the Board. To communicate with the Board or an individual Director of the Fund,
a stockholder must send a written communication to the Fund's principal office
at the address listed in the Notice of Annual Meeting of Stockholders
accompanying this Proxy Statement, addressed to the Board or the individual
Director. All stockholder communications received in accordance with this
process will be forwarded to the Board or the individual Director to whom or to
which the communication is addressed.
The Fund does not pay any fees to, or reimburse expenses of, any Director
during a time when the Director is considered an "interested person" of the
Fund. The aggregate compensation paid by the Fund to the Directors during the
Fund's fiscal year ended 2006, the aggregate compensation paid to the Directors
during calendar year 2006 by all of the investment companies in the
AllianceBernstein Fund Complex and the total number of investment companies in
the AllianceBernstein Fund Complex as to which the Directors are a director or
trustee and the number or investment portfolios as to which the Directors are
directors or trustees, are set forth below. Neither the Fund nor any other
investment company in the AllianceBernstein Fund Complex provides compensation
in the form of pension or retirement benefits to any of its directors or
trustees.
Number of
Number of Investment
Investment Portfolios
Companies in the within the
AllianceBernstein AllianceBernstein
Compensation Fund Complex, Fund Complex,
from the including the including the
Compensation AllianceBernstein Fund, as to Fund, as to
from the Fund Complex, which the which the
Fund during including the Director is a Director is a
its Fiscal Year Fund, during Director or Director or
Name of Director ended in 2006 2006 Trustee Trustee
- ----------------------- --------------- ----------------- ----------------- -----------------
David H. Dievler $5,004 $ 225,125 39 110
John H. Dobkin $6,383 $ 234,625 38 109
Michael J. Downey $4,998 $ 215,125 38 109
William H. Foulk, Jr. $8,585 $ 434,625 41 111
D. James Guzy $2,895 $ 215,125 38 109
Nancy P. Jacklin $1,034 $ 112,625 38 109
Marshall C. Turner, Jr. $2,886 $ 214,625 38 109
Earl D. Weiner* $ 0 $ 0 38 109
Marc O. Mayer $ 0 $ 0 38 109
- ----------
* Mr. Weiner was elected as a Director of the Fund effective January 1, 2007.
Adviser
The Fund's investment adviser, AllianceBernstein L.P. (the "Adviser"), 1345
Avenue of the Americas, New York, NY 10105, is a leading international
investment adviser managing client accounts with assets as of June 30, 2007
totaling more than $792.9 billion (of which more than $99.6 billion represented
the assets of investment companies). As of June 30, 2007, the Adviser managed
retirement assets for many of the largest public and private employee benefit
plans (including 50 of the nations' FORTUNE 100 companies), for public employee
retirement funds in 37 states, for investment companies, and for foundations,
endowments, banks and insurance companies worldwide. The 41 registered
investment companies managed by the Adviser, comprising 123 separate investment
portfolios, currently have approximately 4.3 million stockholder accounts.
The Adviser is a registered investment adviser under the Investment
Advisers Act of 1940, as amended. As of June 30, 2007, AllianceBernstein
Holding, L.P. ("Holding"), a Delaware limited partnership, owned approximately
33.3% of the issued and outstanding units of limited partnership interest in the
Adviser ("AllianceBernstein Units"). Units representing assignments of
beneficial ownership of limited partnership interests in Holding ("Holding
Units") trade publicly on the Exchange under the ticker symbol "AB".
AllianceBernstein Units do not trade publicly and are subject to significant
restrictions on transfer. AllianceBernstein Corporation ("AB Corp.") is the
general partner of both the Adviser and Holding. AB Corp. owns 100,000 general
partnership units in Holding and a 1% general partnership interest in the
Adviser. AB Corp. is an indirect wholly-owned subsidiary of AXA Financial, Inc.
("AXA Financial"), a Delaware corporation.
As of June 30, 2007, AXA, AXA Financial, AXA Equitable Life Insurance
Company ("AXA Equitable") and certain subsidiaries of AXA Equitable beneficially
owned approximately 62.2% of the issued and outstanding AllianceBernstein Units
and approximately 1.7% of the issued and outstanding Holding Units that,
including the general partnership interests in the Adviser and Holding,
represent an economic interest of approximately 63.2% in the Adviser. As of June
30, 2007, SCB Partners, Inc., a wholly-owned subsidiary of SCB, Inc.,
beneficially owned approximately 3.1% of the issued and outstanding
AllianceBernstein Units.
AXA, a French company, is the holding company for an international group of
companies and a worldwide leader in financial protection and wealth management.
AXA operates primarily in Western Europe, North America and the Asia/Pacific
region and, to a lesser extent, in other regions including the Middle East,
Africa and South America. AXA has five operating business segments: life and
savings, property and casualty insurance, international insurance (including
reinsurance), asset management and other financial services. AXA Financial is a
wholly-owned subsidiary of AXA. AXA Equitable is an indirect wholly-owned
subsidiary of AXA Financial.
Under the Advisory Agreement, the Adviser furnishes advice and
recommendations with respect to the Fund's portfolio of securities and
investments and provides persons satisfactory to the Board of Directors to act
as officers and employees of the Fund. Such officers and employees may be
employees of the Adviser or its affiliates.
The Fund has entered into an Advisory Agreement with the Adviser. The
Fund's Advisory Agreement was approved by the vote, cast in person, of the
Fund's Directors including the Directors who are not parties to the Advisory
Agreement or interested persons as defined in the 1940 Act, of any such party,
at a meeting called and held for that purpose.
The Adviser provides investment advisory services and order placement
facilities for each of the Fund's and pays all compensation of Directors and
officers of the Fund who are affiliated persons of the Adviser. The Adviser or
its affiliates also furnish the Fund, without charge, management supervision and
assistance and office facilities and provide persons satisfactory to the Fund's
Board to serve as the Fund's officers. The Fund has, under the Advisory
Agreement, assumed obligation to pay for all other expenses. As to the obtaining
of services other than those specifically provided to the Fund by the Adviser,
the Fund may employ its own personnel. For such services, the Fund may also
utilize personnel employed by the Adviser or its affiliates and, in such event,
the services will be provided to the Fund at cost and the payments therefor,
which must be specifically approved by the Fund's Board.
Under the terms of an Investment Advisory Agreement, the Fund pays the
Adviser a fee comprised of a basic fee (the "Basic Fee") and an adjustment to
the Basic Fee based on the investment performance of the Fund in relation to the
investment record of the Russell 1000R Growth Index (the "Index"). The Basic Fee
is .80% of the average of the net assets of the Fund, and may be adjusted upward
or downward by up to .55%. Prior to February 17, 2006, the Basic Fee was 1.25%
of the average of the net assets of the Fund. Under the terms of the Investment
Advisory Agreement, the performance period for calculation of adjustments to the
Basic Fee is a rolling 36-month period ending with the most recent calendar
month.
For purposes of the calculation of the fee payable to the Adviser, average
weekly net assets are determined on the basis of the average net assets of the
Fund for each weekly period (ending on Fridays) 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. When 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. This advisory fee may be greater than that
paid by most funds. In addition to payments to the Adviser under the Advisory
Agreement, the Fund pays certain other costs.
For the fiscal years ended September 30, 2006, 2005 and 2004, the Fund paid
advisory fees to the Adviser that, in the aggregate, amounted to $699,155,
$325,169 and $400,408, respectively.
The Fund's Advisory Agreement is terminable with respect to that Fund
without penalty on 60 days written notice by a vote of a majority of the
outstanding voting securities of such Fund or by a vote of a majority of the
Fund's Directors, or by the Adviser on 60 days written notice, and will
automatically terminate in the event of its assignment. The Fund's Advisory
Agreement provides that, in the absence of willful misfeasance, bad faith or
gross negligence on the part of the Adviser, or of reckless disregard of its
obligations thereunder, the Adviser shall not be liable for any action or
failure to act in accordance with its duties thereunder.
The Advisory Agreement for the Fund continues in effect, provided that such
continuance is specifically approved at least annually by a vote of a majority
of the Fund's outstanding voting securities or by the Fund's Board, including in
either case approval by a majority of the Directors who are not parties to the
Advisory Agreement or interested persons of such parties as defined by the 1940
Act. Most recently, continuance of the Fund's Advisory Agreement was approved by
the respective Board, including a majority of the Directors who are not parties
to the Advisory Agreements or interested persons of any such party, at a Meeting
held on February 6-8, 2007.
Portfolio Managers
The management of, and investment decisions for, the Fund's portfolio are
made by the Adviser's Large Cap Growth Investment Team. Mr. Michael J. Reilly is
responsible for the day-to-day management of the Fund's portfolio.
The dollar ranges of the Fund's equity securities owned directly or
beneficially by the Fund's portfolio manager as of August 17, 2007 are set
forth below.
DOLLAR RANGE OF EQUITY SECURITIES IN THE FUND
Michael J. Reilly None
The following tables provide information regarding registered investment
companies other than the Fund, other pooled investment vehicles and other
accounts over which the Fund's portfolio manager also has day-to-day management
responsibilities. The tables provide the numbers of such accounts, the total
assets in such accounts and the number of accounts and total assets whose fees
are based on performance. The information is provided as of March 31, 2007.
- --------------------------------------------------------------------------------
REGISTERED INVESTMENT COMPANIES
(excluding the Fund)
- --------------------------------------------------------------------------------
Total
Number of Assets of
Total Total Registered Registered
Number of Assets of Investment Investment
Registered Registered Companies Companies
Investment Investment Managed with Managed with
Companies Companies Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
- --------------------------------------------------------------------------------
Michael J. Reilly 8 $4,799,000 None None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER POOLED INVESTMENT VEHICLES
- --------------------------------------------------------------------------------
Total
Number of Assets of
Total Total Pooled Pooled
Number of Assets of Investment Investment
Pooled Pooled Vehicles Vehicles
Investment Investment Managed with Managed with
Vehicles Vehicles Performance- Performance-
Portfolio Manager Managed Managed based Fees based Fees
- --------------------------------------------------------------------------------
Michael J. Reilly 16 $3,555,000,000 None None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OTHER ACCOUNTS
- --------------------------------------------------------------------------------
Number of
Total Other Total Assets
Number of Accounts of Other
Other Total Managed with Accounts with
Accounts Assets of Other Performance- Performance-
Portfolio Manager Managed Accounts Managed based Fees based Fees
- --------------------------------------------------------------------------------
Michael J. Reilly 35,431 $17,433,000,000 4 $770,000,000
- --------------------------------------------------------------------------------
Investment Professional Conflict of Interest Disclosure
As an investment adviser and fiduciary, the Adviser owes its clients and
stockholders an undivided duty of loyalty. We recognize that conflicts of
interest are inherent in our business and accordingly have developed policies
and procedures (including oversight monitoring) reasonably designed to detect,
manage and mitigate the effects of actual or potential conflicts of interest in
the area of employee personal trading, managing multiple accounts for multiple
clients, including AllianceBernstein Mutual Funds, and allocating investment
opportunities. Investment professionals, including portfolio managers and
research analysts, are subject to the above-mentioned policies and oversight
monitoring to ensure that all clients are treated equitably. We place the
interests of our clients first and expect all of our employees to meet their
fiduciary duties.
Employee Personal Trading. The Adviser has adopted a Code of Business
Conduct and Ethics that is designed to detect and prevent conflicts of interest
when investment professionals and other personnel of the Adviser own, buy or
sell securities which may be owned by, or bought or sold for, clients. Personal
securities transactions by an employee may raise a potential conflict of
interest when an employee owns or trades in a security that is owned or
considered for purchase or sale by a client, or recommended for purchase or sale
by an employee to a client. Subject to the reporting requirements and other
limitations of its Code of Business Conduct and Ethics, the Adviser permits its
employees to engage in personal securities transactions, and also allows them to
acquire investments in the AllianceBernstein mutual funds through direct
purchase, 401(k)/profit-sharing plan investment and/or notionally in connection
with deferred incentive compensation awards. The Adviser's Code of Ethics and
Business Conduct requires disclosure of all personal accounts and maintenance of
brokerage accounts with designated broker-dealers approved by the Adviser. The
Code also requires preclearance of all securities transactions and imposes a
one-year holding period for securities purchased by employees to discourage
short-term trading.
Managing Multiple Accounts for Multiple Clients. The Adviser has compliance
policies and oversight monitoring in place to address conflicts of interest
relating to the management of multiple accounts for multiple clients. Conflicts
of interest may arise when an investment professional has responsibilities for
the investments of more than one account because the investment professional may
be unable to devote equal time and attention to each account. The investment
professional or investment professional teams for each client may have
responsibilities for managing all or a portion of the investments of multiple
accounts with a common investment strategy, including other registered
investment companies, unregistered investment vehicles, such as hedge funds,
pension plans, separate accounts, collective trusts and charitable foundations.
Among other things, the Adviser's policies and procedures provide for the prompt
dissemination to investment professionals of initial or changed investment
recommendations by analysts so that investment professionals are better able to
develop investment strategies for all accounts they manage. In addition,
investment decisions by investment professionals are reviewed for the purpose of
maintaining uniformity among similar accounts and ensuring that accounts are
treated equitably. No investment professional that manages client accounts
carrying performance fees is compensated directly or specifically for the
performance of those accounts. Investment professional compensation reflects a
broad contribution in multiple dimensions to long-term investment success for
our clients and is not tied specifically to the performance of any particular
client's account, nor is it directly tied to the level or change in level of
assets under management.
Allocating Investment Opportunities. The Adviser has policies and
procedures intended to address conflicts of interest relating to the allocation
of investment opportunities. These policies and procedures are designed to
ensure that information relevant to investment decisions is disseminated
promptly within its portfolio management teams and investment opportunities are
allocated equitably among different clients. The investment professionals at the
Adviser routinely are required to select and allocate investment opportunities
among accounts. Portfolio holdings, position sizes, and industry and sector
exposures tend to be similar across similar accounts, which minimizes the
potential for conflicts of interest relating to the allocation of investment
opportunities. Nevertheless, investment opportunities may be allocated
differently among accounts due to the particular characteristics of an account,
such as size of the account, cash position, tax status, risk tolerance and
investment restrictions or for other reasons.
The Adviser's procedures are also designed to prevent potential conflicts
of interest that may arise when the Adviser has a particular financial
incentive, such as a performance-based management fee, relating to an account.
An investment professional may perceive that he or she has an incentive to
devote more time to developing and analyzing investment strategies and
opportunities or allocating securities preferentially to accounts for which the
Adviser could share in investment gains.
To address these conflicts of interest, the Adviser's policies and
procedures require, among other things, the prompt dissemination to investment
professionals of any initial or changed investment recommendations by analysts;
the aggregation of orders to facilitate best execution for all accounts; price
averaging for all aggregated orders; objective allocation for limited investment
opportunities (e.g., on a rotational basis) to ensure fair and equitable
allocation among accounts; and limitations on short sales of securities. These
procedures also require documentation and review of justifications for any
decisions to make investments only for select accounts or in a manner
disproportionate to the size of the account.
Portfolio Manager Compensation
The Adviser's compensation program for investment professionals is designed
to be competitive and effective in order to attract and retain the highest
caliber employees. The compensation program for investment professionals is
designed to reflect their ability to generate long-term investment success for
our clients, including stockholders of the AllianceBernstein Mutual Funds.
Investment professionals do not receive any direct compensation based upon the
investment returns of any individual client account, nor is compensation tied
directly to the level or change in level of assets under management. Investment
professionals' annual compensation is comprised of the following:
(i) Fixed base salary: This is generally the smallest portion of
compensation. The base salary is a relatively low, fixed salary within a similar
range for all investment professionals. The base salary is determined at the
outset of employment based on level of experience, does not change significantly
from year-to-year and hence, is not particularly sensitive to performance.
(ii) Discretionary incentive compensation in the form of an annual cash
bonus: The Adviser's overall profitability determines the total amount of
incentive compensation available to investment professionals. This portion of
compensation is determined subjectively based on qualitative and quantitative
factors. In evaluating this component of an investment professional's
compensation, the Adviser considers the contribution to his/her team or
discipline as it relates to that team's overall contribution to the long-term
investment success, business results and strategy of the Adviser. Quantitative
factors considered include, among other things, relative investment performance
(e.g., by comparison to competitor or peer group funds or similar styles of
investments, and appropriate, broad-based or specific market indices), and
consistency of performance. There are no specific formulas used to determine
this part of an investment professional's compensation and the compensation is
not tied to any pre-determined or specified level of performance. The Adviser
also considers qualitative factors such as the complexity and risk of investment
strategies involved in the style or type of assets managed by the investment
professional; success of marketing/business development efforts and client
servicing; seniority/length of service with the firm; management and supervisory
responsibilities; and fulfillment of the Adviser's leadership criteria.
(iii) Discretionary incentive compensation in the form of awards under the
Adviser's Partners Compensation Plan ("deferred awards"): the Adviser's overall
profitability determines the total amount of deferred awards available to
investment professionals. The deferred awards are allocated among investment
professionals based on criteria similar to those used to determine the annual
cash bonus. There is no fixed formula for determining these amounts. Deferred
awards, for which there are various investment options, vest over a four-year
period and are generally forfeited if the employee resigns or the Adviser
terminates his/her employment. Investment options under the deferred awards plan
include many of the same AllianceBernstein Mutual Funds offered to mutual fund
investors, thereby creating a close alignment between the financial interests of
the investment professionals and those of the Adviser's clients and mutual fund
stockholders with respect to the performance of those mutual funds. The Adviser
also permits deferred award recipients to allocate up to 50% of their award to
investments in the Adviser's publicly traded equity securities.(1)
- ----------
(1) Prior to 2002, investment professional compensation also included
discretionary long-term incentive in the form of restricted grants of the
Adviser's Master Limited Partnership Units.
(iv) Contributions under the Adviser's Profit Sharing/401(k) Plan: The
contributions are based on the Adviser's overall profitability. The amount and
allocation of the contributions are determined at the sole discretion of the
Adviser.
The Adviser may act as an investment adviser to other persons, firms or
corporations, including investment companies, and is investment adviser to
AllianceBernstein Balanced Shares, Inc., AllianceBernstein Blended Style Series,
Inc., AllianceBernstein Bond Fund, Inc., AllianceBernstein Cap Fund, Inc.,
AllianceBernstein Emerging Market Debt Fund, Inc., AllianceBernstein Exchange
Reserves, AllianceBernstein Fixed-Income Shares, Inc., AllianceBernstein Focused
Growth & Income Fund, Inc., AllianceBernstein Global Government Income Trust,
Inc., AllianceBernstein Global Health Care Fund, Inc., AllianceBernstein Global
Real Estate Investment Fund, Inc., AllianceBernstein Global Research Growth
Fund, Inc., AllianceBernstein Global Strategic Income Trust, Inc.,
AllianceBernstein Global Technology Fund, Inc., AllianceBernstein Greater China
`97 Fund, Inc., AllianceBernstein Growth and Income Fund, Inc.,
AllianceBernstein High Yield Fund, Inc., AllianceBernstein Institutional Funds,
Inc., AllianceBernstein International Growth Fund, Inc., AllianceBernstein
International Research Growth Fund, Inc., AllianceBernstein Large Cap Growth
Fund, Inc., AllianceBernstein Mid-Cap Growth Fund, Inc., AllianceBernstein
Municipal Income Fund, Inc., AllianceBernstein Municipal Income Fund II,
AllianceBernstein Trust, AllianceBernstein Utility Income Fund, Inc.,
AllianceBernstein Variable Products Series Fund, Inc., Sanford C. Bernstein
Fund, Inc., Sanford C. Bernstein Fund II, Inc., The AllianceBernstein Pooling
Portfolios and The AllianceBernstein Portfolios, all registered open-end
investment companies; and to AllianceBernstein Income Fund, Inc.,
AllianceBernstein Global High Income Fund, Inc., ACM Managed Dollar Income Fund,
Inc., Alliance California Municipal Income Fund, Inc., AllianceBernstein
National Municipal Income Fund, Inc., Alliance New York Municipal Income Fund,
Inc. and The Spain Fund, Inc., all registered closed-end investment companies.
Administrator
The Adviser serves as administrator for the Fund. Under the administrative
agreements, the Adviser performs standard administrative services for the Fund.
Pursuant to an Administration Agreement, the Fund reimburses the Adviser
for its costs incurred for providing administrative services, provided however
that such reimbursement shall not exceed an annualized rate of .25% of the
average weekly net assets of the Fund.
Shareholder Servicing
AllianceBernstein Investor Services, Inc. ("ABIS"), an affiliate of the
Adviser, provides stockholder services for the Fund. The Fund reimburses ABIS
for these services. Under the terms of a Shareholder Inquiry Agency Agreement
with ABIS, the Fund reimburses ABIS for costs relating to servicing phone
inquiries on behalf of the Fund.
Custodian, Dividend Paying Agent, Transfer Agent and Registrar
The Bank of New York, 100 Church Street, New York, NY 10286 serves as
custodian for the Fund. Computershare Trust Company, N.A. ("Computershare"),
P.O. Box 43010, Providence, RI 02940 serves as the dividend paying agent,
transfer agent and registrar for the Fund.
For these services and for the fiscal years ended September 30, 2006, 2005
and 2004, the Fund paid The Bank of New York $120,169, $124,620 and $125,542,
respectively; and paid Computershare $1,479, and paid UBS Paine Webber prior to
October 1, 2005 $125,258 and $120,573, respectively.
Stock Ownership
As of August 10, 2007, to the knowledge of the Fund, no person owned either
of record or beneficially, 5% or more of the outstanding shares of either of the
Fund.
VALUATION OF PORTFOLIO SECURITIES
The NAV is computed at the next close of regular trading on the Exchange
(ordinarily 4:00 p.m. Eastern time) following receipt of a purchase or
redemption order by the Fund on each Fund business day on which such an order is
received and on such other days as the Board of Directors deems appropriate or
necessary in order to comply with Rule 22c-1 under the 1940 Act. The Fund's NAV
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 Exchange is open for trading.
In accordance with applicable rules under the 1940 Act and the Fund's
pricing policies and procedures adopted by the Board of Directors (the "Pricing
Policies"), portfolio securities are valued at current market value or at fair
value. The Board of Directors has delegated to the Adviser, subject to the
Board's continuing oversight, certain of its duties with respect to the Pricing
Policies.
With respect to securities for which market quotations are readily
available, the market value of a security will be determined as follows:
(a) securities listed on the Exchange, on other national securities
exchanges (other than securities listed on The Nasdaq Stock Market, Inc.
("NASDAQ")) or on a foreign securities exchange are valued at the last sale
price reflected on the consolidated tape at the close of the exchange or foreign
securities exchange 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;
(b) securities traded on NASDAQ are valued in accordance with the
NASDAQ Official Closing Price;
(c) securities traded on the Exchange or on a foreign securities
exchange and on one or more other national or foreign securities exchanges, and
securities not traded on the Exchange but traded on one or more other national
or foreign securities exchanges, are valued in accordance with paragraph (a)
above by reference to the principal exchange on which the securities are traded;
(d) 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, such securities will be
valued at the closing bid prices on that day;
(e) 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;
(f) securities traded in the over-the-counter market, including
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 as reported by the National Quotation Bureau or other comparable
sources;
(g) 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 it is determined, in accordance with procedures
established by the Board of Directors, that this method does not represent fair
value);
(h) 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 a pricing service take
into account many factors, including institutional size, trading in similar
groups of securities and any developments related to specific securities. For
securities where the Adviser has determined that an appropriate pricing service
does not exist, such securities may be valued on the basis of a quoted bid price
or spread from a major broker-dealer in such security;
(i) mortgage-backed and asset-backed securities may be valued at
prices obtained from a bond pricing service or at a price obtained from one or
more of the major broker/dealers in such securities when such prices are
believed to reflect the fair market value of such securities. In cases where
broker-dealer quotes are obtained, the Adviser may establish procedures whereby
changes in market yields or spreads are used to adjust, on a daily basis, a
recently obtained quoted bid price on a security;
(j) OTC and other derivatives are valued on the basis of a quoted bid
price or spread from a major broker-dealer in such security; and
(k) all other securities will be valued in accordance with readily
available market quotations as determined in accordance with procedures
established by the Board of Directors.
The Fund values its securities at their current market value determined on
the basis of market quotations or, if market quotations are not readily
available or are unreliable, at "fair value" as determined in accordance with
procedures established by and under the general supervision of the Fund's Board
of Directors. When the Fund uses fair value pricing, it may take into account
any factors it deems appropriate. The Fund may determine fair value based upon
developments related to a specific security, current valuations of foreign stock
indices (as reflected in U.S. futures markets) and/or U.S. sector or broader
stock market indices. The prices of securities used by the Fund to calculate its
NAV may differ from quoted or published prices for the same securities. Fair
value pricing involves subjective judgments and it is possible that the fair
value determined for a security is materially different than the value that
could be realized upon the sale of that security.
The Fund expects to use fair value pricing for securities primarily traded
on U.S. exchanges only under very limited circumstances, such as the early
closing of the exchange on which a security is traded or suspension of trading
in the security. The Fund may use fair value pricing more frequently for
securities primarily traded in non-U.S. markets because, among other things,
most foreign markets close well before the Fund values its securities at 4:00
p.m., Eastern Time. The earlier close of these foreign markets gives rise to the
possibility that significant events, including broad market moves, may have
occurred in the interim. For example, the Fund believes that foreign security
values may be affected by events that occur after the close of foreign
securities markets. To account for this, the Fund may frequently value many of
its foreign equity securities using fair value prices based on third party
vendor modeling tools to the extent available.
Subject to the Board's oversight, the Fund's Board has delegated
responsibility for valuing the Fund's assets to the Adviser. The Adviser has
established a Valuation Committee, which operates under the policies and
procedures approved by the Board, to value the Fund's assets on behalf of the
Fund. The Valuation Committee values Fund assets as described above. The Fund
may suspend the determination of its NAV (and the offering and sale of shares),
subject to the rules of the Commission and other governmental rules and
regulations, at a time when: (1) the Exchange is closed, other than customary
weekend and holiday closings, (2) an emergency exists as a result of which it is
not reasonably practicable for the Fund to dispose of securities owned by it or
to determine fairly the value of its net assets, or (3) for the protection of
shareholders, the Commission by order permits a suspension of the right of
redemption or a postponement of the date of payment on redemption.
For purposes of determining the Fund's NAV 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
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 Exchange, the
rate of exchange will be determined in good faith by, or under the direction of,
the Board of Directors.
The assets attributable to the Class A shares, Class B shares, Class C
shares, Class R shares, Class K shares, Class I shares and Advisor Class shares
will be invested together in a single portfolio. The NAV of each class will be
determined separately by subtracting the liabilities allocated to that class
from the assets belonging to that class in conformance with the provisions of a
plan adopted by the Fund in accordance with Rule 18f-3 under the 1940 Act.
The Fund calculates and makes available for weekly publication the NAV of
its shares of common stock. The NAV per share of the Fund's common stock is
determined as of the close of trading on the NYSE each Friday or, when Friday is
not a Fund business day, on the immediately preceding Fund business day, by
adding the market value of all securities in the Fund's portfolio and other
assets, subtracting liabilities incurred or accrued and dividing by the total
number of the Fund's shares of common stock then outstanding.
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 exchange (other than foreign securities exchanges whose operations
are similar to those of the United States over-the-counter market) are valued,
except as indicated 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 quoted bid prices on such day. If no bid prices are quoted on
such day, then the security is valued at the mean of the bid and asked prices at
the close of the NYSE on such day as obtained from one or more dealers regularly
making a market in such security. Where a bid and asked price can be obtained
from only one such dealer, such security is valued at the mean of the bid and
asked price obtained from such dealer unless it is determined that such price
does not represent current market value, in which case the security shall be
valued in good faith at fair value by, or pursuant to procedures established by,
the Board of Directors. Securities for which no bid and asked price quotations
are readily available are valued in good faith at faire 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
are valued in like manner. Portfolio securities traded on the NYSE and on one or
more other 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 only in the over-the-counter market,
securities listed on a foreign securities exchange whose operations are similar
to those of the United Stated over-the-counter market, and debt securities
listed on a U.S. national securities exchange whose primary market is believed
to be over-the-counter, are valued at the mean of the bid and asked prices at
the close of the NYSE on such day as obtained from two or more dealers regularly
making a market in such security. Where a bid and asked price can be obtained
from only one such dealer, such security is valued at the mean of the bid and
asked price obtained from such dealer unless it is determined that such price
does not represent current market value, in which case the security shall be
valued in good faith at fair value by, or in accordance with procedures
established by, the Board of Directors.
Listed put and call options purchased by the Fund are valued at the last
sale price. If there has been no sale on that day, 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 a pricing service take into account
may factors, including institutional size trading in similar groups of
securities and any developments related to specific securities. Mortgage backed
and asset backed securities may be valued at prices obtained from a bond pricing
service or at a price obtained from one or more of the major broker/dealers in
such securities. In cases where broker/dealers quotes are obtained, the Adviser
may establish procedures whereby changes in market yields or spreads are used to
adjust, on a daily basis, a recently obtained quoted bid price on a security.
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 a 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 these prices do not reflect current
market value, in which case the securities will be valued in good faith by fair
value by, or in accordance with procedures established by, the Board of
Directors.
The Board of Directors may suspend the determination of the Fund's net
asset value, subject to the rules of the SEC and other governmental rules and
regulations, at a time when: (1) the NYSE is closed, other than customary
weekend and holiday closings or (2) an emergency exists as a result of which it
is not reasonably practicable for the Fund to dispose of securities owned by it
or to determine fairly the value of its net assets.
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 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.
DIVIDEND REINVESTMENT AND CASH PURCHASE PLAN
Stockholders of the Fund whose shares are registered in their own names may
elect to be participants in the Fund's DRIP, under which dividends and capital
gain distributions to stockholders will be paid or reinvested in additional
shares of the Fund (the "Dividend Shares"). Computershare Trust Company, N.A.
(the "Agent") serves as the agent for participants under the DRIP for the Fund.
Stockholders who do not elect to participate in the DRIP will receive all
distributions in cash paid by check mailed directly to the stockholder of record
(or, if the shares are held in street or other nominee name, then to the
nominee) by the Agent, as dividend disbursing agent.
The automatic reinvestment of dividends and distributions will not relieve
participants of any income taxes that may be payable (or required to be
withheld) on dividends and distributions. The federal income tax treatment of
reinvestment is described under "Taxation."
A stockholder who has elected to participate in the DRIP may withdraw from
the DRIP at any time. There will be no penalty for withdrawal from the DRIP and
stockholders who have previously withdrawn from the DRIP may rejoin it at any
time. Changes in elections must be in writing and should include the
stockholders name and address as they appear on the share certificate. An
election to withdraw from the DRIP will, until such election is changed, be
deemed to be an election by a stockholder to take all subsequent distributions
in cash. An election will be effective only for a distribution declared and
having a record date of at least 10 days after the date on which the election is
received. A stockholder whose shares are held in the name of a broker or nominee
should contact such broker or nominee concerning changes in that stockholder's
election.
Under a DRIP and commencing not more than five business days before the
dividend payment date, purchases of the Fund's shares may be made by the Agent,
on behalf of the participants in the DRIP, from time to time to satisfy dividend
reinvestments under the DRIP. Such purchases by the Agent on or before the
dividend payment date may be made on the NYSE or elsewhere at any time when the
price plus estimated commissions of the Fund's common stock on the NYSE is lower
than the Fund's most recently calculated NAV per share.
If the Agent determines on the dividend payment date that the shares
purchased as of such date are insufficient to satisfy the dividend reinvestment
requirements, the Agent, on behalf of the participants in the DRIP, will obtain
the necessary additional shares as follows. To the extent that outstanding
shares are not available at a cost of less than per share NAV, the Agent, on
behalf of the participants in the DRIP, will accept payment of the dividend, or
the remaining portion thereof, in authorized but unissued shares of the Fund on
the dividend payment date. Such shares will be issued at a per share price equal
to the higher of (1) the NAV per share on the payment date, or (2) 95% of the
closing market price per share on the payment date. If the closing sale or offer
price, plus estimated commissions, of the common stock on the NYSE on the
payment date is less than the Fund's NAV per share on such day, then the Agent
will purchase additional outstanding shares on the NYSE or elsewhere. If before
the Agent has completed such purchases, the market price plus commissions
exceeds the NAV of the Fund share, the average per share purchase price paid by
the Agent may exceed the NAV of the Fund's shares, resulting in the acquisition
of fewer shares than if shares had been issued by the Fund.
Participants in a DRIP have the option of making additional cash payments
to the Agent, semi-annually, in any amount of $100 or more for investment in the
Fund's shares. The Agent uses all funds received from participants to purchase
Fund shares in the open market on or about each January 15 and July 15.
Participants' cash payments are also used to acquire Fund shares under the same
procedure as that used for reinvestment of dividends and distributions. To allow
ample time for receipt and processing by the Agent, participants should send in
voluntary cash payments to be received by the Agent not later than five business
days before each January 15 and July 15. To avoid unnecessary cash
accumulations, cash payments received after that time and cash payments received
more than 30 days prior to these dates will be returned by the Agent and
interest will not be paid on any uninvested cash payments. A participant may
withdraw a voluntary cash payment by written notice, if the notice is received
by the Agent not less than 48 hours before such payment is to be invested.
The Agent will maintain all stockholders' accounts in a DRIP and furnish
written confirmation of all transactions in the account, including information
needed by stockholders for tax records. Shares in the account of each DRIP
participant will be held by the Agent in non-certificated form in the name of
the participant, and each stockholder's proxy will include those shares
purchased or received pursuant to the DRIP.
In the case of stockholders such as banks, brokers or nominees, which hold
shares for others who are the beneficial owners, the Agent will administer the
DRIP on the basis of the number of shares certificated from time to time by the
record stockholders as representing the total amount registered in the record
stockholders' name and held for the account of beneficial owners who are to
participate in the DRIP.
There will be no brokerage charges with respect to shares issued directly
by the Fund to satisfy the dividend reinvestment requirements. However, each
participant will pay a pro rata share of brokerage commissions incurred with
respect to the Agent's open market purchases of shares. In each case, the cost
per share of shares purchased for each stockholder's account will be the average
cost, including brokerage commissions, of any shares purchased in the open
market plus the cost of any shares issued by the Fund. A participant also will
pay brokerage commissions incurred in purchases from voluntary cash payments
made by the participant.
Stockholders participating in a DRIP may receive benefits not available to
stockholders not participating in a DRIP. If the market price plus commissions
of the Fund's shares is above the NAV, participants in a DRIP will receive
shares of the Fund at a discount of up to 5% from the current market value.
However, if the market price plus commissions is below the NAV, participants
will receive distributions in shares with a NAV greater than the value of any
cash distribution they would have received on their shares. There may be
insufficient shares available in the market to make distributions in shares at
prices below NAV. Also, since the Fund does not redeem it shares, the price on
resale may be more or less than the NAV.
In the case of foreign participants whose dividends are subject to U.S.
income tax withholding and in the case of any participants subject to 31%
federal backup withholding, the Agent will reinvest dividends after deduction of
the amount required to be withheld.
Experience under a DRIP may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate a DRIP as applied
to any voluntary cash payments made and any dividend or distribution paid
subsequent to written notice of the change sent to participants in the DRIP at
least 90 days before the record date for such dividend or distribution. A DRIP
may also be amended or terminated by the Agent on at least 90 days' written
notice to participants in the DRIP. There is no service charge to participants
in a DRIP; however, the Fund reserves the right to amend the DRIP to include a
service charge payable to the Agent by the participants. All correspondence
concerning the DRIP for the Fund should be directed to Computershare Trust
Company, N.A., P.O. Box 43010, Providence, RI 02940.
DESCRIPTION OF COMMON STOCK
Common Stock of the Fund
The Fund is authorized to issue up to 300,000,000 shares of common stock,
par value $.01 per share. As of August 10, 2007, the Fund had 3,703,216 shares
outstanding, respectively. The Fund's shares have no preemptive, conversion,
exchange or redemption rights. Each share has equal voting, dividend,
distribution and liquidation rights. The shares of the Fund outstanding are
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 of common stock of the Fund can
elect 100% of the Directors then nominated for election if they choose to do so
and, in such event, the holders of the remaining shares of common stock will not
be able to elect any Directors. Under the rules of the NYSE applicable to listed
companies, the Fund is required to hold an annual meeting of stockholders each
year.
Certain Anti-Takeover Provisions of the Fund's Charters Articles of
Incorporation and Bylaws
The Fund presently has provisions in its Charter, and Bylaws (together, the
"Charter Documents") that are intended to limit (i) the ability of other
entities or persons to acquired control of the Fund, (ii) the Fund's freedom to
engage in certain transactions, or (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 Documents may be regarded as
"anti-takeover" provisions. The Board of Directors of the Fund is divided into
three classes, each having a term of three years. Each class of Directors serves
for a three year term. Accordingly, only those - Directors may have the effect
of maintaining the continuity of management and, thus, make it more difficult
for the Fund's stockholders to change the majority of Directors. Under Maryland
law and the Fund's Charter, the affirmative vote of the holders of a majority of
the votes entitles 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
certain amendments to the Fund's Charter. 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 common stock of the Fund is required generally to
authorize any of the following transactions 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 corporation, person or other entity;
(ii) issuance of any securities of the Fund to any corporation, person
or other entity for cash;
(iii) sale, lease or exchange of all or any substantial part of the
assets of the Fund to any corporation, person or other entity
(except assets having an aggregate fair market value of less than
$1,000,000); or
(iv) sale, lease or exchange to the Fund, in exchange for securities
of the Fund, of any assets of any corporation, person or other
entity (except assets having an aggregate fair market value of
less than $1,000,000);
If such corporation, person or entity is directly, or indirectly through
affiliates or associates, the beneficial owner of more than 5% of the
outstanding shares of the Fund (a "principal stockholder"). However, such vote
would not be required where, under certain condition, the Board of Directors
approves the transaction, 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 provisions of the Charter Documents described above and the Fund's
right to repurchase or make a tender offer for its common stock could have the
effect of depriving the owners of shares 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.
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. However, they provide the advantage of potentially requiring
persons seeking control of the Fund to negotiate with its management regarding
the price to be paid and facilitating the continuity of the Fund's management
and investment objective and policies. 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.
PORTFOLIO TRANSACTIONS
Subject to the general supervision of the Fund's Board, the Adviser is
responsible for the investment decisions and the placing of orders for portfolio
transactions for the Fund. The Fund's portfolio transactions occur primarily
with issuers, underwriters or major dealers acting as principals. Such
transactions are normally on a net basis, which does not involve payment of
brokerage commissions. The cost of securities purchased from an underwriter
usually includes a commission paid by the issuer to the underwriters;
transactions with dealers normally reflect the spread between bid and asked
prices. Premiums are paid with respect to options purchased by the Fund and
brokerage commissions are payable with respect to transactions in
exchange-traded futures contracts.
The Fund has no obligation to enter into transactions in portfolio
securities with any dealer, issuer, underwriter or other entity. In placing
orders, it is the policy of the Fund to obtain the best price and execution for
its transactions. Where best price and execution may be obtained from more than
one dealer, the Adviser may, in its discretion, purchase and sell securities
through dealers who provide research, statistical and other information to the
Adviser. Such services may be used by the Adviser for all of its investment
advisory accounts and, accordingly, not all such services may be used by the
Adviser in connection with the Fund. The supplemental information received from
a dealer is in addition to the services required to be performed by the Adviser
under the Advisory Agreement, and the expenses of the Adviser will not
necessarily be reduced as a result of the receipt of such information.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best price and execution, the
Fund may consider sales of shares of the Fund as a factor in the selection of
dealers to enter into portfolio transactions with the Fund.
Brokerage Allocation and Other Practices
Neither the Fund nor the Adviser has entered into agreements or
understandings with any brokers or dealers regarding the placement of securities
transactions because of research or statistical services they provide. To the
extent that such persons or firms supply investment information to the Adviser
for use in rendering investment advice to the Fund, such information may be
supplied at no cost to the Adviser and, therefore, may have the effect of
reducing the expenses of the Adviser in rendering advice to the Fund. While it
is impossible to place an actual dollar value on such investment information,
its receipt by the Adviser probably does not reduce the overall expenses of the
Adviser to any material extent.
The investment information provided to the Adviser is of the types
described in Section 28(e)(3) of the Securities Exchange Act of 1934 and is
designed to augment the Adviser's own internal research and investment strategy
capabilities. Research and statistical services furnished by brokers through
whom the Fund effects securities transactions are used by the Adviser in
carrying out its investment management responsibilities with respect to all its
client accounts but not all such services may be utilized by the Adviser in
connection with the Fund. The Fund will deal in some instances in equity
securities, which are not listed on a national stock exchange but are traded in
the over-the-counter market. Where transactions are executed in the
over-the-counter market, the Fund will seek to deal with the primary market
makers, but when necessary in order to obtain the best price and execution, it
will utilize the services of others. In all cases, the Fund will attempt to
negotiate best execution. The Fund may from time to time place orders for the
purchase or sale of securities (including listed call options) with SCB & Co.,
an affiliate of the Adviser. In such instances, the placement of orders with
such broker would be consistent with the Fund's objective of obtaining best
execution and would not be dependent upon the fact that SCB & Co. is an
affiliate of the Adviser. With respect to orders placed with SCB & Co. for
execution on a national securities exchange, commissions received must conform
to Section 17(e)(2)(A) of the 1940 Act and Rule 17e-1 thereunder, which permit
an affiliated person of a registered investment company (such as the Fund), or
any affiliated person of such person, to receive a brokerage commission from
such registered investment company provided that such commission is reasonable
and fair compared to the commissions received by other brokers in connection
with comparable transactions involving similar securities during a comparable
period of time.
The following table shows the brokerage commission paid on investment
transactions for the last three fiscal years:
- --------------------------------------------------------------------------------
Fiscal Year End - September 30 Brokerage Commission Paid ($)
- --------------------------------------------------------------------------------
2006 $117,443
- --------------------------------------------------------------------------------
2005 $263,917
- --------------------------------------------------------------------------------
2004 $577,273
- --------------------------------------------------------------------------------
Disclosure of Portfolio Holdings
The Fund believes that the ideas of the Adviser's investment staff should
benefit the Fund and its shareholders, and does not want to afford speculators
an opportunity to profit by anticipating Fund trading strategies or using Fund
information for stock picking. However, the Fund also believes that knowledge of
the Fund's portfolio holdings can assist shareholders in monitoring their
investment, making asset allocation decisions, and evaluating portfolio
management techniques.
The Adviser has adopted, on behalf of the Fund, policies and procedures
relating to disclosure of the Fund's portfolio securities. The policies and
procedures relating to disclosure of the Fund's portfolio securities are
designed to allow disclosure of portfolio holdings information where necessary
to the Fund's operation or useful to the Fund's shareholders without
compromising the integrity or performance of the Fund. Except when there are
legitimate business purposes for selective disclosure and other conditions
(designed to protect the Fund and its shareholders) are met, the Fund does not
provide or permit others to provide information about the Fund's portfolio
holdings on a selective basis.
The Fund includes portfolio holdings information as required in regulatory
filings and shareholder reports, discloses portfolio holdings information as
required by federal or state securities laws and may disclose portfolio holdings
information in response to requests by governmental authorities. In addition,
the Adviser posts portfolio holdings information on the Adviser's website
(www.AllianceBernstein.com). The Adviser posts on the website a complete
schedule of the Fund's portfolio securities, as of the last day of each calendar
month, approximately 30 days after the end of that month. This posted
information generally remains accessible on the website for three months. For
each portfolio security, the posted information includes its name, the number of
shares held by the Fund, the market value of the Fund's holdings, and the
percentage of the Fund's assets represented by the Fund's holdings. In addition
to the schedule of portfolio holdings, the Adviser may post information about
the number of securities the Fund holds, a summary of the Fund's top ten
holdings (including name and the percentage of the Fund's assets invested in
each holding), and a percentage breakdown of the Fund's investments by country,
sector and industry, as applicable approximately 10-15 days after the end of the
month. The day after portfolio holdings information is publicly available on the
website, it may be mailed, e-mailed or otherwise transmitted to any person.
The Adviser may distribute or authorize the distribution of information
about the Fund's portfolio holdings that is not publicly available, on the
website or otherwise, to the Adviser's employees and affiliates that provide
services to the Fund. In addition, the Adviser may distribute or authorize
distribution of information about the Fund's portfolio holdings that is not
publicly available, on the website or otherwise, to the Fund's service providers
who require access to the information in order to fulfill their contractual
duties relating to the Fund, to facilitate the review of the Fund by rating
agencies, for the purpose of due diligence regarding a merger or acquisition, or
for the purpose of effecting in-kind redemption of securities to facilitate
orderly redemption of portfolio assets and minimal impact on remaining Fund
shareholders. The Adviser does not expect to disclose information about the
Fund's portfolio holdings that is not publicly available to the Fund's
individual or institutional investors or to intermediaries that distribute the
Fund's shares. Information may be disclosed with any frequency and any lag, as
appropriate.
Before any non-public disclosure of information about the Fund's portfolio
holdings is permitted, however, the Adviser's Chief Compliance Officer (or his
designee) must determine that the Fund has a legitimate business purpose for
providing the portfolio holdings information, that the disclosure is in the best
interests of the Fund's shareholders, and that the recipient agrees or has a
duty to keep the information confidential and agrees not to trade directly or
indirectly based on the information or to use the information to form a specific
recommendation about whether to invest in the Fund or any other security. Under
no circumstances may the Adviser or its affiliates receive any consideration or
compensation for disclosing the information.
The Adviser has established procedures to ensure that the Fund's portfolio
holdings information is only disclosed in accordance with these policies. Only
the Adviser's Chief Compliance Officer (or his designee) may approve the
disclosure, and then only if he or she and a designated senior officer in the
Adviser's product management group determines that the disclosure serves a
legitimate business purpose of the Fund and is in the best interest of the
Fund's shareholders. The Adviser's Chief Compliance Officer (or his designee)
approves disclosure only after considering the anticipated benefits and costs to
the Fund and its shareholders, the purpose of the disclosure, any conflicts of
interest between the interests of the Fund and its shareholders and the
interests of the Adviser or any of its affiliates, and whether the disclosure is
consistent with the policies and procedures governing disclosure. Only someone
approved by the Adviser's Chief Compliance Officer (or his designee) may make
approved disclosures of portfolio holdings information to authorized recipients.
The Adviser reserves the right to request certifications from senior officers of
authorized recipients that the recipient is using the portfolio holdings
information only in a manner consistent with the Adviser's policy and any
applicable confidentiality agreement. The Adviser's Chief Compliance Officer (or
his designee) or another member of the compliance team reports all arrangements
to disclose portfolio holdings information to the Fund's Board of Directors on a
quarterly basis. If the Board determines that disclosure was inappropriate, the
Adviser will promptly terminate the disclosure arrangement.
In accordance with these procedures, each of the following third parties
have been approved to receive information concerning the Fund's portfolio
holdings: (i) the Fund's independent registered public accounting firm, for use
in providing audit opinions; (ii) RR Donnelley Financial, Data Communique
International and, from time to time, other financial printers, for the purpose
of preparing Fund regulatory filings; (iii) the Fund's custodian in connection
with its custody of the Fund's assets; (iv) Institutional Shareholder Services,
Inc. for proxy voting services; and (v) data aggregators, such as Vestek.
Information may be provided to these parties at any time with no time lag. Each
of these parties is contractually and ethically prohibited from sharing the
Fund's portfolio holdings information unless specifically authorized.
DISTRIBUTIONS
The Fund intends to distribute monthly its net investment income. Net
short-term capital gains, if any, will normally be distributed quarterly and net
long-term capital gains, if any, will normally be distributed annually.
TAXATION
General
The Fund intends for each taxable year to qualify as a "regulated
investment company" under the Code. 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 or securities or foreign currency, or certain
other income (including but not limited to, gains from options, futures and
forward 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 if limited, in
respect of any one issuer, to an amount not greater than 5% of the Fund's total
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 securities of other
regulated investment companies).
The Treasury Department is authorized to issue regulations to provide that
foreign currency gains that are "not directly related" to the Fund's principal
business of investing in stock or securities may be excluded from the income
which qualifies for purposes of the 90% gross income requirement described above
with respect to the Fund's qualification as a "regulated investment company." No
such regulations have yet been issued.
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
net investment 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. Investors should consult their own counsel for a
complete understanding of the requirements the Fund must meet to qualify to be
taxed as a "regulated investment company."
The information set forth in the following discussion relates solely to the
significant United States federal income tax consequences of dividends and
distributions by the Fund and of sales or redemptions of Fund shares, and
assumes that the Fund qualifies to be taxed as a regulated investment company.
Investors should consult their own tax counsel with respect to the specific tax
consequences of their being stockholders of the Fund, including the effect and
applicability of federal, state and local tax laws to their own particular
situation and the possible effects of changes therein.
Dividends and Distributions
The Fund intends to make timely distributions of its taxable income
(including any net capital gain) so that the Fund will not be subject to federal
income taxes. The Fund also intends to declare and distribute dividends in the
amounts and at the times necessary to avoid the application of the 4% federal
excise tax imposed on certain undistributed income of regulated investment
companies. The Fund will be required to pay the 4% excise tax to the extent it
does not distribute to its stockholders during any calendar year an amount equal
to the sum of (i) 98% of its ordinary taxable income for the calendar year, (ii)
98% of its capital gain net income and foreign currency gains for the twelve
months ended October 31 of such year (or December 31 if elected by the Fund) and
(iii) any ordinary income or capital gain net income from the preceding calendar
year that was not distributed during such 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 but actually paid during the following
January will be taxable to these stockholders for the year declared, and not for
the subsequent calendar year in which the stockholders actually received the
dividend.
Dividends of the Fund's net ordinary income and distributions of any net
realized short-term capital gain are taxable to stockholders as ordinary income.
Since the Fund expects to derive substantially all of its gross income from
sources other than dividends, it is expected that none of the Fund's dividends
or distributions will qualify for the dividends-received deduction for
corporations.
Distributions of net capital gain by the Fund to its stockholders will be
taxable to the stockholders as long-term capital gains, irrespective of the
length of time a stockholder may have held his Fund shares. Any dividend or
distribution received by a stockholder on shares of the Fund will have the
effect of reducing the NAV 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 him as described above.
Dividends are taxable in the manner discussed regardless of whether they are
paid to the stockholder in cash or are reinvested in additional shares of the
Fund.
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.
Sales
Any gain or loss arising from a sale of Fund shares generally will be
capital gain or loss except in the case of a dealer or a financial institution,
and will be long-term capital gain or loss if such stockholder has held such
shares for more than one year at the time of the sale; otherwise it will be
short-term capital gain or loss. However, 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 such 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 Fund's
DRIP 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.
Backup Withholding
The Fund generally will be required to withhold tax at the rate of 28% of
reportable payments (which may include dividends and distributions of net
capital gain) payable to a noncorporate stockholder unless the stockholder
certified on his subscription application that the social security or taxpayer
identification number provided is correct and that the stockholder has not been
notified by the Internal Revenue Service that he is subject to backup
withholding.
Foreign Income Taxes
Investment income received by the Fund from sources within foreign
countries may be subject to foreign income taxes, including taxes withheld at
the source. The United States has entered into tax treaties with many foreign
countries which entitle the Fund to a reduced rate of such taxes or exemption
from taxes on such income. It is impossible 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.
United States Federal Income Taxation of the Fund
The following discussion relates 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.
Options, Futures Contracts, and Forward Currency Exchange Contracts.
--------------------------------------------------------------------
Certain listed options, regulated futures contracts, and forward currency
exchange 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
currency exchange contracts will be considered 60% long-term and 40% short-term
capital gain or loss. Gain or loss realized by the Fund on forward currency
exchange contracts 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 shareholders 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.
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
shareholders 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 (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 if 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 which have as their
underlying property foreign currency 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, other
forward contract, 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 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.
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 income 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
shareholders 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 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 a non-taxable return of
capital to shareholders, rather than as an ordinary dividend, reducing each
shareholder's basis in his or her Fund shares. To the extent that such
distributions exceed such shareholder's basis, each will be treated as a gain
from the sale of shares.
Other Taxation
The foregoing is a brief summary of the federal tax laws applicable to
investors in the Fund. Investors may also be subject to state and local taxes,
although distributions of the Fund that are derived from interest on certain
obligations to the U.S. Government and agencies thereof may be exempt from state
and local taxes in certain states.
Taxation of Foreign Stockholders
Taxation of a shareholder who, under the Code, is a nonresident alien
individual, foreign trust or estate, foreign corporation or foreign partnership
("foreign shareholder"), depends on whether the income from the Fund is
"effectively connected" with a U.S. trade or business carried on by the foreign
shareholder.
If the income from the Fund is not effectively connected with the foreign
shareholder's U.S. trade or business, then, except as discussed below,
distributions of the Fund attributable to ordinary income and short-term capital
gain paid to a foreign shareholder by the Fund will be subject to U.S.
withholding tax at the rate of 30% (or lower treaty rate) upon the gross amount
of the distribution. However, distributions of the Fund attributable to
short-term capital gains and U.S. source portfolio interest income paid during
taxable years of the Fund beginning before January 1, 2008 will not be subject
to this withholding tax.
A foreign shareholder generally would be exempt from Federal income tax on
distributions of the Fund attributable to net long-term capital gain and on gain
realized from the sale or redemption of shares of the Fund. Special rules apply
in the case of a shareholder that is a foreign trust or foreign partnership.
If the income from the Fund is effectively connected with a foreign
shareholder's U.S. trade or business, then ordinary income distributions,
capital gain distributions, and any gain realized upon the sale of shares of the
Fund will be subject to Federal income tax at the rates applicable to U.S.
citizens or U.S. corporations.
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein.
The tax rules of other countries with respect to an investment in the Fund
can differ from the Federal income taxation rules described above. These foreign
rules are not discussed herein. Foreign shareholders are urged to consult their
own tax advisors as to the consequences of foreign tax rules with respect to an
investment in the Fund.
CODE OF ETHICS AND PROXY VOTING
The Fund, the Adviser and ABI have each adopted codes of ethics pursuant to
Rule 17j-1 of the 1940 Act. These codes of ethics permit personnel subject to
the codes to invest in securities, including securities that may be purchased or
held by the Fund.
The Fund has adopted the Adviser's proxy voting policies and procedures.
The Adviser's proxy voting policies and procedures are attached as Appendix A.
Information regarding how the Fund voted proxies related to portfolio
securities during the most recent 12-month period ended June 30 is available (1)
without charge, upon request, by calling (800) 227-4618; or on or through the
Fund's website at www.AllianceBernstein.com; or both; and (2) on the
Commission's website at www.sec.gov.
LEGAL MATTERS
Certain legal matters concerning LCGF and the Fund and their participation
in the Acquisition, the issuance of LCGF shares in connection with the
Acquisition and the tax consequences of the Acquisition will be passed upon by
Seward & Kissel LLP, One Battery Park Plaza, New York, NY 10004, counsel to LCGF
and the Fund.
FINANCIAL STATEMENTS AND REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The financial statements of LCGF for the fiscal year ended July 31, 2006
and the report of KPMG LLP, independent registered public accounting firm, are
incorporated herein by reference to the LCGF's annual report. Also incorporated
by reference are the statement of changes in net assets for the year ended July
31, 2005 and the financial highlights for each of the presented years and
periods ended prior to 2005, which were audited by PricewaterhouseCoopers LLP
whose report thereon, dated September 16, 2005, was included in the LCGF's
annual report for the year ended July 31, 2005. The annual reports were filed on
Form N-CSR with the Commission on October 10, 2006, and October 11, 2005. These
reports are available without charge upon request by calling ABIS at
(800)227-4618.
The financial statements of the Fund for the fiscal year ended September
30, 2006 and the report of KPMG LLP, independent registered public accounting
firm, are incorporated herein by reference to the Funds annual report. Also,
incorporated by reference are the statement of changes in net assets for the
year ended September 30, 2005 and the financial highlights for each of the
presented years and periods ended prior to 2005, which were audited by
PricewaterhouseCoopers LLP whose report thereon, dated November 22, 2005, was
included in the Funds annual report for the year ended September 30, 2005. The
annual reports were filed on Form N-CSR with the Commission on December 11,
2006, and December 8, 2005. These reports are available without charge upon
request by calling ABIS at (800)227-4618.
In addition, the financial statements for the six months ended January 31,
2007 and March 31, 2007, for LCGF and AMA, respectively, are incorporated by
reference to the Semi-Annual Reports for LCGF and AMA, filed on April 10, 2007
and June 5, 2007, as amended on July 31, 2007, respectively.
- --------------------------------------------------------------------------------
APPENDIX A:
STATEMENT OF POLICIES AND
PROCEDURES FOR VOTING PROXIES
- --------------------------------------------------------------------------------
1. Introduction
As a registered investment adviser, AllianceBernstein L.P.
("AllianceBernstein", "we" or "us") has a fiduciary duty to act solely in
the best interests of our clients. We recognize that this duty requires us
to vote client securities in a timely manner and make voting decisions that
are in the best interests of our clients. Consistent with these
obligations, we will disclose our clients' voting records only to them and
as required by mutual fund vote disclosure regulations. In addition, the
proxy committees may, after careful consideration, choose to respond to
surveys regarding past votes.
This statement is intended to comply with Rule 206(4)-6 of the Investment
Advisers Act of 1940. It sets forth our policies and procedures for voting
proxies for our discretionary investment advisory clients, including
investment companies registered under the Investment Company Act of 1940.
This statement applies to AllianceBernstein's growth, value and blend
investment groups investing on behalf of clients in both US and non-US
securities.
2. Proxy Policies
This statement is designed to be responsive to the wide range of proxy
voting subjects that can have a significant effect on the investment value
of the securities held in our clients' accounts. These policies are not
exhaustive due to the variety of proxy voting issues that we may be
required to consider. AllianceBernstein reserves the right to depart from
these guidelines in order to avoid voting decisions that we believe may be
contrary to our clients' best interests. In reviewing proxy issues, we will
apply the following general policies:
2.1. Corporate Governance
AllianceBernstein's proxy voting policies recognize the importance of
good corporate governance in ensuring that management and the board of
directors fulfill their obligations to the shareholders. We favor
proposals promoting transparency and accountability within a company.
We will vote for proposals providing for equal access to the proxy
materials so that shareholders can express their views on various
proxy issues. We also support the appointment of a majority of
independent directors on key committees and separating the positions
of chairman and chief executive officer. Finally, because we believe
that good corporate governance requires shareholders to have a
meaningful voice in the affairs of the company, we will support
shareholder proposals that request that companies amend their by-laws
to provide that director nominees be elected by an affirmative vote of
a majority of the votes cast.
2.2. Elections of Directors
Unless there is a proxy fight for seats on the Board or we determine
that there are other compelling reasons for withholding votes for
directors, we will vote in favor of the management proposed slate of
directors. That said, we believe that directors have a duty to respond
to shareholder actions that have received significant shareholder
support. We may withhold votes for directors (or vote against in
non-US markets) that fail to act on key issues such as failure to
implement proposals to declassify boards, failure to implement a
majority vote requirement, failure to submit a rights plan to a
shareholder vote or failure to act on tender offers where a majority
of shareholders have tendered their shares. In addition, we will
withhold votes for directors who fail to attend at least seventy-five
percent of board meetings within a given year without a reasonable
excuse. Finally, we may abstain or vote against directors of non-U.S.
issuers where there is insufficient information about the nominees
disclosed in the proxy statement.
2.3. Appointment of Auditors
AllianceBernstein believes that the company remains in the best
position to choose the auditors and will generally support
management's recommendation. However, we recognize that there may be
inherent conflicts when a company's independent auditor performs
substantial non-audit related services for the company. The
Sarbanes-Oxley Act of 2002 prohibited certain categories of services
by auditors to US issuers, making this issue less prevalent in the US.
Nevertheless, in reviewing a proposed auditor, we will consider the
fees paid for non-audit services relative to total fees as well as if
there are other reasons to question the independence of the auditors.
2.4. Changes in Legal and Capital Structure
Changes in a company's charter, articles of incorporation or by-laws
are often technical and administrative in nature. Absent a compelling
reason to the contrary, AllianceBernstein will cast its votes in
accordance with the company's management on such proposals. However,
we will review and analyze on a case-by-case basis any non-routine
proposals that are likely to affect the structure and operation of the
company or have a material economic effect on the company. For
example, we will generally support proposals to increase authorized
common stock when it is necessary to implement a stock split, aid in a
restructuring or acquisition or provide a sufficient number of shares
for an employee savings plan, stock option or executive compensation
plan. However, a satisfactory explanation of a company's intentions
must be disclosed in the proxy statement for proposals requesting an
increase of greater than one hundred percent of the shares
outstanding. We will oppose increases in authorized common stock where
there is evidence that the shares will be used to implement a poison
pill or another form of anti-takeover device. We will support
shareholder proposals that seek to eliminate dual class voting
structures.
2.5. Corporate Restructurings, Mergers and Acquisitions
AllianceBernstein believes proxy votes dealing with corporate
reorganizations are an extension of the investment decision.
Accordingly, we will analyze such proposals on a case-by-case basis,
weighing heavily the views of our research analysts that cover the
company and our investment professionals managing the portfolios in
which the stock is held.
2.6. Proposals Affecting Shareholder Rights
AllianceBernstein believes that certain fundamental rights of
shareholders must be protected. We will generally vote in favor of
proposals that give shareholders a greater voice in the affairs of the
company and oppose any measure that seeks to limit those rights.
However, when analyzing such proposals we will weigh the financial
impact of the proposal against the impairment of shareholder rights.
2.7. Anti-Takeover Measures
AllianceBernstein believes that measures that impede corporate
transactions such as takeovers or entrench management not only
infringe on the rights of shareholders but may also have a detrimental
effect on the value of the company. We will generally oppose
proposals, regardless of whether they are advanced by management or
shareholders, the purpose or effect of which is to entrench management
or excessively or inappropriately dilute shareholder ownership.
Conversely, we support proposals that would restrict or otherwise
eliminate anti-takeover or anti-shareholder measures that have already
been adopted by corporate issuers. For example, we will support
shareholder proposals that seek to require the company to submit a
shareholder rights plan to a shareholder vote. We will evaluate, on a
case-by-case basis, proposals to completely redeem or eliminate such
plans. Furthermore, we will generally oppose proposals put forward by
management (including the authorization of blank check preferred
stock, classified boards and supermajority vote requirements) that
appear to be anti-shareholder or intended as management entrenchment
mechanisms.
2.8. Executive Compensation
AllianceBernstein believes that company management and the
compensation committee of the board of directors should, within
reason, be given latitude to determine the types and mix of
compensation and benefit awards offered to company employees. Whether
proposed by a shareholder or management, we will review proposals
relating to executive compensation plans on a case-by-case basis to
ensure that the long-term interests of management and shareholders are
properly aligned. In general, we will analyze the proposed plan to
ensure that shareholder equity will not be excessively diluted taking
into account shares available for grant under the proposed plan as
well as other existing plans. We generally will oppose plans that have
below market value grant or exercise prices on the date of issuance or
permit repricing of underwater stock options without shareholder
approval. Other factors such as the company's performance and industry
practice will generally be factored into our analysis. We generally
will support shareholder proposals seeking additional disclosure of
executive and director compensation. This policy includes proposals
that seek to specify the measurement of performance based
compensation. In addition, we will support proposals requiring
managements to submit severance packages that exceed 2.99 times the
sum of an executive officer's base salary plus bonus that are
triggered by a change in control to a shareholder vote. Finally, we
will support shareholder proposals requiring companies to expense
stock options because we view them as a large corporate expense that
should be appropriately accounted for.
2.9. Social and Corporate Responsibility
AllianceBernstein will review and analyze on a case-by-case basis
proposals relating to social, political and environmental issues to
determine whether they will have a financial impact on shareholder
value. We will vote against proposals that are unduly burdensome or
result in unnecessary and excessive costs to the company. We may
abstain from voting on social proposals that do not have a readily
determinable financial impact on shareholder value.
3. Proxy Voting Procedures
3.1. Proxy Voting Committees
Our growth and value investment groups have formed separate proxy
voting committees to establish general proxy policies for
AllianceBernstein and consider specific proxy voting matters as
necessary. These committees periodically review these policies and new
types of corporate governance issues, and decide how we should vote on
proposals not covered by these policies. When a proxy vote cannot be
clearly decided by an application of our stated policy, the proxy
committee will evaluate the proposal. In addition, the committees, in
conjunction with the analyst that covers the company, may contact
corporate management and interested shareholder groups and others as
necessary to discuss proxy issues. Members of the committee include
senior investment personnel and representatives of the Legal and
Compliance Department. The committees may also evaluate proxies where
we face a potential conflict of interest (as discussed below).
Finally, the committees monitor adherence to these policies.
3.2. Conflicts of Interest
AllianceBernstein recognizes that there may be a potential conflict of
interest when we vote a proxy solicited by an issuer whose retirement
plan we manage, or we administer, who distributes AllianceBernstein
sponsored mutual funds, or with whom we or an employee has another
business or personal relationship that may affect how we vote on the
issuer's proxy. Similarly, AllianceBernstein may have a potential
material conflict of interest when deciding how to vote on a proposal
sponsored or supported by a shareholder group that is a client. We
believe that centralized management of proxy voting, oversight by the
proxy voting committees and adherence to these policies ensures that
proxies are voted with only our clients' best interests in mind.
Additionally, we have implemented procedures to ensure that our votes
are not the product of a material conflict of interests, including:
(i) on an annual basis, the proxy committees will take reasonable
steps to evaluate the nature of AllianceBernstein's and our employees'
material business and personal relationships (and those of our
affiliates) with any company whose equity securities are held in
client accounts and any client that has sponsored or has material
interest in a proposal upon which we will be eligible to vote; (ii)
requiring anyone involved in the decision making process to disclose
to the chairman of the appropriate proxy committee any potential
conflict that they are aware of (including personal relationships) and
any contact that they have had with any interested party regarding a
proxy vote; (iii) prohibiting employees involved in the decision
making process or vote administration from revealing how we intend to
vote on a proposal in order to reduce any attempted influence from
interested parties; and (iv) where a material conflict of interests
exists, reviewing our proposed vote by applying a series of objective
tests and, where necessary, considering the views of third party
research services to ensure that our voting decision is consistent
with our clients' best interests.
Because under certain circumstances AllianceBernstein considers the
recommendation of third party research services, the proxy committees
will take reasonable steps to verify that any third party research
service is in fact independent based on all of the relevant facts and
circumstances. This includes reviewing the third party research
service's conflict management procedures and ascertaining, among other
things, whether the third party research service (i) has the capacity
and competency to adequately analyze proxy issues; and (ii) can make
such recommendations in an impartial manner and in the best interests
of our clients.
3.3. Proxies of Certain Non-US Issuers
Proxy voting in certain countries requires "share blocking."
Shareholders wishing to vote their proxies must deposit their shares
shortly before the date of the meeting with a designated depositary.
During this blocking period, shares that will be voted at the meeting
cannot be sold until the meeting has taken place and the shares are
returned to the clients' custodian banks. Absent compelling reasons to
the contrary, AllianceBernstein believes that the benefit to the
client of exercising the vote does not outweigh the cost of voting
(i.e. not being able to sell the shares during this period).
Accordingly, if share blocking is required we generally abstain from
voting those shares.
In addition, voting proxies of issuers in non-US markets may give rise
to a number of administrative issues that may prevent
AllianceBernstein from voting such proxies. For example,
AllianceBernstein may receive meeting notices without enough time to
fully consider the proxy or after the cut-off date for voting. Other
markets require AllianceBernstein to provide local agents with power
of attorney prior to implementing AllianceBernstein's voting
instructions. Although it is AllianceBernstein's policy to seek to
vote all proxies for securities held in client accounts for which we
have proxy voting authority, in the case of non-US issuers, we vote
proxies on a best efforts basis.
3.4. Loaned Securities
Many clients of AllianceBernstein have entered into securities lending
arrangements with agent lenders to generate additional revenue.
AllianceBernstein will not be able to vote securities that are on loan
under these types of arrangements. However, under rare circumstances,
for voting issues that may have a significant impact on the
investment, we may request that clients recall securities that are on
loan if we determine that the benefit of voting outweighs the costs
and lost revenue to the client or fund and the administrative burden
of retrieving the securities.
3.5. Proxy Voting Records
You may obtain information regarding how the Fund voted proxies
relating to portfolio securities during the most recent 12-month
period ended June 30, without charge. Simply visit AllianceBernstein's
web site at www.alliancebernstein.com, go to the Securities and
Exchange Commission's web site at www.sec.gov or call
AllianceBernstein at (800) 227-4618.
SK 00250 0205 799191 v3
PART C
OTHER INFORMATION
ITEM 15. 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, filed as Exhibit (a), Article
VII and Article VIII of the Registrant's By-Laws filed as Exhibit (b) and
Section 10 of the Distribution Services Agreement filed as Exhibit (e)(1) all
filed in response to Item 23 of the Registrant's Registration Statement filed on
Form N-1A (File Nos. 33-49530 and 811-6730), and all as set forth below. The
liability of the Registrant's directors and officers is dealt with in Article
EIGHTH of Registrant's Articles of Incorporation, and Article VII, Section 7 and
Article VIII, Section 1 through Section 6 of the Registrant's By-Laws, as set
forth below. The Adviser's liability for any loss suffered by the Registrant or
its shareholders is set forth in Section 4 of the Advisory Agreement filed as
Exhibit (d) in response to Item 23 of the Registrant's Registration Statement
filed on Form N-1A (File Nos. 33-49530 and 811-6730), as set forth below.
Section 2-418 of the Maryland General Corporation Law reads as follows:
"2-418 INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS.--
(a) In this section the following words have the meaning indicated.
(1) "Director" means any person who is or was a director of a
corporation and any person who, while a director of a
corporation, is or was serving at the request of the
corporation as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic
corporation, partnership, joint venture, trust, other
enterprise, or employee benefit plan.
(2) "Corporation" includes any domestic or foreign predecessor
entity of a corporation in a merger, consolidation, or other
transaction in which the predecessor's existence ceased upon
consummation of the transaction.
(3) "Expenses" include attorney's fees.
(4) "Official capacity" means the following:
(i) When used with respect to a director, the office of
director in the corporation; and
(ii) When used with respect to a person other than a
director as contemplated in subsection (j), the
elective or appointive office in the corporation held
by the officer, or the employment or agency
relationship undertaken by the employee or agent in
behalf of the corporation.
(iii) "Official capacity" does not include service for any
other foreign or domestic corporation or any
partnership, joint venture, trust, other enterprise, or
employee benefit plan.
(5) "Party" includes a person who was, is, or is threatened to
be made a named defendant or respondent in a proceeding.
(6) "Proceeding" means any threatened, pending or completed
action, suit or proceeding, whether civil, criminal,
administrative, or investigative.
(b) (1) A corporation may indemnify any director made a party to any
proceeding by reason of service in that capacity unless it
is established that:
(i) The act or omission of the director was material to the
matter giving rise to the proceeding; and
1. Was committed in bad faith; or
2. Was the result of active and deliberate
dishonesty; or
(ii) The director actually received an improper personal
benefit in money, property, or services; or
(iii) In the case of any criminal proceeding, the director
had reasonable cause to believe that the act or
omission was unlawful.
(2) (i) Indemnification may be against judgments, penalties,
fines, settlements, and reasonable expenses actually
incurred by the director in connection with the
proceeding.
(ii) However, if the proceeding was one by or in the right
of the corporation, indemnification may not be made in
respect of any proceeding in which the director shall
have been adjudged to be liable to the corporation.
(3) (i) The termination of any proceeding by judgment, order or
settlement does not create a presumption that the
director did not meet the requisite standard of conduct
set forth in this subsection.
(ii) The termination of any proceeding by conviction, or a
plea of nolo contendere or its equivalent, or an entry
of an order of probation prior to judgment, creates a
rebuttable presumption that the director did not meet
that standard of conduct.
(4) A corporation may not indemnify a director or advance
expenses under this section for a proceeding brought by that
director against the corporation, except:
(i) For a proceeding brought to enforce indemnification
under this section; or
(ii) If the charter or bylaws of the corporation, a
resolution of the board of directors of the
corporation, or an agreement approved by the board of
directors of the corporation to which the corporation
is a party expressly provide otherwise.
(c) A director may not be indemnified under subsection (b) of this
section in respect of any proceeding charging improper personal
benefit to the director, whether or not involving action in the
director's official capacity, in which the director was adjudged
to be liable on the basis that personal benefit was improperly
received.
(d) Unless limited by the charter:
(1) A director who has been successful, on the merits or
otherwise, in the defense of any proceeding referred to in
subsection (b) of this section shall be indemnified against
reasonable expenses incurred by the director in connection
with the proceeding.
(2) A court of appropriate jurisdiction upon application of a
director and such notice as the court shall require, may
order indemnification in the following circumstances:
(i) If it determines a director is entitled to
reimbursement under paragraph (1) of this subsection,
the court shall order indemnification, in which case
the director shall be entitled to recover the expenses
of securing such reimbursement; or
(ii) If it determines that the director is fairly and
reasonably entitled to indemnification in view of all
the relevant circumstances, whether or not the director
has met the standards of conduct set forth in
subsection (b) of this section or has been adjudged
liable under the circumstances described in subsection
(c) of this section, the court may order such
indemnification as the court shall deem proper.
However, indemnification with respect to any proceeding
by or in the right of the corporation or in which
liability shall have been adjudged in the circumstances
described in subsection (c) shall be limited to
expenses.
(3) A court of appropriate jurisdiction may be the same court in
which the proceeding involving the director's liability took
place.
(e) (1) Indemnification under subsection (b) of this section may not
be made by the corporation unless authorized for a specific
proceeding after a determination has been made that
indemnification of the director is permissible in the
circumstances because the director has met the standard of
conduct set forth in subsection (b) of this section.
(2) Such determination shall be made:
(i) By the board of directors by a majority vote of a
quorum consisting of directors not, at the time,
parties to the proceeding, or, if such a quorum cannot
be obtained, then by a majority vote of a committee of
the board consisting solely of two or more directors
not, at the time, parties to such proceeding and who
were duly designated to act in the matter by a majority
vote of the full board in which the designated
directors who are parties may participate;
(ii) By special legal counsel selected by the board or a
committee of the board by vote as set forth in
subparagraph (i) of this paragraph, or, if the
requisite quorum of the full board cannot be obtained
therefor and the committee cannot be established, by a
majority vote of the full board in which directors who
are parties may participate; or
(iii) By the stockholders.
(3) Authorization of indemnification and determination as to
reasonableness of expenses shall be made in the same manner
as the determination that indemnification is permissible.
However, if the determination that indemnification is
permissible is made by special legal counsel, authorization
of indemnification and determination as to reasonableness of
expenses shall be made in the manner specified in
subparagraph (ii) of paragraph (2) of this subsection for
selection of such counsel.
(4) Shares held by directors who are parties to the proceeding
may not be voted on the subject matter under this
subsection.
(f) (1) Reasonable expenses incurred by a director who is a party to
a proceeding may be paid or reimbursed by the corporation in
advance of the final disposition of the proceeding, upon
receipt by the corporation of:
(i) A written affirmation by the director of the director's
good faith belief that the standard of conduct
necessary for indemnification by the corporation as
authorized in this section has been met; and
(ii) A written undertaking by or on behalf of the director
to repay the amount if it shall ultimately be
determined that the standard of conduct has not been
met.
(2) The undertaking required by subparagraph (ii) of paragraph
(1) of this subsection shall be an unlimited general
obligation of the director but need not be secured and may
be accepted without reference to financial ability to make
the repayment.
(3) Payments under this subsection shall be made as provided by
the charter, bylaws, or contract or as specified in
subsection (e) of this section.
(g) The indemnification and advancement of expenses provided or
authorized by this section may not be deemed exclusive of any
other rights, by indemnification or otherwise, to which a
director may be entitled under the charter, the bylaws, a
resolution of stockholders or directors, an agreement or
otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office.
(h) This section does not limit the corporation's power to pay or
reimburse expenses incurred by a director in connection with an
appearance as a witness in a proceeding at a time when the
director has not been made a named defendant or respondent in the
proceeding.
(i) For purposes of this section:
(1) The corporation shall be deemed to have requested a director
to serve an employee benefit plan where the performance of
the director's duties to the corporation also imposes duties
on, or otherwise involves services by, the director to the
plan or participants or beneficiaries of the plan;
(2) Excise taxes assessed on a director with respect to an
employee benefit plan pursuant to applicable law shall be
deemed fines; and
(3) Action taken or omitted by the director with respect to an
employee benefit plan in the performance of the director's
duties for a purpose reasonably believed by the director to
be in the interest of the participants and beneficiaries of
the plan shall be deemed to be for a purpose which is not
opposed to the best interests of the corporation.
(j) Unless limited by the charter:
(1) An officer of the corporation shall be indemnified as and to
the extent provided in subsection (d) of this section for a
director and shall be entitled, to the same extent as a
director, to seek indemnification pursuant to the provisions
of subsection (d);
(2) A corporation may indemnify and advance expenses to an
officer, employee, or agent of the corporation to the same
extent that it may indemnify directors under this section;
and
(3) A corporation, in addition, may indemnify and advance
expenses to an officer, employee, or agent who is not a
director to such further extent, consistent with law, as may
be provided by its charter, bylaws, general or specific
action of its board of directors or contract.
(k) (1) A corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee,
or agent of the corporation, or who, while a director,
officer, employee, or agent of the corporation, is or was
serving at the request, of the corporation as a director,
officer, partner, trustee, employee, or agent of another
foreign or domestic corporation, partnership, joint venture,
trust, other enterprise, or employee benefit plan against
any liability asserted against and incurred by such person
in any such capacity or arising out of such person's
position, whether or not the corporation would have the
power to indemnify against liability under the provisions of
this section.
(2) A corporation may provide similar protection, including a
trust fund, letter of credit, or surety bond, not
inconsistent with this section.
(3) The insurance or similar protection may be provided by a
subsidiary or an affiliate of the corporation.
(l) Any indemnification of, or advance of expenses to, a director in
accordance with this section, if arising out of a proceeding by
or in the right of the corporation, shall be reported in writing
to the stockholders with the notice of the next stockholders'
meeting or prior to the meeting."
Article EIGHTH of the Registrant's Articles of Incorporation reads as follows:
"(1) To the full extent that limitations on the liability of directors
and officers are permitted by the Maryland General Corporation Law, no director
or officer of the Corporation shall have any liability to the Corporation or its
stockholders for damages. This limitation on liability applies to events
occurring at the time a person serves as a director or officer of the
Corporation whether or not such person is a director or officer at the time of
any proceeding in which liability is asserted.
"(2) The Corporation shall indemnify and advance expenses to its
currently acting and its former directors to the full extent that
indemnification of directors is permitted by the Maryland General Corporation
Law. The Corporation shall indemnify and advance expenses to its officers to the
same extent as its directors and to such further extent as is consistent with
law. The Board of Directors may by By-Law, resolution or agreement make further
provisions for indemnification of directors, officers, employees and agents to
the full extent permitted by the Maryland General Corporation Law.
"(3) No provision of this Article shall be effective to protect or
purport to protect any director or officer of the Corporation against any
liability to the Corporation or its stockholders to which he would otherwise be
subject by reason of wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
"(4) References to the Maryland General Corporation Law in this
Article are to that law as from time to time amended. No amendment to the
Charter of the Corporation shall affect any right of any person under this
Article based on any event, omission or proceeding prior to the amendment."
Article VII, Section 7 of the Registrant's By-Laws reads as follows:
Section 7. Insurance Against Certain Liabilities. The Corporation
shall not bear the cost of insurance that protects or purports to protect
directors and officers of the Corporation against any liabilities to the
Corporation or its security holders to which any such director or officer would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
Article VIII of the Registrant's By-Laws reads as follows:
"Section 1. Indemnification of Directors and Officers. The Corporation
shall indemnify its directors to the full extent that indemnification of
directors is permitted by the Maryland General Corporation Law. The Corporation
shall indemnify its officers to the same extent as its directors and to such
further extent as is consistent with law. The Corporation shall indemnify its
directors and officers who while serving as directors or officers also serve at
the request of the Corporation as a director, officer, partner, trustee,
employee, agent or fiduciary of another corporation, partnership, joint venture,
trust, other enterprise or employee benefit plan to the full extent consistent
with law. The indemnification and other rights provided by this Article shall
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of the heirs, executors and administrators of such a
person. This Article shall not protect any such person against any liability to
the Corporation or any stockholder thereof to which such person would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office
("disabling conduct").
"Section 2. Advances. Any current or former director or officer of the
Corporation seeking indemnification within the scope of this Article shall be
entitled to advances from the Corporation for payment of the reasonable expenses
incurred by him in connection with the matter as to which he is seeking
indemnification in the manner and to the full extent permissible under the
Maryland General Corporation Law. The person seeking indemnification shall
provide to the Corporation a written affirmation of his good faith belief that
the standard of conduct necessary for indemnification by the Corporation has
been met and a written undertaking to repay any such advance if it should
ultimately be determined that the standard of conduct has not been met. In
addition, at least one of the following additional conditions shall be met: (a)
the person seeking indemnification shall provide a security in form and amount
acceptable to the Corporation for his undertaking; (b) the Corporation is
insured against losses arising by reason of the advance; or (c) a majority of a
quorum of directors of the Corporation who are neither "interested persons" as
defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended,
nor parties to the proceeding ("disinterested non-party directors"), or
independent legal counsel, in a written opinion, shall have determined, based on
a review of facts readily available to the Corporation at the time the advance
is proposed to be made, that there is reason to believe that the person seeking
indemnification will ultimately be found to be entitled to indemnification.
"Section 3. Procedure. At the request of any person claiming
indemnification under this Article, the Board of Directors shall determine, or
cause to be determined, in a manner consistent with the Maryland General
Corporation Law, whether the standards required by this Article have been met.
Indemnification shall be made only following: (a) a final decision on the merits
by a court or other body before whom the proceeding was brought that the person
to be indemnified was not liable by reason of disabling conduct or (b) in the
absence of such a decision, a reasonable determination, based upon a review of
the facts, that the person to be indemnified was not liable by reason of
disabling conduct by (i) the vote of a majority of a quorum of disinterested
non-party directors or (ii) an independent legal counsel in a written opinion.
"Section 4. Indemnification of Employees and Agents. Employees and
agents who are not officers or directors of the Corporation may be indemnified,
and reasonable expenses may be advanced to such employees or agents, as may be
provided by action of the Board of Directors or by contract, subject to any
limitations imposed by the Investment Company Act of 1940.
"Section 5. Other Rights. The Board of Directors may make further
provision consistent with law for indemnification and advance of expenses to
directors, officers, employees and agents by resolution, agreement or otherwise.
The indemnification provided by this Article shall not be deemed exclusive of
any other right, with respect to indemnification or otherwise, to which those
seeking indemnification may be entitled under any insurance or other agreement
or resolution of stockholders or disinterested directors or otherwise. The
rights provided to any person by this Article shall be enforceable against the
Corporation by such person who shall be presumed to have relied upon it in
serving or continuing to serve as a director, officer, employee, or agent as
provided above.
"Section 6. Amendments. References in this Article are to the Maryland
General Corporation Law and to the Investment Company Act of 1940 as from time
to time amended. No amendment of these By-laws shall affect any right of any
person under this Article based on any event, omission or proceeding prior to
the amendment.
The Advisory Agreement between the Registrant and AllianceBernstein
L.P. provides that AllianceBernstein L.P. will not be liable under such
agreements for any mistake of judgment or in any event whatsoever except for
lack of good faith and that nothing therein shall be deemed to protect
AllianceBernstein L.P. against any liability to the Registrant or its security
holders to which it would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties thereunder, or by
reason of reckless disregard of its duties and obligations thereunder.
The Distribution Services Agreement between the Registrant and
AllianceBernstein Investments, Inc. (formerly known as Alliance Fund
Distributors, Inc.) ("ABI") provides that the Registrant will indemnify, defend
and hold ABI and any person who controls it within the meaning of Section 15 of
the Securities Act of 1933, as amended (the "Securities Act"), free and harmless
from and against any and all claims, demands, liabilities and expenses which ABI
or any controlling person may incur arising out of or based upon any alleged
untrue statement of a material fact contained in the Registrant's Registration
Statement, Prospectus or Statement of Additional Information or arising out of,
or based upon any alleged omission to state a material fact required to be
stated in any one of the foregoing or necessary to make the statements in any
one of the foregoing not misleading.
The foregoing summaries are qualified by the entire text of
Registrant's Articles of Incorporation and By-Laws, the Advisory Agreement
between Registrant and AllianceBernstein L.P. and the Distribution Services
Agreement between Registrant and ABI which are filed as Exhibits (a), (b), (d)
and (e), respectively, in response to Item 23 of the Registrant's Registration
Statement filed on Form N-1A (File Nos. 33-49530 and 811-6730), and each of
which are incorporated by reference herein.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
In accordance with Release No. IC-11330 (September 2, 1980), the
Registrant will indemnify its directors, officers, investment manager and
principal underwriters only if (1) a final decision on the merits was issued by
the court or other body before whom the proceeding was brought that the person
to be indemnified (the "indemnitee") was not liable by reason or willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office ("disabling conduct") or (2) a reasonable
determination is made, based upon a review of the facts, that the indemnitee was
not liable by reason of disabling conduct, by (a) the vote of a majority of a
quorum of the directors who are neither "interested persons" of the Registrant
as defined in section 2(a)(19) of the Investment Company Act of 1940 nor parties
to the proceeding ("disinterested, non-party directors"), or (b) an independent
legal counsel in a written opinion. The Registrant will advance attorneys fees
or other expenses incurred by its directors, officers, investment adviser or
principal underwriters in defending a proceeding, upon the undertaking by or on
behalf of the indemnitee to repay the advance unless it is ultimately determined
that he is entitled to indemnification and, as a condition to the advance, (1)
the indemnitee shall provide a security for his undertaking, (2) the Registrant
shall be insured against losses arising by reason of any lawful advances, or (3)
a majority of a quorum of disinterested, non-party directors of the Registrant,
or an independent legal counsel in a written opinion, shall determine, based on
a review of readily available facts (as opposed to a full trial-type inquiry),
that there is reason to believe that the indemnitee ultimately will be found
entitled to indemnification.
The Registrant participates in a Joint directors and officers
liability insurance policy issued by the ICI Mutual Insurance Company. Coverage
under this policy has been extended to directors, trustees and officers of the
investment companies managed by AllianceBernstein L.P. Under this policy,
outside trustees and directors would be covered up to the limits specified for
any claim against them for acts committed in their capacities as trustee or
director. A pro rata share of the premium for this coverage is charged to each
investment company and to the Adviser.
ITEM 16. Exhibits
(1) (a) Articles of Incorporation of Registrant - Incorporated by
reference to Exhibit 1(a) to Post-Effective Amendment No. 14 of
Registrant's Registration Statement on Form N-1A (File Nos.
33-49530 and 811-6730) filed with the Securities and Exchange
Commission on January 30, 1998.
(b) Articles of Amendment to Articles of Incorporation of the
Registrant dated July 31, 1992 and filed August 3, 1992 -
Incorporated by reference to Exhibit 1(b) to Post-Effective
Amendment No. 14 of Registrant's Registration Statement on Form
N-1A (File Nos. 33-49530 and 811-6730) filed with the Securities
and Exchange Commission on January 30, 1998.
(c) Certificate of Correction of Articles of Amendment dated
September 22, 1992 and filed September 24, 1992 - Incorporated by
reference to Exhibit 1(c) to Post-Effective Amendment No. 15 of
Registrant's Registration Statement on Form N-1A (File Nos.
33-49530 and 811-6730) filed with the Securities and Exchange
Commission on October 30, 1998.
(d) Articles Supplementary to Articles of Incorporation of Registrant
dated April 29, 1993 and filed April 30, 1993 - Incorporated by
reference to Exhibit 1(d) to Post-Effective Amendment No. 15 of
Registrant's Registration Statement on Form N-1A (File Nos.
33-49530 and 811-6730) filed with the Securities and Exchange
Commission on October 30, 1998.
(e) Articles Supplementary to Articles of Incorporation of Registrant
dated September 30, 1996 and filed October 1, 1996 - Incorporated
by reference to Exhibit 1 to Post-Effective Amendment No. 11 of
Registrant's Registration Statement on Form N-1A (File Nos.
33-49530 and 811-6730) filed with the Securities and Exchange
Commission on January 30, 1998.
(f) Articles of Amendment to Articles of Incorporation dated March
19, 2003 and filed March 20, 2003 - Incorporated by reference to
Exhibit (a)(6) to Post-Effective Amendment No. 28 of Registrant's
Registration Statement on Form N-1A (File Nos. 33-49530 and
811-6730) filed with the Securities and Exchange Commission on
August 7, 2003.
(g) Articles Supplementary to Articles of Incorporation dated July
31, 2003 and filed August 1, 2003 - Incorporated by reference to
Exhibit (a)(7) to Post-Effective Amendment No. 28 of Registrant's
Registration Statement on Form N-1A (File Nos. 33-49530 and
811-6730) filed with the Securities and Exchange Commission on
August 7, 2003.
(h) Articles of Amendment to Articles of Incorporation dated October
19, 2004 and filed December 8, 2004 - Incorporated by reference
to Exhibit (a)(8) to Post-Effective Amendment No. 32 of
Registrant's Registration Statement on Form N-1A (File Nos.
33-49530 and 811-6730) filed with the Securities and Exchange
Commission on February 28, 2005.
(i) Articles Supplementary to the Articles of Incorporation dated
February 17, 2005 and filed February 22, 2005 - Incorporated by
reference to Exhibit (a)(8) to Post-Effective Amendment No. 32 of
Registrant's Registration Statement on Form N-1A (File Nos.
33-49530 and 811-6730) filed with the Securities and Exchange
Commission on February 28, 2005.
(2) Amended and Restated By-Laws of the Registrant - Incorporated by
reference to Exhibit (2) of Registrant's Registration Statement on
Form N-14AE (File No. 333-136475) filed with the Securities and
Exchange Commission on August 10, 2006.
(3) Not applicable.
(4) Form of Agreement and Plan of Acquisition and Liquidation between
Alliance All-Market Advantage Fund, Inc. and AllianceBernstein Large
Cap Growth Fund, Inc. - Constitutes Appendix H to Part A hereof.
(5) Not applicable.
(6) (a) Advisory Agreement between the Registrant and AllianceBernstein
L.P. - Incorporated by reference to Exhibit 5 to Post-Effective
Amendment No. 14 of Registrant's Registration Statement on Form
N-1A (File Nos. 33-49530 and 811-6730) filed with the Securities
and Exchange Commission on January 30, 1998.
(b) Form of Amended and Restated Advisory Agreement - Incorporated by
reference to Exhibit (d)(2) to Post Effective Amendment No. 37 of
Registrant's Registration Statement on Form N-1A (File Nos.
33-49530 and 811-6730) filed with the Securities and Exchange
Commission on October 31, 2006.
(7) (a) Distribution Services Agreement between the Registrant and
AllianceBernstein Investments, Inc. (formerly known as Alliance
Fund Distributors, Inc.) - Incorporated by reference to Exhibit
6(a) to Post-Effective Amendment No. 14 of Registrant's
Registration Statement on Form N-1A (File Nos. 33-49530 and
811-6730) filed with the Securities and Exchange Commission on
January 30, 1998.
(b) Amendment to the Distribution Services Agreement between the
Registrant and AllianceBernstein Investments, Inc. (formerly
known as Alliance Fund Distributors, Inc.) dated July 16, 1996 -
Incorporated by reference to Exhibit 6 to Post-Effective
Amendment No. 11 of Registrant's Registration Statement on Form
N-1A (File Nos. 33-49530 and 811-6730) filed with the Securities
and Exchange Commission on February 3, 1997.
(c) Amendment to the Distribution Services Agreement dated November
3, 2003 between the Registrant and AllianceBernstein Investments,
Inc. (formerly known as Alliance Fund Distributors, Inc.) -
Incorporated by reference to Exhibit (e)(3) to Post Effective
Amendment No. 31 of Registrant's Registration Statement on Form
N-1A (File Nos. 33-49530 and 811-6730) filed with the Securities
and Exchange Commission on November 1, 2004.
(d) Form of Amendment to the Distribution Services Agreement between
the Registrant and AllianceBernstein Investments, Inc. (formerly
known as Alliance Fund Distributors, Inc.) - Incorporated by
reference to Exhibit (e)(4) to Post-Effective Amendment No. 32 of
Registrant's Registration Statement on Form N-1A (File Nos.
33-49530 and 811-6730) filed with the Securities and Exchange
Commission on February 28, 2005.
(e) Form of Amendment to the Distribution Services Agreement between
the Registrant and AllianceBernstein Investments, Inc. -
Incorporated by reference to Exhibit (e)(5) to Post-Effective
Amendment No. 37 of Registrant's Registration Statement on Form
N-1A (File Nos. 33-49530 and 811-6730) filed with the Securities
and Exchange Commission on October 31, 2006.
(f) Form of Selected Dealer Agreement between AllianceBernstein
Investments, Inc. (formerly known as Alliance Fund Distributors,
Inc.) and selected dealers offering shares of Registrant -
Incorporated by reference to Exhibit (e)(3) to Post-Effective
Amendment No. 34 of the Registration Statement on Form N-1A of
AllianceBernstein Municipal Income Fund, Inc. (File Nos. 33-7812
and 811-04791) filed with the Securities and Exchange Commission
on January 28, 2005.
(g) Form of Selected Agent Agreement between AllianceBernstein
Investments, Inc. (formerly known as Alliance Fund Distributors,
Inc.) and selected agents making available shares of Registrant
Incorporated by reference to Exhibit (e)(4) to Post-Effective
Amendment No. 34 of the Registration Statement on Form N-1A of
AllianceBernstein Municipal Income Fund, Inc. (File Nos. 33-7812
and 811-04791) filed with the Securities and Exchange Commission
on January 28, 2005.
(8) Not applicable.
(9) Custodian Contract between the Registrant and State Street Bank and
Trust Company - Incorporated by reference to Exhibit 8 to
Post-Effective Amendment No. 14 of Registrant's Registration Statement
on Form N-1A (File Nos. 33-49530 and 811-6730) filed with the
Securities and Exchange Commission on January 30, 1998.
(10) (a) Rule 12b-1 Plan - See Exhibit (7)(1) hereto.
(b) Form of Amended and Restated Rule 18f-3 Plan - Incorporated by
reference to Exhibit (n) to Post-Effective Amendment No. 32 of
Registrant's Registration Statement on Form N-1A (File Nos.
33-49530 and 811-6730) filed with the Securities and Exchange
Commission on February 28, 2005.
(11) Form of Opinion and Consent regarding the legality of securities being
registered - Filed herewith.
(12) Form of Opinion of Seward & Kissel LLP as to Tax Matters - To be filed
by amendment.
(13) (a) Transfer Agency Agreement between the Registrant and
AllianceBernstein Investor Services, Inc. (formerly
AllianceBernstein Global Investor Services, Inc.) - Incorporated
by reference to Exhibit 9 to Post-Effective Amendment No. 14 of
Registrant's Registration Statement on Form N-1A (File Nos.
33-49530 and 811-6730) filed with the Securities and Exchange
Commission on January 30, 1998.
(b) Transfer Agency Agreement between the Registrant and
AllianceBernstein Investor Services, Inc. - Incorporated by
reference to Exhibit (h)(e) to Post-Effective Amendment No. 37 of
Registrant's Registration Statement on Form N-1A (File Nos.
33-49530 and 811-6730) filed with the Securities and Exchange
Commission on October 31, 2006.
(c) Code of Ethics for the Fund - Incorporated by reference to
Exhibit (p)(1) to Post-Effective Amendment No. 74 of the
Registration Statement on Form N-1A of AllianceBernstein Bond
Fund, Inc. (File Nos. 2-48227 and 811-2383), filed with the
Securities and Exchange Commission on October 6, 2000, which is
substantially identical in all material respects except as to the
party which is the Registrant.
(d) Code of Ethics for AllianceBernstein L.P. and AllianceBernstein
Investments, Inc. (formerly known as Alliance Fund Distributors,
Inc.) - Incorporated by reference to Exhibit (p)(2) to
Post-Effective Amendment No. 4 of the Registration Statement on
Form N-1A of The AllianceBernstein Pooling Portfolios (File Nos.
333-120487 and 811-21673), filed with the Securities and Exchange
Commission on December 29, 2006.
(14) Consents of Independent Registered Public Accounting Firms - Filed
herewith.
(15) Not applicable.
(16) Powers of Attorney for: David H. Dievler, John H. Dobkin, Michael J.
Downey, William H. Foulk, Jr., D. James Guzy, Nancy P. Jacklin, Marc
O. Mayer and Marshall C. Turner, Jr. - Incorporated by reference to
the Registrant's Registration Statement filed pursuant to Rule 497(b)
(File No. 333-136475) filed with the Securities and Exchange
Commission on September 19, 2006.
(17) Not applicable.
ITEM 17. Undertakings
(1) The undersigned registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is
a part of this registration statement by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c) of the
Securities Act 17 CFR 230.145(c), the reoffering prospectus will
contain the information called for by the applicable registration form
for reofferings by persons who may be deemed underwriters, in addition
to the information called for by the other items of the applicable
form.
(2) The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to
the registration statement and will not be used until the amendment is
effective, and that, in determining any liability under the 1933 Act,
each post-effective amendment shall be deemed to be a new registration
statement for the securities offered therein, and the offering of the
securities at that time shall be deemed to be the initial bona fide
offering of them.
(3) The undersigned registrant undertakes to file a post-effective
amendment to this registration statement upon the closing of the
Acquisition described in this registration statement that contains an
opinion of counsel supporting the tax matters discussed in this
registration statement.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant has duly caused this Registration Statement on Form N-14
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, on the 31st day of August, 2007.
ALLIANCEBERNSTEIN LARGE CAP GROWTH FUND, INC.
By: Marc O. Mayer*
------------------
Marc O. Mayer
President
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 Officer:
Marc O. Mayer* President and Chief August 31, 2007
Executive Officer
2. Principal Financial and
Accounting Officer:
/s/ Joseph J. Mantineo Treasurer and August 31, 2007
----------------------- Chief Financial
Joseph J. Mantineo Officer
3. Majority of Directors:
David H. Dievler*
John H. Dobkin*
Michael J. Downey*
William H. Foulk, Jr.*
D. James Guzy*
Nancy P. Jacklin*
Marc O. Mayer*
Marshall C. Turner, Jr.*
*By: /s/ Andrew L. Gangolf August 31, 2007
----------------------
Andrew L. Gangolf
(Attorney-in-fact)
Index to Exhibits
Exhibit No. Description of Exhibits
- ----------- -----------------------
(11) Form of Opinion of Counsel
(14) Consents of Independent Registered Public Accounting Firms
SK 00250 0455 799039